Contract Note
If properly prepared by a lawyer who represents the vendor or the purchaser, the Contract Note can make the sale process quick and simple.
Unfortunately, this simple alternative to the full Contract of Sale of Real Estate is easily manipulated when it is used by a
person whose goal is to achieve a sale, rather than to protect a client.
Here's what can happen when the Contract Note is put into the wrong hands:
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It prevents the Vendor's own lawyer from protecting the Vendor from the agent.
A lawyer's duty is to protect the Vendor client, and this is often done by the insertion of conditions into the Contract. These conditions draw the Purchaser's attention to obligations the Purchaser is to assume, or matters for which the Vendor will not accept responsibility. If an estate agent has to deal with a comprehensive Contract, it means that the agent must read it and understand it. It also means that a Purchaser may wish to seek legal advice about it. By using the simple one-page Contract Note the agent simplifies matters - for the agent. (The agent is
always out of the way when the problems arise after the sale has been finalised).
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It allows the agent to prevent the Purchaser from obtaining proper legal advice.
Most agents will not let the Contract Note out of their sight. The Purchaser will be required to attend at the estate agent's office to "make a written offer" and the estate agent will complete the Contract Note then and there - and have the Purchaser sign it. If the Purchaser wants to obtain legal advice before signing, the agent will explain that there is no point, because it is such a simple form. If the Purchaser insists, the agent will hand the Purchaser a blank form, so that the Purchaser feels a fool. (We have had numerous instances where a Purchaser client has attended at our office for advice, and when we have contacted the agent for a copy of the Contract Note, the agent has arrogantly faxed us a blank form.)
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It allows the agent to destroy the Contract of Sale prepared by the Vendor's lawyer.
If you go into the office of any conveyancing lawyer in the State of Victoria and ask if they have ever experienced a case where an estate agent has destroyed the lawyer's carefully drafted Contract of Sale and replaced it with a Contract Note, you will hear an angry "Yes" from every one of them. Why does this improper practice persist? Because the regulating bodies have too many other complaints to deal with, and they suggest that it is a matter for the Vendor to take up with the agent after the event.
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It allows the agent to decide what conditions will or will not appear in the Contract.
Because the estate agent has possession of the Contract at all times until it crystallizes to become a binding Contract, the agent has the opportunity to "advise" or otherwise persuade or dissuade either party from "complicating matters" by inserting or changing conditions.
Amazing as it may sound, very few people every seek legal advice until after the Contract Note has become a binding Contract.
If you would like further information about dealing with the Contract Note, please feel free to contact us for more information. |
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