Deep North Agents "Re-licensed" to Practise Real Estate Law

Posted on January 9, 2008 by | 16 Comments

Tim O'Dwyer M.A., LL.B by Tim O’Dwyer M.A., LL.B
Solicitor
Consumer Advocate
watchdog@argonautlegal.com.au


 


From July 1st last year the role of Queensland real estate agents in preparing contracts was severely limited by law. Sit back, dear readers, as I now blow the whistle on an extraordinary government back-flip.Beattie & Shine


Remember when the Beattie government back-stabbed real estate consumers who had been ripped-off by over-priced property marketeers?


In December 2002 amendments to the Property Agents and Motor Dealers Act (PAMDA) retrospectively prevented marketeering victims claiming compensation from a government fund. This fund, having already paid some victims’ claims, had inadequate reserves to meet those already filed apart from an avalanche to come.


Five years later, almost to the day, history repeated itself when the Bligh government retrospectively shafted all real estate consumers – buyers, sellers, landlords and tenants. How? With a regulation (backdated to 1st July 2007) intended principally to permit legally unqualified agents to continue to prepare legally binding contracts.


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16 Comments

  • http:// says:

    Peter
    Having read Ian Reid’s clause, I concur that it is not good! You do need to ask yourself why does he do it! The answer is, because Lawyers use the Finance Clause as a way to avoid a contract when a Buyer changes their mind and is too late to use the Cooling off clause!

    If Lawyers weren’t so tricky in dreaming up new ways to avoid a legitimate contract to the detriment of the VENDOR, then the Ian Reids of the world wouldn’t need the clause!! This is one occassion you need to attack your industry (The legal fratenity that is)!!

  • Alan, you’re right. Too many lawyers have cosy relationships with estate agents (see http://www.lawyersconveyancing.com.au/news/124_richard_wood_solicitors.asp), and this taints them.

    I believe that lawyers who allow estate agents to “play lawyer” are very much to blame for predatory behaviour of estate agents. Estate agents would be de-fanged and de-clawed if lawyers had the guts to stand up to them. But the kick-backs for referrals culture is now out of control.

    Alan, I’m all for estate agents acting as conveyancers and handling contracts, provided they take responsibility for the entire matter. If an estate agent acting for the vendor were to take full responsibility the way a lawyer or conveyancer does, he or she would not be permitted to nobble the other side of the transaction. In other words, the purchaser would have to be referred to their own representative.

    Imagine if we had an estate agent acting for the vendor and an estate agent acting for the purchaser, and observing the rules regarding conflicts of interests and not communicating with another practitioner’s client. There would be no more trickery and deception!

    As it stands, the estate agent is a self-interest meddler, who insinuates himself into the vendor’s side of the transaction, then into the purchaser’s side of the transaction, extracts a commission, then leaves the parties’ legal representatives to carry responsibility for their respective clients.

    Some time ago I decided to take the lead in demonstrating that there is a better way, and the result is Lawyers Real Estate (see http://www.LawyersRealEstate.com.au). Read through the methodolgy set out on that site and let me have your criticisms.

  • http:// says:

    Meanwhile I’ve received a couple of encouraging emails from other agents. The first is from a Remax agent, the second from a Hooker agent:

    “Just an update. I forwarded your article to all our staff and the general attitude was “So what?!” We are all continuing with what we were doing

    and will still not be adding any clauses that the solicitors have not given to us. We liked the legislation the way it was because it took a lot of responsibility off our shoulders and made for stronger contracts.

    Basically as far as this office is concerned, the legislation is still the same. Everyone is also taking extra care with preparation of contracts too.

    Sometimes I really like the people in my office. Business as usual at Remax.”

    “Hurrah to Tim O’Dwyer from one of the Foxes he so eloquently describes. Having arrived from the ACT only 2 years ago, I was horrified to find that Real Estate Agents, most with only 5 days training, are expected to prepare and execute legal contracts for the sale and purchase of property in Queensland.

    We agents are advised to present a contract laden with huge WARNING signs telling the buyer to seek legal advice, then in the next breath ask them to sign the same contract – without obtaining the legal advice!! Surely this cannot be sane practice.

    In the ACT all contracts are prepared by a solicitor before the property is placed on the market. Full disclosure is made to prospective buyers with 2yrs worth of body corp minutes (if required) and building and pest inspections also form part of the contract.

    Contracts don’t fall unless there is a good reason, and buyers have no surprises once the contract is conditional.

    Please lets change this law URGENTLY. Thanks Tim for the whistle blowing – you have my support!”

