Archive for category: Leverage Review

My mates at Fair Trading used to say to me “You were once a respected Administrative Lawyer, you’ve now become a celebrity who represents Real Estate Agents”.  Harsh comments from my previous colleagues, but I always respond ….. “the one thing I can promise you about real estate is that every day I get up and go to work, I learn something new”. 

This article is dedicated to the God Academus, who has provided me with new learning in the areas of Contract execution.

For many years I have taught, as have others, that no one can execute a Contract for Sale of Land except the entity purchasing or a person holding a Power of Attorney, on behalf of the purchasing entity. 

However, an incident occurred about eight weeks ago which caused me to reconsider my view. 

A solicitor arrived at an auction, advising that he was going to bid and sign on behalf of his client.  The auctioneer conducting the auction raised his concerns in regard to how a solicitor might execute the contract on the persons behalf without a power of Attorney, but because he was a solicitor, the auctioneer acquiesced, and the solicitor duly executed.  The solicitor provided them with a copy of a section under the Conveyancing Act 1919, that supported his position. 

By the way, I write this article well and truly after the contract has settled, in case of any questions about the validity of execution of the contract.

Section 23C of the NSW Conveyancing Act 1919 states:-

CONVEYANCING ACT 1919 – SECT 23C

Instruments required to be in writing

23C Instruments required to be in writing

(1) Subject to the provisions of this Act with respect to the creation of interests in land by parol:

(a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by the person’s agent thereunto lawfully authorised in writing, or by will, or by operation of law,

(b) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by the person’s will,

(c) a disposition of an equitable interest or trust subsisting at the time of the disposition, must be in writing signed by the person disposing of the same or by the person’s will, or by the person’s agent thereunto lawfully authorised in writing.

(2) This section does not affect the creation or operation of resulting, implied, or constructive trusts.

(3) For the purposes of this section, a requirement for writing may be satisfied in electronic form and a requirement for writing to be signed may be satisfied by electronic signature.

What a lot of gobble! What it did seem to say, is that a land dealing can be executed by a person who is the agent of, or acting on behalf of the person, who obtained the benefit of the land.

This wasn’t enough to make me feel any better.  I therefore reviewed the parts that related directly to residential conveyancing in NSW.

Section 52A of the Conveyancing Act 1919 states that a vendor must produce a contract in writing which contains a number of prescribed forms.  Section 54A of the same Act states the contract must be executed on or “on behalf of” the vendor and the Purchaser.  Yes, I would prefer that it simply said any person who is authorised to sign on behalf of another, can sign the Contract for Sale, but it does not.

After reviewing Section 23C and 54A, we are firmly of the view that a person who is authorised in writing to execute a Contract for Sale on behalf of another, can execute that contract.

This means that: –

• Bidders at Auctions can be authorised to execute the Contract on behalf of the Purchaser.  The bidder’s authority could provide the authority for such power; and
• A person can sign a private treaty contract on behalf of another provided a written authority can be provided.  This can simply be a note provided by the prospective purchaser.

Although the provisions of the legislation don’t provide it, we don’t believe there is any problem with the purchaser executing the authority to exchange, to bind the contract.  Due to the person given power to execute the contract under the Conveyancing Act 1919, the person is given the power to bind the parties to an agreement.  Hence, by signing the authority to exchange, they have agreed to the binding of the purchaser to the agreement to purchase the property.

This does not allow any person to sign a Transfer on behalf of the vendor.  A transfer on behalf of the purchaser can be signed by a Solicitor or the holder of a Power of Attorney, and these provisions do assist Solicitors in finalising the conveyancing process.  This is good news!  Agents will be able to change their bidder’s authority to allow the person signing the bidder’s authority to authorise the person to execute the contract on their behalf.

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

To get in touch with Bailey, please email info@leveragegroup.com.au or call 1300 438 538

Cooling Off Period for Agency agreements

Very few people know that after you sign up a Real Estate Agent, a prospective Vendor or Purchaser has a 24 hour cooling off period (ie. until 5pm on the working day).  This means that, if you change your mind immediately about your agent, you can get out of the agreement. 

