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In Check Issue 43 (June 2009)

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Clean up your contracts
Letters of demand require caution
Probate online advertising system
Conveyancers now have authority to receive payment on behalf of vendors
2009 Risk Management Intensive

 

Clean up your contracts

In tough economic times purchasers look to get out of hastily entered purchases and scour the documentation to find a way out. Will your contracts stand up to that sort of scrutiny?

While the current economic climate has not yet had a substantial effect on most of the property market there may still be a more significant downturn to come. It is therefore a good time for practitioners to
review their standard contracts of sale and other precedents like rescission notices.

Practitioners have told us that they have seen contracts of sale of real estate where the special conditions still refer to Table A instead of the general conditions in the contract itself. There have also been instances where rescission notices refer to the wrong clauses in the contract. 

Practitioners have also reported that the new form of sale of business contract under the Estate Agents (Contracts) Regulations 2008 is not being completed properly. In one example, the condition section of the particulars of sale contained a generic reference to all of the general and special conditions in the contract. This is not how the particulars were intended to be completed. Reference only to specific conditions precedent or subsequent, like the requirement for a trial period or a subject to finance clause, should be included in the particulars of sale section. Referring to all of the general conditions arguably makes the contract a nonsense, because general condition 2 requires all conditions referred to in the particulars to be satisfied two business days before the completion date or the contract is terminated.

Take the time now to review your precedents and avoid the angst of a later claim.

 

Letters of demand require caution

In this current economic climate practitioners will no doubt be receiving more instructions to recover debts for clients as well needing to take steps to recover their own fees. We remind practitioners that they need to be careful not to ‘overstep the mark’ and risk allegations of misleading or deceptive conduct, undue harassment or coercion by reason of the wording of their letters of demand.

A common complaint concerns solicitors’ letters of demand that threaten proceedings against the debtor unless the debt and the legal fees are paid. This is misleading as creditors are not entitled to have their legal fees paid in order for the original debt to be extinguished. Section 21 of the Fair Trading Act 1999 (Vic) sets out a list of conduct that is deemed to be undue harassment or coercion. This includes making false or misleading statements about the consequences of not paying a debt or the method of recovering a debt. The LIV Letters of demand guidelines provides precedent letters for practitioners to avoid this imputation. It is available at www.liv.asn.au/regulations/ethics/about/ethics-Letters.html

Practitioners should not allow their firm letterhead to be used by other organisations, such as debt collection agencies. To do so exposes the firm to unnecessary risk and to allegations of undue harassment or coercion under section 21 for ‘use of letterhead which is liable to mislead the person to whom the letter is sent as to the identity, status or role of the person who used the letterhead’. See Guidelines for debt collection – Debt collection and the Fair Trading Act 1999 published by Consumer Affairs Victoria and available on their website at www.consumer.vic.gov.au and follow the links ‘credit & debt’ to ‘dealing with debt’ and then ‘debt collection’.

In 2005 the ACCC and ASIC jointly released a revised version of the Debt collection guideline: for collectors and creditors (the guideline), which explains how Commonwealth consumer protection laws relevant to collection of debts apply. In May 2009 the ACCC and ASIC published a report on Debt collection practices in Australia. The paper summarises major issues identified by the ACCC and ASIC during information gathering activities undertaken in 2008. The paper aims to promote further discussion among consumers, industry and regulators and calls for responses by 30 June 2009.

Practitioners are encouraged to read the above guidelines, particularly those who do not regularly practice in the area of debt collection but occasionally act for clients in recovering debts. This will ensure you do not inadvertently breach the various consumer protection laws.

 

Probate online advertising system 

Practitioners have expressed some concern to us that many practitioners may not be aware of the new dual advertising arrangements for probate matters.

From 2 March this year advertisements of an applicant’s intention to apply for Probate and Administration could be advertised on the new probate online advertising system found at https://online.justice.vic.gov.au. A dual system of advertising either on this website or in newspapers will continue until 1 September 2009. By 2 September 2009 all advertising will have to be on the website.

The search facility allows practitioners to search by day or a period of time up to 12 months, and within that time frame there is an optional search by postcode, suburb, town or first or surname. 

Practitioners who practice in the wills and estate area should remember to check the online advertising as well as the local newspapers until 2 September 2009.

 

Conveyancers now have authority to receive payment on behalf of vendors

In issue 32 of In Check we drew to your attention the case of Clarey v Permanent Trustee Co Ltd [2005] VSCA 128. The case confirmed that at common law a vendor’s solicitor does not have authority to receive payment on behalf of the vendor and that section 69 of the Property Law Act 1958 (Vic) confers that right on solicitors and bankers but not on ‘conveyancers’. The consequence was that when dealing with conveyancing companies acting for vendors, solicitors were advised to insist on an itemised list of cheques signed by the vendor not the conveyancer. The Conveyancers Act 2006 Vic (‘the Act’) has changed that position. Schedule 2 of the Act made a consequential amendment to section 69 of the Property Law Act to include conveyancers as having authority to receive payment on behalf of vendors. ‘Conveyancer’ is defined in the Property Law Act to mean a licensee under the Conveyancers Act 2006.

This means that purchasers’ solicitors can accept a direction from the vendor’s conveyancer as to what cheques are required at settlement but only if the conveyancer is licenced under the Act.

 

2009 Risk Management Intensive

It is nearly that time of year! LPLC’s annual Risk Management Intensive will again run on a choice of three dates to suit your calendar. They are:

A brochure and registration form will be e-mailed or sent to you soon and will also be available on our website. Join our e-mail database to receive your brochure and registration form early.