Forums / Getting Technical / Legal & Accounting / RE Agent Lodges Caveat for Commission!

2019 Money Magnet Symposium - Discover how to make, and keep, more money and achieve a financially empowered future
Viewing 15 posts - 1 through 15 (of 15 total)
  • Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,173

    Someone sent me a link to this interesting article by Peter Mericka:

    Conveyancing Consumer Alert – Beware of the Sneaky Stamp!
    http://www.lawyersconveyancing.com.au/news/conveyancing_240_the_sneaky_stamp.asp

    My Summary:
    – Agent selling the property place a "sneaky stamp" on his Sales agreement with the vendor
    – The sneaky stamp contained a clause which allowed the agent to place a caveat on the property if his commission wasn't paid.
    – With one sale the amount held under the deposit was not enough to pay the agent's commission in full
    – As a result the agent demanded payment before settlement or at settlement
    – Cheques had already been drawn
    – So agent lodged a caveat on the day of settlement!

    Check out the article for a pic of the stamp. You would have needed a magnifying glass to read it!

    http://www.lawyersconveyancing.com.au/news/conveyancing_240_the_sneaky_stamp.asp

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of v8ghiav8ghia
    Member
    @v8ghia
    Join Date: 2005
    Post Count: 871

    Unbelievable Terry. Must admit though, that while I have had good experiences with some agents, some should be quite simply jailed. The three worst experiences I have ever had, which include ambiguous contracts, deposit issues, and blatant dishonesty (requiring commissions as 'deferrred advertisign levies' once the sale period has expired and they have not sold the house and their sales agent has put in writing that they don't apply)  all have 'First National' in their title, whether in VIC, NSW, or Tassie………although I'm sure it's a coincidence! ;-)

    Cheers

    Profile photo of Scott No MatesScott No Mates
    Participant
    @scott-no-mates
    Join Date: 2005
    Post Count: 3,847

    Hi Terry,

    thanks for the heads up. A couple of points though: would it not be in the interests of the agent to have negotiated that the purchaser provide a deposit equal to (or more than) the selling commission?

    Aren't the rights of agents protected by the provisions of the contract of sale eg: where the agent is not the deposit holder? Otherwise it would raise a little grey area of where the solicitor is the deposit holder but not privy to the sales agreement and rate of commission payable to the agent, would it not?

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,173

    Hi Scott
    Yep, many agents insist on getting a deposit large enough to cover their commissions, but really it would be up to the vendor to decide.

    Not sure about the rights of the agent being protected though. Did you have any particular clause in mind?

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of colinnewlandcolinnewland
    Participant
    @colinnewland
    Join Date: 2006
    Post Count: 128

    I would ensure that you instruct your REA (in writing) that EVERY $ offered be accepted as a deposit (just $1 is all that is required to show 'consideration') to form a finding contract )once you 'accept' the 'offer'.
    If the REA forces a buyer to pony up 10% deposit will proberbly frighten the buyer away, especially if they are making several offers at a time (with the intention to go with the first one accepted).
    The first home I purchased, I held with a $10 deposit.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,173

    Its not in the vendor's interest to accept less than 10% deposit. If the purchaser doesn't settle they then have to go to the trouble to sue the seller and then extract the money – which they may not even have.

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of colinnewlandcolinnewland
    Participant
    @colinnewland
    Join Date: 2006
    Post Count: 128

    OK, accepted….so why not include a clause in the REA contract that the "commission is due and payable within 24 hours of settlement"; = no settlement, no commission.
    This should ensure that he REA agent moves the deal long to closure ASAP as only then will they be entitled to any commission.
    Any other clause would have the effect that a REA would be entitled to their commission once the contract is accepted, even if their is a 6 month deplay in settlement which (for a variety of reasons) may never be settled on that buyer. 
    Without a 'settlemt' clause, it would also have the effect that a REA would be entitled to a commission on any subsequent sales contract should the first one fall over.

    Profile photo of Scott No MatesScott No Mates
    Participant
    @scott-no-mates
    Join Date: 2005
    Post Count: 3,847
    colinnewland wrote:
    This should ensure that he REA agent moves the deal long to closure ASAP as only then will they be entitled to any commission.
    Any other clause would have the effect that a REA would be entitled to their commission once the contract is accepted, even if their is a 6 month deplay in settlement which (for a variety of reasons) may never be settled on that buyer.

    The agent is generally paid upon settlement when the purchaser's solicitor provides the 'order on the agent' to account for any interest earned (if joint account was required) and to release the deposit held less any costs/commission back to the vendor. So if there is a delayed settlement, then the payment of commission is also delayed. It is not the role of the agent to ensure that the buyer is going to settle (the vendor's conveyancer/solicitor does this) however the agent would generally still engage with the buyer to ensure they were aware of the progress towards completion.

    colinnewland wrote:
    Without a 'settlemt' clause, it would also have the effect that a REA would be entitled to a commission on any subsequent sales contract should the first one fall over.

    From memory, there is a clause with regard to commission (on recission of contract in the cooling-off period) but there is no enforceable clause for payment of commission on sales which subsequently fall over or fail to complete.