  • http:// says:

    Interesting Question! The problem I have is the trust I need to place in the negotiating ability of two people not au fait with the property. People doing the negotiating won’t have the best interests of BOTH parties, merely looking after the interest of THEIR client. Many times there will be mutiple counter offers with a contract going back and forth before a result is achieved. Would you do this? When a buyer says “I’ll pay $x if the vendor does X” will you know and understand what this all means without having seen the property or familiar with the area?

    Many contracts I have negotiated have been done at night time while you’re settled back watching the news and palying with the kids! Experience tells me that Buyers enter ‘Buyers remorse’ straight after being told their offer has been accepted. Will you help them through this situation or assist them to escape a contract they entered freely and probably are still happy to buy after they get over their initial nerves!

    If there are mutiple offers ( and nowadays its common) will we have three Lawyers (a scary thought) negotiating, all with a different agenda!!

    I don’t believe this is the ultimate solution! I don’t agree with current Queensland legislation which aims to protect the Consumer (read Buyer) but does not seek to protect the Consumer (the Seller).

    To me, the ultimate situation would be for Sellers to have a valuation done (by a licensed Valuer) and be prepared to make that available to Agent, Buyer and Mortgage originator. The Seller to provide the Buyer with a report from Solicitor, Pest Controller and Builder in relation to the property basically giving (in your words) a ‘road worthy’ Whoops we agree! The agent prepare and present the contract to both parties (with standard clauses provided by Lawyers) and the contract becomes enforceable when the contract is received by the Lawyers who accepts the contract as properly prepared and entered into. (with no tricks to avoid a legitimately formed contract.) Buyers should still have a five day cooling off period (and maybe the Vendor should have this right too!)

    Peter, I can tell you that my industry strives to enhance our reputation as Professional people carrying out a legimate occupation for reward and this shouldn’t allow you to be so focused on thinking that Commission we earn is earned without consideration to the people involved. Sure there are Cowboys out there (and Lawyers) but the great majority are decent honest law abiding people. I note the comments from some in your profession as to who would pay for the clauses when agents seek advice. Are they moneygrubbers! I think they raise a legitimate question. An epistle eh.

  • http:// says:

    Tim

    I’m an L J Hooker agent and I don’t agree with your article. If using the 31st February make an agent incompetant or cunning then you need to include the Office Fair Trading who used the 31st June in an advice! Tim, mistakes are mistakes, move on. It’ll be a sad day when Queensland succumbs to your pressure as a “Consumer Advocate” to follow the flawed NSW system and introduce Gazzumping!!

    The less involvement Lawyers have in the process the better the process will be! There can be a better system (as your ex ACT writer alluded to) but more Lawyers involvement will only slow everything down and cost consumers more with no guarantee of ridding the world of the Sharks!

  • http:// says:

    Despite the earlier assertion that Quensland’s Office of Fair has given approval to a private company’s form of real estate contract, this is not the case. In fact five years ago this OFT release came out:

    “Fair Trading seeks public views on residential property contracts (24 January, 2003)

    T

    he Office of Fair Trading has invited the public to tell it what buyers and sellers want included in a new standard contract for residential property sales.

    Fair Trading Minister Merri Rose today said OFT would conduct a short survey to obtain people’s experiences and views concerning real estate contracts.

    “Independent research undertaken for the Office of Fair Trading late last year indicated that a number of real estate buyers and sellers did not seek independent legal advice because they believed the standard contract available already had all their interests covered,” Ms Rose said.

    “These beliefs are not matched by the reality and while no one should make such assumptions about a contract, particularly without reading it, I believe we can improve the contract considerably.”

    Ms Rose said OFT had convened a working party comprising the Real Estate Institute of Queensland, Queensland Law Society, Legal Aid and Queensland Consumers Association to improve the current standard contract document.”

    Nothing eventuated from this bold exercise in contract improvement because the working party never actually got around to any work.

    But things can move slowly when consumer protection is concerned. This was issued only last month from OFT:

    “The Office of Fair Trading is currently undertaking a survey of the fairness of terms and conditions used in standard form consumer contracts. We are inviting businesses to provide copies of their standard contract terms and conditions to inform our research.

    If you would like to participate or require further information contact Martin Skorka on 07 3119 0022 or martin.skorka@qld.gov.au before 31 January 2008.”

  • http:// says:

    By the way, the Queensland Law Society no longer has any reponsiblity for disciplining errant solicitors. That function was removed from it some three years ago and given to the Legal Services Commissioner.

    I played a public part in achieving that change as the following ABC-TV’s 7.30 Report transcipt shows:
    http://www.abc.net.au/7.30/content/2002/s662264.htm

  • My name is Sean Black, and to be transparent, I’m a real estate agent in Beenleigh, Queensland. http://www.seanblackproperty.com

    1) Agents stuff contracts up all the time, and solicitors are left to fix the problem.

