Buying and selling property is a serious business – why do many people take the ‘cheap option’ when it comes to making sure they are properly protected?
There are so many things that can go wrong with a sale or a purchase contract for property in both Queensland and New South Wales. Although the states sit side by side, the conveyancing process in each state is completely different. Regardless of which state you are in, you face the same risks when you buy or sell property. It is simply a matter of whether you are prepared to engage lawyers who act exclusively in property matters and have the experience and expertise to protect your investment.
Many people pay in excess of $1,000 each year to insure their cars but are uncomfortable paying lawyers slightly higher than this amount to have the security of knowing that their property sale or purchase is being handled professionally and with the correct advice. Quite often the value or purchase price of the property involved is well in excess of $500,000 and, in many cases on the Gold Coast, the properties are sold for in excess of $1 million. Despite the fact that there is a large price tag attached to the value of the property that you are buying or selling, for some reason consumers believe that this transaction is “just paperwork” or that it can be done cheaply by a small conveyancing legal firm or (worse), a cheap conveyancer!
Although conveyancers are licensed to practice in New South Wales, they have no right to act in relation to Queensland matters (it is against the law for them to act in conveyancing matters within the state of Queensland). In addition to this, we believe that they do not hold professional indemnity insurance for acting in Queensland matters. The other downside of using a conveyancer is that if something goes wrong with the contract involving legal issues, they cannot continue to act in the matter and must send you off to a real lawyer!
Although you may think we have a vested interest in telling you this, we have no hesitation in confirming that you should use a qualified lawyer to act in any property sales or purchases in both Queensland and New South Wales. In many cases the real estate agent will recommend a lawyer or conveyancer who will “do it cheaply“. Perhaps this ploy is to take the attention away from the very high amounts of commission that they charge on the sales or they may even think that they are doing the right thing by the parties in having someone do it cheaply for them. However, it is our experience that, in many cases, this could lead to a conflict of interest in that the lawyer or conveyancer will not want to offend the real estate agent who has referred the work to them.
In addition to this, we understand that there are some local real estate agents who recommend cheap conveyancers to act on behalf of both parties in the transaction as a means of reducing costs. This is a clear conflict of interest and it is impossible for someone acting for both parties in a transaction to effectively ensure that each party’s interests are protected. If you are ever recommended to have a conveyancer act on behalf of both sides in a transaction, you should immediately seek independent legal advice.
Some things that can go wrong in conveyancing transactions:-
- Purchasers who falsely attempt to terminate the contract on the basis that their finance has not been approved (they have the letter of approval but simply don’t want to go ahead with the purchase) – sometimes you need to get tough with them to ensure that they comply with the contract and threaten court action for specific performance;
- Purchasers attempting to either terminate the contract on the grounds of an adverse pest and building inspection, or attempting to use this as leverage to have the sale price reduced for relatively minor issues in the report. Buyers can only terminate under the pest and building if there are substantive issues and that it is reasonable in all of the circumstances. In too many cases, the party’s representatives do not insist on the buyer complying with the contractual provisions. Knowledge of the case law surrounding this issue is an important part of advising the clients properly in relation to this area of law;
- Adverse issues that affect a property that come up in searches – once again this requires experience and knowledge of the possible matters affecting the property in order for the clients to make an educated decision in relation to whether they proceed or not. Some things that affect the property are significant matters going to the title of the property or other issues impacting (e.g. resumptions for main roads, railways etc.). Once again, it takes experience and knowledge of the relevant case law to properly advise the clients so that they can make a valid decision in relation to whether they proceed with the contract or not. In some cases the issues affecting the property are not sufficient to warrant termination of the contract;
- Complying with time of the essence deadlines in the contract and making sure that you are ready to settle on the due date. This comes down to the capacity and organisational skills of the lawyers involved. Unfortunately, many of the cheap conveyancing firms do not have enough staff to cope with the volume of work that they are doing (it usually follows that if it’s too cheap it’s too good to be true!). If you use a recognised legal firm with appropriate staffing and resources to handle your matter properly, there will always be a qualified person who can ensure that your matter is being handled properly and in a timely manner;
- Knowing your rights when there is a critical event in the contract process. If something crops up that enables one of the parties to terminate the contract, you need to know that you are obtaining the right advice in relation to the decision that you make. This could be crucial in relation to any court proceedings that follow and your liability for legal costs and other issues. You do not want to be dragged into a dispute if you are “in the wrong” – this could be a catastrophic outcome for you if you take the other party to court and lose. We have a dedicated commercial litigation department which can offer timely and correct advice to clients immediately. If you were using a smaller conveyancing firm or licensed conveyancer, they would be simply unable to offer this service to you and you would need to be referred to a proper lawyer.
The upshot of this information is simple – don’t skimp on your buying and selling of property by using a cheap law firm or conveyancer. Protect your investment properly and be comforted in the knowledge that you are receiving the right advice and that your interests will be protected. Using a good lawyer to act on your behalf in your property transactions is a good insurance policy – make sure you take out that insurance!
You are welcome to contact our office with any enquiries concerning property and commercial advice. Please contact our Property and Commercial Department Managers, Jess Kimpton on direct line 07 5506 8402, email [email protected] or Andrea McGarry on direct line 07 5506 8242, email [email protected] Please click here to access our team brochure with details of our professional staff.