In all states of Australia, an agent is not entitled to their commission unless they sign a contract with their Vendor.  The Contract is referred to as different things in different states and jurisdictions but can normally be referred to as Agency Agreement or Agents Authority.  For our purpose here, we will refer to it as an “Agency Agreement”.

In NSW and ACT, Agency Agreements come with a cooling off period.  The legislation in NSW and ACT state that any Vendor (Principal) can withdraw from an Agency Agreement, up to 5pm the next working day, including Saturdays.  There needs to be no reason for pulling out, just that the consumer wants to.

How do you do this?

• Write a letter merely stating that the Vendor (Principal) wishes to rescind the Agency Agreement in question; and
• Send it by fax, email or hand deliver it.

This Cooing Off Period is printed on the front of all Agency Agreements, but owners seem to never read this particular area.  You are also given a Consumer Protection Guide in NSW and ACT, however, equally, no one appears to have time to read all the documentation.

Presently, Leverage is looking after an owner who did not read the Agency Agreement or Consumer Protection Guide. 

The person talking to the Agent held a Power of Attorney, representing their parents.  An Agent came in to do an appraisal of the property and presented an Agency Agreement.  Without reading it, the holder of the Power of Attorney signed the Agency Agreement and left it with the Agent. 

After talking to the family, the holder of the Power of Attorney was convinced not to proceed with the specific Agent.  On the same day as executing the Agency Agreement, they rang the Agent and said they did not wish to proceed with the Agency Agreement.  The Agent said, “that’s okay, I wouldn’t force you to stay with me when the family doesn’t agree”

The holder of the Power of Attorney went on to ask, “is there anything else I need to do, to terminate the Agreement?” – to which the agent responded, “No…this telephone call is enough”.

The holder of the Power of Attorney appointed another agent and the property subsequently sold. 

The first Agent has now fronted up and said that you sold the property whilst we had an Exclusive Agency Agreement in place.  You therefore need to pay us the commission under our Agency Agreement.

The Agent who did no work, was aiming to rely on their Agency Agreement as a means of getting paid for doing nothing.  Worse still, were this to occur, it would not void the second Agency Agreement and the owner may end-up being liable to pay double commission.

Whether the first agent is successful or not is one thing – but, what is far more pertinent, is that it could have been avoided, if the owner had known about the cooling off period and had given notice in writing.

Remember, you have until 5pm on the next working day to relieve yourself of an agent!  It must be done in writing and cannot be done orally.

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

To get in touch with Bailey, please email info@leveragegroup.com.au or call 1300 438 538

We have now reached the one hundred and seventh day of the year.  How quick have we reached the first pit stop! I blinked after Christmas, and Easter is here.

Once upon a time, Easter was on the calendar as a holy festival for Christians.  These days, its just a pit stop from the hustle and bustle of Australian business life.  And what a pit stop!  It starts on 19 April and ends on 28 April.  Running on the back of Easter, we have Anzac Day and another weekend.  Leverage’s commitment to family has meant that we have determined to shut our office down on 26 April, so our staff can have two long weekends and to celebrate Easter and Anzac Day.

Easter seems to represent two completely different perspectives; on one hand, it’s just a holiday for most, but for others, it represents a solemn and important day on the Christian calendar.  This is so reflective of modern society.

The week leading up to Christmas on the sporting news, we had two individuals which stand out over all others; First we have had a person who has appealed to the Federal Court regarding being stood down with full pay while his criminal proceedings occur.  Secondly, we have a man who has committed no act of violence against any person but has made an inappropriate post which has insulted certain parts of our society.

For the sports, it is the issue of brand.  There is no conversations of values or standards which should be set by those people who are in those organisations, but whether the conduct itself affects the brand.  Both the possible criminal and the insulter have been deemed to affect the business brand of their various codes and have been stood down.  As an employer, if a person in our business did something to affect our brand, we would have no hesitation dismissing them.

