leverage australia solicitors 2012 in review
DESCRIPTION
2012 In Review by Leverage Australia Solicitors is our inaugural e-magazine publication where we focus on the provision of information for those participating in small business and the property industry, educating those who want to enter those industries and hopefully will provide you with a few laughs along the way.TRANSCRIPT
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2012 in Review Merry Christmas
from
Bailey, Vivien, and the team at:
LEVERAGE AUSTRALIA
SOLICITORS
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FORWARD
Just a taste
At the end of a tumultuous 2012, Leverage Solicitors have been reinvigorated by its move to
Norwest Business Park. Leverage Solicitor’s selling position in the marketplace has always been its
expertise in small business and the property industry. The Leverage Solicitor’s office is placed
‘smack, bang’ in the middle of the fastest growing business park in New South Wales. This move and
the focus on small businesses and property will place Leverage in an outstanding position for 2013.
This e-magazine is just a taste of what is coming in the New Year. On top of our weekly newsletters,
which Bailey has been publishing now for the last 6 years, we are introducing a quarterly e-
magazine, with the inaugural publication being this 2012 in Review issue! The e-magazine will focus
on the provision of information for those participating in small business and the property industry,
educating those who want to enter those industries and hopefully will provide you with a few laughs
along the way.
This magazine reflects Leverage’s growth and emergence as a major player within the business
community. Leverage will continue to be led by the property industry’s most trusted lawyer, Bailey
Compton, and his young and incredibly skilled legal team.
Leverage is no longer an organisation that supports a training college. But one that provides services
to the business and property community. Leverage Solicitors is a legal firm that provides other
services including training. It will never lose its focus on the small business nor forget its connection
with the property industry.
I would like to thank all of our clients who have utilised Leverage throughout 2012 and over the last
10 years. Without you, Leverage is not a business.
If you have any comments about this magazine or services which have been provided by Leverage in
2013 please do not hesitate to contact us.
Kind Regards,
Vivien Compton
General Manager
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2012 IN REVIEW
CHRISTMAS 2012 EDITION
LEVERAGE AUSTRALIA SOLICITORS
LEVEL 1, SUITE 105
2 – 8 BROOKHOLLOW AVENUE, BAULKHAM HILLS
SYDNEY NSW 2153
EMAIL: [email protected]
WEBSITE: www.leverageaustralia.com
PHONE: 1300 438 538
FIND US ON:
PRODUCED BY THE BAMBOO GARDEN MARKETING & PR
LEVEL 6, 822 GEORGE STREET, SYDNEY NSW 2000. EMAIL [email protected]
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CONTENTS
LEVERAGE NEWS .......................................................................................................................... 6
DEPARTURES AND ARRIVALS ......................................................................................................... 8
SUCCESSES ................................................................................................................................... 9
TOP 5 MOST VIEWED BLOG POSTS OF 2012 ................................................................................. 10
#1 AUCTION CHEQUES .......................................................................................................................... 10
#2 AUCTION CHEQUES SEQUEL ............................................................................................................. 11
#3 BACKDOOR TO EXCLUSIVE AGENCY.................................................................................................. 12
#4 GRABBED THE CASH AND GONE ....................................................................................................... 13
#5 DISCRIMINATION .............................................................................................................................. 14
STAFF REFLECTIONS .................................................................................................................... 15
MOST MEMORABLE MOMENTS OF 2012 ..................................................................................... 16
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“LEVERAGE HAS ALWAYS
SUPPORTED THE SMALL
BUSINESS AND PROPERTY
COMMUNITY; WE WILL
CONTINUE TO SUPPORT
THAT THROUGHOUT 2013.”
BAILEY COMPTON
PRINCIPAL SOLICITOR & DIRECTOR
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LEVERAGE NEWS
Thanks to the Friends
As the avid readers would know, Leverage was the parent company of the Australian College of
Professionals since its conception in 2003. In June 2012, this partnership came to an acrimonious
end. Most of you won’t be interested why this occurred, although some of the gools may be,
however we want to ensure at Christmas time we give some lessons and most of all, expressions of
good will.
The first lesson to learn about partnerships is “always consider whether you can do it yourself”?
