This article is from the Australian Property Journal archive
Queensland’s Courier Mail has been reporting on the latest over-priced property marketeering scams. Solicitor and consumer watchdog Tim O’Dwyer reveals more.
“The trouble with lawyer jokes is that lawyers don’t think they’re funny, and non-lawyers don’t think they’re jokes”.
The disturbing trouble really is that no one much loves lawyers and people have now become less trusting of this once honourable profession.
Yet one guileless group of non-lawyers has shown an amazing faith in lawyers, particularly certain conveyancing solicitors.
This group consists of novice property investors who come to Queensland on weekend “wealth creation” trips after being cold-called and seminared back home. Most find out only much later they were scammed into overpriced properties.
No investment excursion is complete without a visit to your scammers’ recommended solicitor. Only hours before their return flights, these trusting souls are invariably taken to after-hours solicitors who assure these new clients their door-stops of contracts and other documents are safe to sign.
The Beattie government has tried to protect vulnerable residential consumers by requiring sellers’ agents to disclose their relationships with solicitors they recommend. Similarly conveyancing solicitors are legally obliged to certify how independent they are. Solicitors must use an “approved form”, explain to clients its “purpose and nature” then disclose business, family or other relationships with anyone involved in the sale.
The consumer-protective thinking is that informed buyers might reject an arrangement where solicitor and recommender have a cosy relationship.
Sadly, I have seen too many interstate buyers still with only absolute trust in pet solicitors they hurriedly saw to finalise townhouse, unit or house-land package purchases.
Not too long ago Adelaide couple, John and Carlene Whitmee, made a quick, marketeer-organised overnight visit to the Gold Coast. They returned home having signed for an off-the-plan, one-bedroom unit at Miami. While the agent revealed a “business” relationship with a recommended solicitor, the solicitor certified no relationship. Whitmees, in the euphoria of buying their little piece of Queensland, failed to notice this contradiction. Afterwards they felt “pushed” and “hurried”, and were “rushed” to the solicitor to sign.
Fortunately they picked up a Gold Coast Bulletin in passing. At home they checked real estate adverts before belatedly investigating comparable properties. A Robina agent inspected their unit’s construction site for them, and reported: “The property is worth on its best day $200,000.00 and more likely would be worth $170,000 – $190,000.”
Whitmees, who were paying a whopping $276,900.00 for this dud, desperately contacted the Queensland Law Society. With my help they soon sacked the solicitor, and canned the contract.
“Clearly you have not been able to give us independent advice,” they wrote to him. He replied that he had spent a great deal of time advising on contractual rights and obligations and his “position in relation to the matter, them and others.” “Sadly”, he remarked, “we clearly did not form the relationship of trust and confidence I thought we had …”
Details of Whitmees’ experience went to Fair Trading (which had previously made marketeering raids on the solicitor) and to the Legal Services Commissioner. He will be interested, no doubt, in evidence this solicitor gave to the Consumer and Commercial Tribunal regarding his regular referral relationship with a convicted marketeer.
Barely a month before Whitmees’ experience, Robert and Cecelia Headrick were marketeered in from Sydney. The selling agent arranged their pre-return-flight-after-hours consultation with another Gold Coast solicitor. Headricks happily signed for a $235,000 off-the-plan unit but did not spot that the agent disclosed a “business conveyance” relationship, yet the solicitor certified complete independence.
After later accessing consumer advocate Neil Jenman’s website Headricks became very nervous. Jenman steered them to me, and the deal was quickly killed.
Again details went to the Legal Services Commissioner and Fair Trading to whom this solicitor’s former partner had already given an enforceable undertaking to comply with the law on certifications of independence.
More than 4 years ago the Law Society warned conveyancing solicitors: “A consistent referral source from a seller’s agent to buyers who do not have their own solicitor, may remove your ability to confirm genuine independence.” Fail to disclose your lack of independence, added the Society, and your indemnity insurers might decline clients’ subsequent compensation claims. The Law Society was not joking because litigation lawyers say insurers are now doing just that.
By Tim O’Dwyer*
Tim O’Dwyer is a Queensland solicitor and consumer advocate watchdog@argonautlegal.com.au.