Two things have stood out during this debate;

1. Talk back radio has been filled with conversations regarding both the activities.  Most of them, however, have been regarding the post by the greatest try scorer in super rugby history.  No-one has gone to his defence, believing his career should be wiped out for life.  On the other hand, notwithstanding the gravity of the offence, society is split regarding whether the rugby league player should be stopped whilst being heard in the Court.  Somebody said to me the other day, “the world has gone mad where the person who harms is defended and the person who comments inappropriately is vilified!”
2. Although Easter and Christmas are holidays to celebrate Christian festivals, most take it as a holiday.  I note there is no discussion regarding the relevance of these holidays in Australian society whilst we wish to rid ourselves of Australia Day.  If we are secular and the Christian calendar is no longer relevant, should Christmas and Easter therefore be a public holiday?  Public holidays are meant to celebrate a purpose which is important to society; if it is no longer important, it should be treated as a normal day and the holiday be dispensed.  Interestingly enough, I see no requests by any other religion or any of the doom day???  Regarding Christianity about getting rid of the holidays; any excuse for a holiday!

Easter Sunday is supposed to represent a resurrection.  Forgiveness of our sins and a pathway for renewal.

Let’s hope for all of us Sunday brings a renewal and positivity to life.  Let’s hope that the business, health and family Gods smile on all of us on Easter Sunday and we are all revitalised.

From us here at Leverage, we hope that everyone is revitalised, and you have an excellent and safe Easter.

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

To get in touch with Bailey, please email info@leveragegroup.com.au or call 1300 438 538

If you haven’t heard of the amendments to the Residential Tenancies Act 2010 (RTA), which will give tenants a free pass from obligations under the Residential Tenancies Agreement, you must have been hiding under a rock. On 28^th February 2019, a tenant who is a victim of domestic violence will be able to terminate a Residential Tenancy Agreement immediately without penalty.

The amendment provides that a person who is a victim of domestic violence, including their child, is immediately released from their obligations under the Residential Tenancies Agreement without penalty provided that:

1. The victim serves on the Landlord/Agent the termination in the prescribed form;
2. The domestic violence is proven by attaching one of the following:
3. Evidence of a conviction by the perpetrator;
4. An injunction from the Family Court of Australia;
5. An interim or permanent apprehended domestic violence order against the perpetrator;
6. A letter from a Medical Practitioner setting out that the person is a victim of domestic violence.

Fair Trading has produced a fact sheet setting out all the requirements that relate to the amendment. All landlords or agents should carefully read this notification. Link

Governments should protect weaker parties against violence, the threat of violence or the fear of violence. Those who are truly the victims of domestic violence should be able to remove themselves from points of danger immediately.

The intentions behind this legislation are completely valid. Unfortunately, two things often happen with this type of legislation:

• It always goes too far and provides too many leniencies;
• There is always punishment inflicted on the innocent party, that being the landlord.

Apart from some flaws in the limitations in the attached documents, persons who hold convictions, injunctions or apprehended domestic violence orders, is sufficient evidence for a person to be released from the point of danger. The medical practitioners however create an extraordinarily low bar; provided the practitioner signs the standard prescribed form that requires only two things, the person has a free pass from obligations under the Residential Tenancies Agreement. Those two things are:

• The Practioner has consulted with the victim;
• The victim appears to be the victim of domestic violence.

To place faith in the profession which is been found guilty of freely prescribing drugs which cause addiction, is tempting fate. There is always a doctor who will complete a form that gives the tenant what they seek. Remember, domestic violence is not just about committing an act of violence; it’s about threat, abuse, intimidation or offensive behaviour. This particular part of the legislation will become a field day for the professional tenant.

Spare a thought for the landlord who relies on rent to pay the mortgage for often their largest investment. For some strange unidentifiable reason, governments believe that the only persons who own an investment property are those who are wealthy. Many of these properties are bought by self-funded retirees and rely on the income to fund their retirement. Taking away that ability will place the pressure back on the government purse to fund the persons retirement. These circumstances may lead to the punishment of an innocent landlord who has done nothing wrong. The victim can leave without penalty, the co-tenants who haven’t perpetrated the offence have a two week grace period, the co-tenants can apply also to terminate the agreement, and the perpetrator is left to pay the rent.  If a prudent agent how has determined a person’s capacity to pay the rent as being the accumulation of the income of all the tenants, are suddenly left with a person who is incapable of paying the rent, ultimately, the perpetrator will be punished by falling into arrears and being terminated under the Agreement.