    Profile photo of Scott No MatesScott No Mates
    Participant
    @scott-no-mates
    Join Date: 2005
    Post Count: 3,847
    Terryw wrote:
    Hi Scott

    Not sure about the rights of the agent being protected though. Did you have any particular clause in mind?

    I was thinking along the lines of (ref REINSW SA00200) Agent's Remuneration Cl 3 ii) & vi)

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,173

    Scott,

    What is the current version of the standard contract? I only have a 2005 version here, with cl 3 relating to vendor duty.

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of Scott No MatesScott No Mates
    Participant
    @scott-no-mates
    Join Date: 2005
    Post Count: 3,847

    It would be the most recent/current version but I dare say the clause wouldn’t have changed a great deal over the years.

    Profile photo of MickhardmanMickhardman
    Member
    @mickhardman
    Join Date: 2011
    Post Count: 1

    Peter Mericka is preaching double standards. Lawyers for years have been securing their fees by using caveats. Family law is a classic example. The instance why some agents are using a caveat is to secure their commission in the event a deposit is not held by the agent. It's not about the amount they charge, rather getting paid at all.

    On another matter Peter Mericka is currently up on charges from Consumer Affairs. If found guilty he and Lawyers Real Estate in Melbourne would have fleeced nearly $1,000,000 in fees he wouldn’t be entitled to. Time will tell with the alleged criminal charges. See the link below.


    http://www.theage.com.au/business/property/lawyer-sued-over-flatfee-housesale-work-20100921-15lhg.html

    Profile photo of peter@lawyersrealestate.com.au[email protected]
    Member
    @peter-lawyersrealestate.com.au
    Join Date: 2008
    Post Count: 3

    Mick Hardman, please get your facts right. I am not “up on charges” at all. Consumer Affairs Victoria (CAV) is fighting a “turf war” in order to protect the monopoly currently enjoyed by real estate agents. According to CAV only a licensed real estate agent is permitted to negotiate the sale or the purchase of real estate on behalf of a client. This is a clearly ludicrous assertion, and one that was soundly dealt with nearly 10 years ago in Canada (see http://www.lawsociety.bc.ca/docs/publications/reports/RealEstateActSubmission.pdf).

    CAV has asked the Supreme Court of Victoria to make declarations on the role of the lawyer, and are seeking injunctions to prevent my firm Lawyers Real Estate from doing what CAV has permitted it to do for nearly a decade.

    Your suggestion that there are criminal charges involved is clearly defamatory, and you should now publicly withdraw that imputation.

    As for lawyers using caveats to secure fees, I have no knowledge of that and I do not support it. Having said that, the issue regarding the sneaky stamp is that it was attached to the real estate agent’s Exclusive Sale Authority in circumstances that made it unlikely that the client would see it our enquire about, and this is why the issue was raised.

    Profile photo of Scott No MatesScott No Mates
    Participant
    @scott-no-mates
    Join Date: 2005
    Post Count: 3,847

    Peter, as far as I can tell, in NSW at least, the PSBA requires anyone who acts/purports to be a rea to hold a licence.
    Why? Bureaucracy!? Even a degree qualified valuer can’t transact property.

    Profile photo of peter@lawyersrealestate.com.au[email protected]
    Member
    @peter-lawyersrealestate.com.au
    Join Date: 2008
    Post Count: 3

    Scott, that’s where the naivete lies in this industry. I don’t purport to act as a real estate agent. I am a lawyer doing what lawyers did before legislation in the 1920’s invented real estate agents, and what they are still entitled to do.

    Just to make the point as simple as possible, a doctor can give a patient an injection without having to be a Registered Nurse. Similarly, a real estate agent can upload information to the internet, prepare contracts and negotiate sale terms without having to be a licensed real estate agent. To this day Consumer Affairs Victoria has been unable to nominate a single task I undertake as a lawyer who assists clients to sell real estate for which I must hold a real estate agent’s licence. Do I need a real estate agent’s licence to order a “For Sale” board?

    For too long we have watched people whose “real” job is selling mobile phones or white goods come into the industry to “have a go at selling real estate” and then to puff themselves up as real estate professionals. And then as soon as times get tough, they head back to what they do best (hence the Financial Review’s revelation that 10,000 real estate agent have left the industry – they’re not unemployed, they’re just doing what they did before they had a go at real estate.

    As a property lawyer I do all of the heavy lifting in a real estate transaction, preparing sale documents, providing legal advice to parties, telling the real estate agent what s/he can or can’t do, and then fixing up the dumb mistakes the real estate agent has made so that the sale can proceed to settlement.

    Now, tell me again, why do I need a real estate agent’s licence?

    And to finish off, I can declare that I hold a full real estate agent’s licence which was granted to me on the basis of recognition of prior learning as a property lawyer. I choose not to use it. Why? Because it’s as useful to me as a first aid certificate is to paramedic!

Viewing 15 posts - 1 through 15 (of 15 total)

You must be logged in to reply to this topic.