When you decide you can’t do it yourself, ask yourself “do I really need to enter a partnership”? A
person once told me that the only ship that is certain to sink is a partnership. Unfortunately, I was
captain of one of those ships which sank.
Notwithstanding the above, many partnerships in history have been a major success. It should be
said that, our partnership was very successful for our 5 years and had moderate success for up to 8
years. Nothing is gained in life unless you can impart lessons of the past.
The lessons I have learnt from entering the partnership are as follows:
Only ever enter into a partnership if you must! You are creating a business marriage whereby
the divorce will cause you more grief then the pain you are suffering as a sole trader.
If you must, make certain it is with people who give equivalent contribution. Contribution should
be seen as investment of money and investment of skills.
Always produce a business plan which both parties agree on.
Always produce a shareholders agreement that includes:
o Decisions making guidelines;
o Financial decision making guidelines;
o Management details;
o An exit plan.
Always set a sunset date for your business, that is, set a period of 3 to 5 years to reconsider
whether you want the shareholders agreement to continue.
Never give financial control to one person.
If you are the one with intellectual property, always ensure that you own that intellectual
property and control such intellectual property in the succession plan.
Every partnership has its zenith. When a partnership reaches the point where it can grow no
more, that is the time to sell your business. Don’t wait for it to travel down the other side to
reach trouble. It may be difficult to part while you’re at the peak of your powers; however this is
the best way to handle partnerships.
Always have a dispute resolution clause in your partnership agreement.
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Remember if you split, you’re always worse for the split then if you stayed together. So
therefore set aside plans to allow the separation to occur amicably and with the most profit as
possible.
Our partnership separation was horrific. Without dealing with the details, my wife and I ended up
controlling a business with absolutely no money in the account, whilst my business partners left with
the cash and the profitable business. What we got was enormous support from friends, family, and
in some cases people we have never met. It was our belief that, if friendship and support could be
measured in currency, we would be billionaires. We thank those who supported us through this
most difficult and crucial time of our business.
As you can see from the forward, we have re-emerged like the phoenix from the ashes. Our brick
wall at the front shows the strength of stone and the solidarity of diamonds. Leverage has always
supported the small business and property community; we will continue to support that throughout
2013. With the support we have been shown through friends, it is an encouragement for us to grow
and be better at what we have done in the past.
We wish everyone a merry Christmas. For those who don’t celebrate Christmas, we wish you all a
happy holiday season.
Cheers,
Bailey Compton
Principal Solicitor & Director
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DEPARTURES AND ARRIVALS Throughout 2012, Leverage has had its
departures and arrivals like all businesses. The
most notable departure was Shannon Lakic,
Senior Solicitor who left at the end of April
this year.
Shannon was a vital member of our Strata and
our agency team. Shannon has now moved on
to work for the caravan and camping industry
association and is still in communication with
Leverage Australia.
Joining the Leverage Team is Erika Jasarevic
and Gia Ghazi. Erika is a young attorney from
America who has just completed her law
degree in Australia. Erika is vibrant, assertive
and loves a fight. Apart from the fact she has
not yet learnt to drive on the right side of the
road, she has become a valuable addition to
ensuring that our clients are protected.
Gia comes to Leverage with 3 years’
experience. Apart from being a solicitor, she is
an accredited migration agent. Gia has been
able to deal with some of our major
litigations, develop contracts and manage our
property portfolio all at the same time. Her
diversity and flexibility have allowed the
Leverage business to grow in a number of
different directions.
Rita Vickers has moved from the reception
counter to the conveyancing department. We
think that when she first started in
conveyancing, she did not know what first hit
her. Over the last 6 months she has grown
from not knowing what a transfer was to
being able to manage files on her own. She
has attended and undertaken the
conveyancing course at the conveyancing
institute of Australia and is now developing
into a friendly and speedy conveyancer. We
think we would never be able to move her
from conveyancing again without some form
of major incentive.
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SUCCESSES Leverage has had a number of major successes throughout 2012, both in the area of cases and in the
development of business structures. I wanted to mention them all, but our editor has told me I have
to limit it to 6.