    2) However solicitors take 3,4,5 days to prepare contracts. This is not fair on buyers or sellers (gazumping, buyers losing initial interest, no certainty and a 30 day contract becomes a 35 day contract).

    3) Perhaps the answer is to have intense and increased training requirment for Agents.

    I believe the REIQ has been agitating for an increase in the training requirements for agents for a long time. The government responds with a yawn!!! Can you believe that? The industry wants to have a high entry level and the government says “Nah, your level of general incompetence is amusing enough and provides public servants plenty of work in our complaints section, why would we bother doing the paperwork.”. mmmmmmm.

  • Hi Sean, and welcome aboard.

    I will address your points 2) and 3).

    Regarding point 2):

    Lawyers often find that clients want something done “yesterday”. This simply raises the question, “If you wanted it done yesterday, why didn’t you contact us yesterday instead of today?”

    What’s wrong with taking a few days to prepare a contract? See the article titled “Quick Section 32 Vendor Statements” in our Downloads section, or click on this link: http://reic.com.au/files/default.aspx and you will get an idea of the problems lawyers have when estate agents create a false sense of urgency.

    I say that it’s a false sense of urgency because there is no need for urgency in a real estate transaction when you are a vendor. Purchaser want a quick deal so that they are not beaten by competing purchasers, and estate agents want a quick sale that the vendor will not change agents. (We have also experienced estate agents wanting a quick sale because another agent in the same office has a purchaser who may pay more, and the first agent doesn’t want to lose the selling commission!)

    It is real estate mythology that a purchaser who cannot sign a contract immediately will buy something else. This truth in such circumstances is that the purchaser doesn’t really want the property, and the estate agent hopes to slam him into a contract before he has a chance to collect his thoughts. (This becomes a problem for the lawyers when “buyer remorse” inevitably sets in post contract.)

    Regarding point 3):

    The only training estate agents need is to be made to understand that when an estate agent has an interest in a sale taking place (any sale at any price will realease that 3% commission) a conflict of interests arises if the same estate agent purports to “represent” or “negotiate on behalf of” either the vendor or the purchaser.

    The estate agent should simply direct interested parties to the vendor’s lawyer, who will then negotiate on behalf of the vendor with the lawyer who represents the purchaser. When the properly advised vendor and purchaser are happy, the estate agent will be happy.

    End of lesson.

    Regarding the increasing of training requirements for estate agents, I have a really simple solution. Make all estate agents conveyancers! The result will be a situation where an estate agent acting for a vendor cannot have direct communication with a purchaser, and similar for the purchaser’s estate agent.

    The estate agents would actually carry responsibility for the legal well-being of their individual clients, and there would be no more “conditioning”, “crunching”, “nudging” “contract switching” etc. etc. And the industry would not attract those with a PT Barnum mentality (Barnum is credited with the maxim “Never give a sucker an even break and never wise up a chump”.

  • http:// says:

    The comments below come from the website of a Brisbane solicitor:

    My basic point is this – Real Estate Agents should do what they are good at and Lawyers should do what they are good at.

    As a Lawyer, I am not skilled and experienced at identifying potential buyers for a property, matching those buyers to properties, effectively marketing a property to a buyer, and leading that buyer to the point of making an offer to purchase the property.

    As a Lawyer, experienced in property law, I am skilled and experienced at clearly and concisely documenting the terms of a contract of sale in order to protect the legitimate interests of the parties to it.

    Preparing a contract for the sale and purchase of land is never as simple as completing blanks in a standard form contract.

    Let me give you some recent examples that have come across my desk:

    1. There is a section in the standard form contract titled, “Encumbrances” which is usually completed “Nil”. Exceptions are rare, eg. when there is a registered easement over the property. That easement is then noted in this section by a specific reference to the easement document. Otherwise, the buyer wants to be sure that when they buy the property there will be no other encumbrances that they have not been made aware of

    Despite very clear notes on standard contracts that this section should be completed “Nil” contracts still come into our office with this section completed, “None known to Seller”. What does this mean? The buyer is now in a situation where their lawyer has to seek to have the contract varied during the cooling off period and bear the cost of doing so.

    2. When a contract is subject to finance it is common practice for Real Estate Agents to complete the finance amount as “Sufficient to complete”. What does this mean? Again this is uncertain and results in a need for the buyer to engage their lawyer to seek to vary the contract after it has been signed during the cooling off period and bear the cost of doing so.

