Dangers of cheap conveyancing – a cautionary tale
Pip Davis, an experienced property solicitor, cautions against using cheap conveyancers for property transactions.
Why would a buyer skimp on legal advice when so much effort and care has gone into choosing and financing a property? Unfortunately, many underestimate the importance of proper legal advice for several reasons.
Firstly, buyers often do not understand the potential legal problems that can arise from a property transaction or a poorly drafted contract.
Secondly, the conveyancing process can appear deceptively simple to outsiders, leading to the belief that it’s “just paperwork”.
Thirdly, the industry is rife with cheap, conveyor belt conveyancers who promote the idea that a property transaction can be carried out with proper due diligence but ‘on a budget’ which defies common sense.
In reality, conveyancing contain a significant amount of risk for a buyer; Queensland is a “buyer beware” jurisdiction meaning a buyer has limited rights and must do their own research before they buy. There are many technical steps that must be taken to ensure a buyer is protected and progress a matter through all of the stages of the conveyance.
Some real estate agents encourage buyers to use cheap conveyancers as they want to settle a transaction as quickly as possible to collect their commissions. For them, the less checks, balances, and conditions, the better. They want the contract to settle, regardless of any issues with the property that the buyers may have to live with.
Some conveyancers even pay referral bonuses to real estate agents to guarantee the agent refers to them.
Cheap conveyancers save costs by:
- skipping important searches – Searches are a buyers only way of being satisfied with what they are buying and are an essential part of the process;
- using inexperienced or underqualified staff – a paralegal cannot give you legal advice, only a solicitor can;
- getting clients to complete steps of the conveyancing process themselves; or
- skipping certain steps altogether.
If there is a problem, cheap conveyancers may not inform the client, as they do not want to lose the transaction or have their fees compromised by it not settling. They want the matter to settle with a minimum of fuss, thanks to their low fees, which is why agents like using them.
Another risk is that cheap conveyancers may act for both parties in a transaction with the knowledge and support of some agents.
This is a serious conflict of interest and can endanger a client’s ability to obtain clear title to their property.
Additionally, some conveyancers may be licensed to work in one state but regularly conduct conveyancing work in another state, which is against the law and raises doubts about their professional indemnity insurance coverage.
In Queensland only a solicitor is able to give legal advice – we do not have licenced conveyancers! Solicitors must abide by the Conveyancing Protocol, which has strict guidelines to protect client’s interests in a conveyancing transaction, but bootleg conveyancers operating from NSW in Queensland are not obligated to observe the same Protocol.
Lastly, licensed conveyancers in NSW cannot give legal advice. If a problem arises in the transaction requiring advice about breach of contract or termination, they cannot act further, and the client must see a real lawyer if that happens which can end up costing twice as much!
When buying property, it can be tempting to cut corners and choose a cheap conveyancer, but this can be a costly mistake.
A conveyancer’s mistake can result in a collapsed contract, a dud buy, or even complete financial ruin. In some cases, expensive litigation is necessary to resolve a commercial conveyancing dispute.
Here are some recent cases where buyers were stung by cheap conveyancers:
- In one case, a cheap conveyancer representing the vendor failed to respond to correspondence and phone calls, resulting in postponed settlement several times. This resulted in extra bank interest, legal costs, and storage costs for the buyer, along with the stress and possible involvement in court action to have the contract enforced.
- In another case, a couple used a cheap conveyancer who did not know how to handle their complicated transaction. The couple was in danger of being sued and losing their deposit, but they were able to settle the matter by seeking help from a reputable law firm.
- In a third case, a cheap conveyancer acted for both parties in a transaction, leading to a conflict of interest. When a dispute arose, the conveyancer attempted to keep the contract on foot to the detriment of the buyers. Both parties ended up having to go to lawyers to sort out the problem, which cost many thousands of dollars to resolve.
To avoid these kinds of issues, it’s essential to choose a quality property solicitor to represent you. Your solicitor oversees the settlement process in three stages:
- pre-completion, and
A good property lawyer will represent your interests, negotiate contract terms, calculate adjustments of rates, and prepare and lodge legal documents for settlement.
At McLaughlins Lawyers, our dedicated Property and Commercial Department have extensive experience in Property Law. Our team is passionate about providing our clients with the highest level of service, from first home buyers to experienced and interstate developers. We understands buying and selling property is a huge financial commitment and will guide you through every step of the process with diligence and understanding.
Our team will methodically assess your contract, make sure it is legally sound, specific to your needs, and explain every term and condition so you understand it. If there are legal problems or unfairness in your contract, we pick up those issues before it’s too late to protect your finances, your asset, and long-term plans. We step in and ensure you are fully informed to make the best decision for your needs. We assist you to take whatever steps are necessary to protect your interests, whether it be terminating a contract or keeping a party to its obligations under the contract by way of specific performance.
Don’t risk one of the most important transactions in your life by choosing a cheap conveyancer.
Call McLaughlins Lawyers today for an appointment: 07 5591 5099 or contact us using the form below.