There are many more view points that we can have regarding the defects with this regulation but opposing it or becoming disgruntled does not assist our landlords. The industry needs to get its shit together and find a way to best defend your landlord.

A couple of things we need to do before the 28^th February 2019;

1. Inform your Landlords; considering the impact on the landlord, you need to provide advice to your landlords regarding the new legislation. It is our suggestion that you send them a copy of Fair Trading publication so that Fair Trading becomes the carrier of bad news and not yourself. The moment the new laws commence, we believe that people will move immediately to take advantage of these new laws. Don’t leave yourself open to an influx of termination notices before you appraise your landlords of the problem. By advising your landlord, it shows that you are across the issues.
2. Malicious injury; Leverage had cause last year to speak to a non-bank mortgagee who provides 100% finance. His advice is that, there were no more defaults at 60% loan value ratio to 100% loan value ratio. He said however, their greatest problem was in family law disputes. He said that where a relationship broke down and led to a mortgage not being paid, considerable damage was done to the property. What this information provides to us is that, where there is domestic violence, usually becomes malicious injury to the property. It is important that all property managers check the landlords insurance policies to ensure that they have malicious injury cover. If some of your landlords don’t, you should suggest rent cover insurance; Leverage has attempted to make contact with a number of landlord rent cover insurers regarding ADVO terminations. EBM aka rent cover are the only ones who have written back to us regarding clear information. EBM have identified that they have an ADVO option and this could be selected by your landlords. We suggest two things:
   a. You contact your insurer to identify whether they have ADVO cover and how it is taken up;
   b. Advise all your clients to take up the ADVO option.
3. Application forms; although the legislation prevents the recording of ADVO terminations and/or giving out information regarding ADVO terminations, there is nothing stopping a prospective agent from seeking information regarding whether a person has ever terminated a Residential Tenancies Agreement on the basis of an ADVO termination. The question could be;
   • Have you at any time in the past two years terminated a Residential Tenancy Agreement on the basis of an Apprehended Domestic Violence?

You are not certain of everyone replying accurately, but it is an attempt to protect your Landlord’s interest.

4. Tenant Ledgers; Staff should be trained in reading a Tenants Ledger. It can become very clear from a tenants ledger that monies, which were normally paid on time, suddenly weren’t paid at all. One of the questions that can then be posed to an agent is whether the penalties under the Residential Tenancy Agreement were ever chased. If you receive a negative answer, you’ll know why.
5. Termination; when receiving a termination notice from a victim of domestic violence, you could have a form in your office which essentially acts as an acknowledgment, and the form should include the following:
   • Name of the DVO
   • Name of the Perpetrator
   • An acknowledgment that they have terminated under the Domestic violence provisions of the Residential Tenancy Act 2010
   • A confirmation that all co-tenants and the perpetrator have been served with notices of the Residential Tenancies Act.
6. Special conditions; We have considered a number of different options for special conditions to be included in the Residential Tenancies Agreement. We see no value in any special conditions that will assist the landlord. Please note that, it is dangerous to include any special conditions because at this stage, we don’ know how the landlord insurers are going to deal with the domestic violence. Before developing any special conditions we need two things;
   a. Determine how big the problem is;
   b. See how the insurers deal with the DVO’s.

Before the critic’s get to me about not supporting these laws, I want to reiterate:

We agree with the domestic violence amendments!

We don’t agree with a doctors certificate, which can be obtained too easily by persons who are not victims of domestic violence!

Irrespective of this view point, these rules are here to stay and we must adapt to them to manage an effective rent roll.

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

To get in touch with Bailey, please email info@leveragegroup.com.au or call 1300 438 538