Search results matching tag 'Finance'

The Finance Approval Minefield

Peter Mericka — Thu, 02 Oct 2008 01:33:00 GMT

by Shannyn Hunter
Conveyancer shannyn@lawyersconveyancing.com.au
Lawyers Conveyancing

Anyone who has dealt with the banks for a home loan will tell you about their battle scars with pride. Simply securing finance approval can be a frustrating and baffling task. An anxious purchaser can be kept waiting for finance approval because the valuation has been delayed, the vendor has gone overseas, the valuation has been done but your documents are being processed, your broker is on leave, your call is important to us...

It is best to ensure that the finance condition in the contract allows ample time to secure finance approval, because the unexpected happens.

With the right information, the naive purchaser can arm themselves against the common mistakes people make when buying a home and securing finance.

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Latest "Clayton's" Finanace Approval Letter

Peter Mericka — Sun, 15 Jun 2008 20:13:00 GMT

by Tim O'Dwyer M.A., LL.B
Solicitor
Consumer Advocate
watchdog@argonautlegal.com.au

This latest "Clayton's" finance approval letter is hot off my fax machine.

Last year I reported on an upbeat broker’s keenness to show me that my clients’ finance had been “approved” - by way of a copy of a letter from the lending bank confirming that the loan application had been “Unconditionally Approved.” (see: Clayton's Finance Approval (The Approval You Have When You Don't Have Approval)).

Responsible conveyancing solicitors warn their buyer clients not to get too excited about such Clayton’s approvals, and to hold off on notifying finance approval to their sellers until they see all the lender’s terms and conditions – and are satisfied with the total deal.

Hot from my office fax machine, is a recent and not very different Clayton’s finance approval letter headed “Unconditionally Approved”. Needless to say, my clients will be advised not to make their purchase contract “unconditional” as to finance until they receive, consider and accept the lender’s “formal offer” with “ALL the terms and conditions of the loan”. Follow the link to read the letter advising "Unconditionally Approved".

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The "Oh", "Really?" and "I Wish I Had Known That!" of Making an Offer and Organising Finance

Shannyn Hunter — Wed, 23 Jan 2008 22:55:00 GMT

by Shannyn Hunter
Conveyancer shannyn@lawyersconveyancing.com.au
Lawyers Conveyancing

On Monday morning purchasers can experience a real estate hangover. After a weekend of elation at finding their dream house and pressure from the agent to make an offer, with hesitation they sign on the dotted line and their concerns about legal advice are pushed aside. They are locked into a contract. Unfortunately, the emotive attachment that causes you to buy a property can also cause you to forego certain protections when you make your offer.

SPECIAL CONDITIONS

Give yourself a way out.

A precisely worded finance condition can give you a way out if, despite your best efforts, your finance is rejected.

One of the worst situations is telling a client, who doesn't have a finance condition and can't get finance, that they will have to come up with the money for settlement somehow.

Specific pest and building inspection's special conditions can stop you being saddled with a property that requires expensive repairs. To protect the purchaser a building inspection special condition should be to the purchaser’s satisfaction, not simply for major structural defects. Legal advice before you sign can assist you in wording special conditions effectively.

Don't let the agent word them for you.

I'm worried when a purchaser says that they relied on the agent to word their special conditions.

Last week a client came to us for help after he had trusted the agent to word a building inspection special condition for him. A subsequent building inspection uncovered building works were needed to the tune of $20,000. When he approached the agent to end the contract, he was stunned to find that the agent was unwilling to assist him in using that same special condition to end the contract. The agent was even angry at the purchaser for daring to end the contract after making the proper investigations.

Ask your solicitor about the proper wording of special conditions during the pre-contract advice process.

For more information click on the link to view the entire article on the Lawyers Conveyancing Website.

Great Rate, With A Terrible Headache

Shannyn Hunter — Wed, 28 Nov 2007 03:43:00 GMT

by Shannyn Hunter
Conveyancer shannyn@lawyersconveyancing.com.au
Lawyers Conveyancing

Imagine my client’s glee when he received pre-approval for a loan to buy his first home. The broker had found him a low rate - he hadn’t been able to borrow enough from the major lenders - and had promised the world.

