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In a strong property market often we hear stories from clients where they have bought “off the plan” having been told that – given the rising market – they should expect substantial increases in value before the contract is due to settle. Perhaps the strong gains over the past year have been pointed out, and the clients have been told that if they sign a contract today at (say) $1M, then by the time the building is complete in two years the unit should be worth at least 10% more, so in effect they are getting a $1.1M unit for $1M. We have had matters where that sort of thought process has led to clients buying units off the plan, thinking that they will be able to almost 100% finance the purchase price, by the time that settlement comes around. Unfortunately – while there have been strong increases in value for many Gold Coast properties – this sort of rising market does not tend to last forever and high rise units in particular are prone to substantial fluctuations in value. This can translate to banks being more conservative with lending on the product. Further, a challenge arises in “off the plan” contracts because the “subject to finance” condition will usually have to be satisfied within three to four weeks of the contract date when settlement might not occur for over two years. The approvals lapse, and when the time to settle comes around the lending policies might have changed, the market might have fallen (ahem….”corrected”) leading to lower valuation, the buyer might have lost his job or had some other misfortune, any of which could lead to finance being declined. What next? Well generally trouble, as the contract is no longer subject to finance. If settlement does not occur and unless there is a basis to terminate the contract, then the buyer is in breach. It could lose the deposit, have to pay interest on the purchase price, and be responsible for losses. As an example, in 2007 some buyers agreed to buy a unit in Oracle Tower 1 for $1.01M. They paid a $101K deposit. They did not settle when the building was finished in 2010. Damages in favour of the seller were assessed at $428,483.50 on top of the deposit of $101,000 which was lost. So all up, and excluding the seller’s legal costs, the buyers were obliged to pay almost $530,000 – over half of the price of the unit that they did not buy. South Sky Investments Pty Ltd v. Luppi [2012] QSC 27 Caution should be exercised in entering contracts and making long term commitments, unless there is certainty that external events will not turn it into a disaster.

Often clients will want their lawyer to act as the executor of their will. While most lawyers honestly and faithfully act in that capacity, unfortunately there have been a number of instances where the conduct of the lawyer has left much to be desired. Generally when a lawyer is appointed to act as executor, it is when there is no close family member able to carry out that role. That can lead to a lack of oversight and accountability, particularly where there is no co-executor. It can also mean that lawyers’ rates are being charged for a lot of basic work, such as sorting through possessions and mail. These situations can give rise to overcharging. In a recent matter, we acted for a client making a claim to the Law Society fidelity fund to recover quite significant overcharges made by a lawyer in the administration of an estate. Of over $42,000 charged by the lawyer and deducted from money paid into the lawyer’s trust account in the estate, over $30,000 was accepted to be in excess of an appropriate fee, and this was compensated by the fund. In other words, over $42,000 was charged for work accepted to be worth around $12,000. Our wills and estate lawyers recommend that there are two executors if it is intended to appoint a lawyer as one. For further information, look at our page https://qbmlawyers.demo2.website/estate-lawyers-gold-coast/who-should-be-the-executor-of-my-will/

Plenty of people are in the current market, and in doing that they sign an appointment to act. But before doing so it is important to check the terms of the appointment. Under Queensland’s Property Occupations Act, agents have to have a written appointment before performing services for the seller, in the absence of which they may lose their entitlement to commission. The form of appointment is Property Occupations Act Form 6 which is a form available from the Queensland Government website. The form provides for the appointment to be one of a listing for a particular service, an open listing (other agents can be appointed), a sole agency (the appointed agent is the only agent but the seller can sell), or an exclusive agency (the agent is the only agent and is paid commission even if the seller sells). It is important to know what sort of appointment is proposed, and what the consequences are. For agents, the holy grail is an exclusive agency with or without an auction, and generally after the exclusive agency ends the appointment will provide for an open listing. Many any agents add terms to the form which are also signed by their clients. Most often those terms are in a form produced by the Real Estate Institute of Queensland, and called “Essential Terms and Conditions”. Those terms and conditions contain a number of provisions for the benefit of the agent and which should be examined by sellers and possibly deleted. As examples, the terms: (a) require the owner to pay commission if the contract is terminated due to the default of the seller (eg if the mortgagee will not release); (b) require the owner to pay commission if the contract fails and all or part of the deposit is liable to be forfeited – even if that is less than the commission; (c) require the owner to pay commission if the contract is terminated by mutual agreement – even if the buyer clearly cannot settle; (d) contain warranties as to the condition of the premises and indemnities in favour of the agent from claims in certain circumstances, even if the owner is not at fault. These sorts of forms are often signed without the owner reading them carefully or understanding the risks, and often without the owner appreciating that certain provisions can – and should – be removed. For advice concerning appointments, please contact Peter Muller at peterm@qbmlaw.com.au.