by Tim O’Dwyer M.A., LL.B
Real estate consumer protection goes west as a result of a convoluted dog’s breakfast amendment to the law, according to Tim O’Dwyer.
Linda Lavarch MP noticed two Legal Aid lawyers sitting in the public gallery during a recent session of State Parliament. “They had tears in their eyes as the Attorney rose to speak,” she later told her parliamentary colleagues before explaining how these lawyers saw firsthand the misery caused by payday lenders’ interest rates. It was understandable, she said, that lawyers brought to tears by clients’ stories would be emotional over Attorney-General Kerry Shine’s Consumer Credit and Other Acts Amendment Bill which would limit the lenders’ charges.
Any conveyancing lawyers present would have also wept – less with joy over this long-overdue action, and more with despair over the betrayal of real estate consumers by the Bill’s unrelated amendment of Section 24 of the Legal Profession Act 2007.
While the Bligh government was effectively giving a green light to legally unqualified estate agents to continue to prepare legally binding contracts, the weepiest moment came when the Attorney-General said the amendment gave “certainty” to agents and solicitors regarding their “roles and responsibilities” within property transactions. Yet Mr Shine was aware of the inability of most agents to properly prepare contracts because his office had been briefed with examples of agents’ contractual recklessness, incompetence, ignorance and illiteracy.
The only “certainty” is that agents will continue to control the contracting process.
Last October on this page I revealed how Section 24, in reserving legal work to lawyers, had since 1st July 2007 exempted and restricted the contract preparation role of agents to filling in details in preprinted documents. Agents could apparently no longer lawfully add clauses, conditions or annexures to contracts. Conveyancing solicitors, who trouble-shoot agents’ contracts, jumped for joy.
Then in January this year, I blew the whistle on how former solicitor Shine had succumbed to real estate industry lobbying with a regulation retrospectively overriding Section 24 and giving agents a get-out-of-jail-free card. Parliament’s Scrutiny of Legislation Committee subsequently found it arguable that the regulation conflicted with fundamental legislative principles and was invalid at common law.
No worries. This transitional backflip on consumer protection has now become, with the unreserved blessing of parliament, a statutory backstab. The convoluted amendment of Section 24 spells out – like a Marx Brothers movie script – how agents (and their employees) are not unlawfully “engaging in legal practice” if they prepare or complete a property contract or other document in the “ordinary course of business undertaken generally” by real estate licencees. A “property contract” means, incredibly, either “a form of contract or agreement generally recognised and accepted for use” by agents or one “previously prepared” by a lawyer.
Any agent may also lawfully prepare or complete a contract/document by “inserting information in a blank space”, as well as by inserting or altering a “term” if this is “authorised” or “given in writing” by a party to the proposed contract/document. Or if a lawyer previously prepared the insertion or alteration. No worries provided an agent “does not change the insertion or alteration except in relation to changing a detail about the transaction … or crossing or leaving out an alternative, or changing the grammatical form of words, of the insertion or alteration.” An agent need not take legal advice before anything is changed, crossed or left out.
Similarly, an agent need not ensure that anything authorised or supplied by a party was drafted for that purpose by a lawyer, or that any property contract was actually prepared by a lawyer. Finally, an agent may insert or alter a previously lawyer-prepared term “whether or not” it was prepared “in connection with” the particular contract or document. Phew, what a dog’s breakfast!
The good news is that agents must still, by law, give consumers a “genuine opportunity” to obtain independent legal advice before signing anything. Few agents comply with this obligation which the Office of Fair Trading rarely enforces. The better news is that Section 24 now clearly prohibits agents “giving legal advice in relation to a property contract or other document”.
When it comes to clinching an exclusive listing or closing a sale, will old persuasive habits die hard? Any agent’s explanation – however simple, qualified, or helpful – of any form, clause, contract or document will be in breach of the law. The “no legal advice” disclaimers now appearing on contracts may carry little weight with the Legal Services Commissioner who, rather than Fair Trading, will police agents’ “illegal” advices. Best agents’ advice? “Don’t sign this until you see your solicitor.”
Meanwhile, despite the Attorney-General’s tear-jerking “certainty” assurance to Parliament, his office subsequently informed me he was aware of complaints about agents’ contract preparation and “drafting deficiencies”. Nevertheless he saw “benefits in continuing the long established practice of allowing real estate agents to prepare or assist in filling in contracts.” A “major” benefit? “The avoidance of significant delays and additional costs in the sale process.”
What a crock, Kerry! The truth is that any benefits will be for commission-hungry agents whose “drafting deficiencies” will continue to cause consumers’ delays, costs and uncertainties.