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Dishonest agents exploiting legal loophole

16 June 2016 Reporter

Unscrupulous operators within the real estate industry are benefiting from “outrageous” property laws that benefit sellers and agents rather than buyers, according to a petition to the Queensland government.

Current property laws in Queensland allow vendors and agents to exploit “non-disclosure” and sell fundamentally flawed properties to unsuspecting buyers, according to Trish Mackie-Smith, the owner of a property inspection company who has a background in property law.

With support from Kate Jones, her local MP, Attorney-General Yvette D’Ath and the Queensland Law Society, Ms Mackie-Smith is seeking immediate “sweeping positive changes to the entire real estate industry and conveyancing law practices in Queensland”, which she says will have “a dramatic yet necessary impact on the property industry and sub-industries in the interest of justice”.


Ms Mackie-Smith said the current regime is based on the ‘buyer beware’ principle, which is “fundamentally unjust”.

“It is astounding that it has been left untouched to wreak havoc for so long,” she said.

“This law causes immeasurable financial hardship to buyers who have no respite if they buy a house that has defects. Many buyers do not even get building reports to save money or because they think they don’t need to. Even worse for those buyers who do – these are only visual inspections – it is easy for dishonest sellers to cover up these issues so they are undetected.

“It is outrageous that the most important and most expensive purchase in our lives is not covered by consumer protection laws,” Ms Mackie-Smith said.

The petition is seeking to switch the onus back onto agents and vendors, in the interests of protecting buyers.

“The winners in this current legal loophole are the sellers and some dishonest real estate agents, who can get away with non-disclosure. It leads to dishonesty and unscrupulous practices so that the sale gets through regardless of structural defects,” Ms Mackie-Smith said.

New owners then have no legal recourse and are left facing a “financial nightmare because of the outdated doctrine”, she said.

“Only in the ACT and recently in the UK have new laws replaced the ‘buyer beware’ principle, obliging the seller to disclose structural defects etc. or face criminal charges.

“Why is it that you must provide a roadworthy certificate when you sell a car; however, when you sell a defective yet expensive house, no such warranties need to be provided?”

The proposed changes include one set of reports per property, rather than multiple reports for different potential buyers. The end buyer would then reimburse the vendor for the cost of the report – “this saves the buyer money as they don’t have to pay for a report if they do not buy”, Ms Mackie-Smith said.

This is not the first time Queensland property laws have come under the spotlight in recent months, with Kosma Comino from LJ Hooker Sunnybank Hills recently telling REB that even though state laws restrict agents from giving buyers a price guide to an auction property, a number of agents are “still falling into the trap of talking price”.

By doing so, not only are they breaking the law, Mr Comino said, they also risk turning “an emotional buyer back into a logical buyer” by making it about the numbers, instead of the emotional drive to secure the property.

[Related: REIQ slams new foreign investor surcharge]

Dishonest agents exploiting legal loophole
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