    “Well that’s what the cooling off period is for”, I hear you say. True. However, there is a “small matter” of 0.25% penalty being charged to the buyer if they terminate the contract in reliance upon cooling off. On a $500,000.00 purchase this amounts to $1,250.00. Not a “small matter” for most buyers. I therefore ask the question, are Real Estate Agents are really preparing contracts for free?

    There is an urban myth that if a contract is sent to a Lawyer for comment or checking prior to it being signed that the Lawyer will bog the matter down and make everything far more complicated than it needs to be. This is not my experience. My experience is that most Lawyers turn these matters around very quickly (normally within a matter of hours) and are highly commercial and practical in the advice that they give.

    A Lawyer, just like a Surgeon, will be able to look at something that appears to be pretty standard or benign on the surface of things and know what risks might be lying just beneath the surface. We insist that our moles and other skin blemishes be examined by a Medical Practitioner with specialty in identifying what appears to be ok on the surface of things on the basis that it may in fact be hiding something far more sinister. Equally, we should not be entrusting the examination and completion of what appear to be fairly benign and standard documents to those who are not specifically trained in carefully considering them and making sure they are appropriately drafted. After all, the purchase of a home is a very significant transaction. Additionally, in the event that the person who is doing this for you makes a mistake you want to know that they have some insurance to cover you for your loss and damage.

    What’s the solution?

    There are a number:

    1. Real Estate Agents should stick to what they do well and let Lawyers do what they are trained to do (preparing and advising on contracts);

    2. Lawyers should stop bagging each other and charge appropriately for pre-contractual advice that they give. (Do Real Estate Agents perform their service for free on next to nothing? No).

    3. Practically, many contracts are prepared after hours or on weekends when lawyers are simply not available to consider and advise on those contracts. The penalty for the termination of a contract under a cooling off period has to be removed. It is truly then a cooling off and advice period.

  • http:// says:

    Me again. Readers of these comments might be interested in this concise report and alternate view-point on the Bligh government’s back-flip (from the website of another Queensland solicitor):

    “On 14 December 2007 regulations were gazetted relaxing the tighter restrictions and penalties imposed by the Legal Profession Act 2007 on persons practising law by preparing land contracts. Last year’s legal clampdown was the subject of a previous posting on this website: Agents may only fill in details. Once the implications of the new law, effective 1 July 2007, had percolated through real estate agent and property lawyer circles there was observable arousal and agitation. As it turned out, there was no appreciable enforcement action or change in behaviour, especially after an assuring e-mail from the REIQ to its members. The government has now acted as though to clarify its legislative drafting to remove an unintended effect and maintain the established practice of real estate agent contract drafting and formation.”

  • http:// says:

    All is not lost, at least in the commercial property world. Must say how chuffed I was to receive the following completely unexpected note earlier this week from a Richardson & Wrench Commercial Agent:

    “Good afternoon Tim, Just a quick thank you for looking after Keith and Theresa…with the sale of their property at…Marsden. I have tried to contact Keith last week but they were out, I will try to chat to them this week to say thank you to them also for their trust in myself and our company. Thanks Tim I will chat soon.Kind regards, Peter Coleman.”

  • We all love you Tim… don’t you get notes like that all the time?

  • http:// says:

    The legal obligations on Queensland real estate agents (when dealing with customers/buyers as opposed to clients) set out below most likely apply by statute or common law elsewhere across Australia.

    Section 15 of Queensland’s statutory Code of Conduct (for real estate agents) provides that a real estate agent must not engage in high pressure tactics, harassment or unconscionable conduct in the conduct of a real estate agency practice.
    These examples of harassment are given:

    1.Using, or getting a third party to use, threatening or intimidating language or behaviour towards a client or customer.
    2.Engaging in conduct that would make an ordinary person feel unwillingly compelled to comply with an agent’s request or demand.
    An Example of unconscionable conduct given is:
    Taking unfair advantage of an agent’s superior bargaining position relative to a client or customer.

    Section 25 of the Code is more specific:
    1. A real estate agent must ensure a customer is aware the agent is acting for the client.
    2. A real estate agent must not induce or allow a customer to believe that the agent is acting for the customer.
    3. A real estate agent must warn a customer, as soon as possible, that any information disclosed to the agent may be disclosed to the agent’s client.

  • Hi Tim,

    Any idea as to what was contemplated as “an agent’s superior bargaining position relative to a client or customer”? Turning over a few rocks in this little garden should see some interesting little issues scuttling out into the daylight!

  • http:// says:

    Tim
    If the Real Estate agent is also a lawyer, what are the legal requirements he has towards ‘the Buyer’ as a Lawyer?

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