Fast forward three months, and he’d missed several days of work to satisfy the banks requirements, and was at risk of losing the property twice due to the broker’s lack of knowledge, adequate explanation and inability to deliver on what they had promised. Settlement happened on time but only after firm words and welcome intervention from the bank after they were informed of the broker’s incompetence.

With a bit of research and a lot more in terms of customer service this could have been a far less stressful process. In general, non-major lenders can offer a cheaper interest rate, but the price consumers pay are the extra hurdles to leap before the bank will provide funds at settlement. A great deal is yours as long as you know what to expect and how to avoid mini-catastrophes.

So where did my client go wrong and how can it be avoided? Click on the link to see how on the Lawyers Real Estate Website.

Non-Standard General Conditions

Peter Mericka — Thu, 14 Jun 2007 02:55:00 GMT

by Peter Mericka B.A., LL.B
Real Estate Lawyer
Qualified Practising Conveyancer Victoria
Director Lawyers Real Estate Pty Ltd

At Lawyers Conveyancing we check a lot of real estate contracts as part of our pre-purchase legal advice service. Recently we have seen an increase in the number of contracts where the General Conditions have been changed so as to render them non-standard.

An alarmingly common trend is to change the standard finance condition so that the purchaser has no time beyond the finance approval date to cancel the contract. We noticed that estate agent Ian Reed, had been imposing a similar condition on consumers some time ago, and this was discussed in an article titled Estate Agent's Finance Clause.

The most recent example is the contract prepared by Williamstown's solicitors John Anile Pty. The contract contains a full set of Special Conditions (so-called because they are not standard). However, an unsuspecting purchaser or purchaser's legal representative may not pay enough attention to the General Conditions of the contract to notice that the clause giving the purchaser two days to end the contract has been removed from the standard finance condition.

Continue reading "Non-Standard General Conditions"

Lousy Advice Can Be Costly

Peter Mericka — Tue, 01 May 2007 05:41:00 GMT

Consumers are again warned about "throw away" legal advice from estate agents.

A client of ours has just called to ask whether the estate agent was correct in advising him to sign a Contract Note, even though the date for payment of the deposit expired 4 days ago!

The helpful estate agent advised our client that the deposit payment date would not matter, as the vendor would understand. (According to the client, the estate agent didn't want to "deface the contract" by changing the neatly printed details.)

PROBLEM: The finance condition stipulates that in order to end the contract due to failure of finance, the purchaser must not be in default under any other condition of the contract.

OUR ADVICE: The deposit must be paid by the due date, as failure to pay on time constitutes a default. In other words, if he had followed the estate agent's advice, our client would probably have lost his finance condition, and would have to proceed with the purchase whether he had finance or not!

Always get proper legal advice before signing anything.

Cunning Commission Clause

Peter Mericka — Tue, 01 May 2007 04:57:00 GMT

by Tim O’Dwyer M.A., LL.B Queensland Solicitor & Consumer Advocate watchdog@argonautlegal.com.au

Buyers default, seller still "liable" to agent.
A young home-seller had to change solicitors when a problem arose on his sale. Apart from the same solicitor having acted for both parties, the issue was simple: the buyers could not settle on time. They would be delayed because their bank was refinancing another property as part of its financing of this one.

Although finance was approved and all special conditions satisfied, a week’s extension was needed. But the seller would not agree.

Nor did he have to. The parties had signed a contract with a fixed settlement date – and time was "of the essence".

"What can I do?" the seller asked his new solicitor.

"If you are ready to settle on the due date," the solicitor replied, "you can hold your buyers in breach of contract, terminate and forfeit their deposit."

The solicitor had one nagging doubt. Could the agency, which sold the property, still claim commission? When asked for a copy of his listing agreement, the client produced a 20-page bound booklet. On the cover were these questions: Why? When? Who? Where? What? How? How much? These exclamations: Excellent! Thank you! This explanation: "Some questions answered because ‘real estate is about people not houses’"; The familiar picture of a girl and teddy; L J Hooker’s logo and slogan "Nobody does it better".

Continue reading "Cunning Commission Clause"

Estate Agents & Home Loans - Conflict Of Interests?

Peter Mericka — Mon, 30 Apr 2007 05:12:00 GMT

by Peter Mericka B.A., LL.B Real Estate Lawyer and Qualified Practising Conveyancer Victoria Lawyers Real Estate

Ask any estate agent who they work for, and they will readily identify the vendor as their client. Ask the same estate agent about any duty owed to the purchaser, and the response "caveat emptor" (buyer beware) is blurted out faster than the answer to an easy question on a TV quiz show.

But ask the estate agent whose interests are being served when a purchaser is referred to a mortgage broker of the estate agent's choosing, and the response is not as quick.

We noticed this advertisement from a mortgage broker, and wanted to know why the mortgage broker would be advertising to estate agents, rather than to consumers. We also wanted to know why the mortgage broker would be offering $1,000 per head to the estate agent, rather than offering this incentive to potential borrowers.

Most importantly, we wanted to know whether the mortgage broker had any concerns about the conflict of interests involved, considering that the estate agent is paid a commission by the vendor to bring about a sale. Would the mortgage broker protect the interests of the purchaser as against those of the estate agent (for whose assistance the broker is paying $1,000) and the vendor? How do the broker and the estate agent deal with the issue of illegal secret commissions?

We put these questions to Mark at Pro Home Loans.

Continue reading "Estate Agents & Home Loans - Conflict Of Interests?"

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Estate Agent's Finance Clause

Peter Mericka — Mon, 30 Apr 2007 01:41:00 GMT

by Peter Mericka B.A., LL.B Real Estate Lawyer and Qualified Practising Conveyancer Victoria Lawyers Real Estate

Consumers should take care if they find that this estate agent's "Conditional On Finance" clause has been inserted into the real estate contract.

Ian Reid is a Melbourne estate agent whose "Ian Reid Vendor Advocacy Australia" website boasts:

"Ian Reid’s career in real estate spans almost 30 years...Over those years, many thousands of clients have come to rely, time and time again, on Ian’s advice, profound real estate knowledge and warm, personal approach.Within the real estate profession itself, Ian has also come to be recognised as an accredited trainer and coach. Ian’s focus has been directed at both individuals and real estate corporations across the country, in delivering new age marketing strategies designed to improve the real estate industry standards."
We have previously discussed Mr. Reid's "Gazumping Clause", but now we have discovered his "Conditional On Finance" clause. And it's awful!

We believe that the Ian Reid "Conditional On Finance" condition has the potential to set the purchaser up to fail, by increasing the likelihood that the purchaser will breach the contract.

In such a situation the most likely winner would be the estate agent, whose chances of taking a commission from a forfeited deposit are greatly increased.

Continue reading "Estate Agent's Finance Clause"

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Long Overdue: Regulation Of Finance & Mortgage Brokers

Peter Mericka — Mon, 30 Apr 2007 01:32:00 GMT

by Tim O’Dwyer M.A., LL.B Queensland Solicitor & Consumer Advocate watchdog@argonautlegal.com.au

It has been almost two years since the release of the Ministerial Council of Consumer Affairs’ Discussion Paper detailing options for a national regulatory scheme for finance and mortgage brokers.

On Monday this week ABC Radio’s The World Today programme reported on what it described as “the miserable and sad end of the property boom in some Australian cities.”

Easy money and climbing interest rates had combined to deliver unprecedented rates of mortgage foreclosures, amid stories of locked-out homeowners and thousands of others hovering on the brink of losing their dream. One Western Sydney real estate agent spoke of loans being pushed: “You've got your no docs, your low docs…if you've got bad credit, don't worry, come and see us, all those things.

And we're seeing quite a few where the people just shouldn't have been borrowing the amount of money that they've borrowed.”

Continue reading "Long Overdue: Regulation Of Finance & Mortgage Brokers"

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