DATABASES A real estate sales team’s major asset is its database. Hence, an agency that employs a sales team wants to protect the data that the salesman gathers whilst employed with the agency. In the middle of this year, Leverage was instructed by a major agency in relation to salesman moving to another agency and taking its database. The salesman instructed the weekend receptionist to email their database to their new work emails. It’s Leverages’ conviction that, agencies that pay the money should be protected. Injunctions were sought in the Supreme Court to prohibit that material being used for the new employer. Leverage was successful in this case and effectively defended the database of the agency.
COMMISSION CLAIM Leverage Solicitors was consulted by an agent who had not been paid their commission by a very difficult vendor. The vendor for some ridiculous reason refused to pay the agent any of their commission. Leverage Solicitors examined the agency agreement and found it to be defective. Nevertheless, a claim was lodged in the local court. Based on the work that Leverage had done, the vendor decided to make an extraordinarily large offer. This offer ultimately happened with a deed of release and all parties went their own way. Leverage was able to achieve a financial outcome for its clients without the ammunition to fight the battle. The agency agreement was defective, however Leverage was still able to convince the vendors solicitor that they did not have a case which was worth running.
STAMP DUTY In early 2012, Leverage undertook the sale of a rent roll for an agency in NSW. The purchase price was 1.3 million dollars. The purchase was by way of transfer of shares. In a normal case, the stamp duty would be based on the 1.3 million dollar purchase. Leverage was able to change the agreement and the stamp duty required by the Office of State Revenue was only $40. This represents a saving of approximately $100,000.
COMPARISON WEBSITES Leverage was consulted regarding the establishment of a comparison website. We were able to assist in the establishment of rates direct both in terms of this intellectual property and its licensing requirements.
PAYING REFERRERS One of the most asked questions in the real estate industry is the payment of people who refer fees to you. Leverage has been able to establish 2 groups in 2012 whereby agencies were able to pay referrers fees legally without breaching any statute throughout Australia. The agents who have adopted this model are now saying that it is reaping wonderful awards for its agency.
REAL ESTATE FUNDS Real estate funds was a business which emerged later in the year. It is an alternative to the holding of deposits by vendors and purchasers and we will talk about this in later years. Leverage was able to provide the advice, the agreements and to establish an alternative to the holding of deposits on behalf of vendors and purchasers.
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TOP 5 MOST VIEWED BLOG POSTS OF 2012
#1 AUCTION CHEQUES
Along time ago, an Eastern Suburbs real estate agent was conducting an auction. It was a beautiful house, and some would say an expensive house.
The reserve price was $5,500,000. The auction opened at $4,500,000 and progressed through until a final bid at $5,300,000. The vendor came to the auctioneer and suggested that they would take $5,300,000 and it should be put on the market.
The auctioneer returned to his podium to announce that the property was now on the market. One person from the back of the room who had not made a bid before, made a bid of $6,000,000. This was an unprecedented leap of $700,000.
Contracts were exchanged on the day and a personal cheque for $600,000 was given to the agent. The following day, the Sunday newspapers carried the story of the unprecedented success of this agency. $500,000 over reserve and one bid jump of $700,000. The agent was a hero!
This is not a fairytale however! The cheque for the deposit bounced. It was discovered that the bidder is what could be technically referred to as a “fruit cake”. The purchase was set aside. The agents returned to the under bidder who would only agree to buy the property for $5,000,000. The agent was sued by the vendor for the other $300,000, however the vendor did fail against the agent. The vendor was successful in obtaining some of the $600,000 out of the purchaser.
All agents accept personal cheques at auctions. It is a risk which all agents take at auctions in relation to the acceptance of personal cheques. The only suggestion that Leverage could make is the following: • On your authority to exchange, the purchaser and vendor should acknowledge that the deposit was taken by way of personalised cheque;
• The purchaser should warrant that there is sufficient funds in the account; and
• The vendor should accept the receipt of the personal cheque.
You cannot remove the risk of rubbery cheques, but you can reduce the opportunity that the vendor has to sue you. It just goes to show, if something is too good to be true, it usually is!
View this on the blog:
http://www.leverageaust
ralia.com/auction-
cheques-2
863 people read this
article
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#2 AUCTION CHEQUES SEQUEL
I have had some requests this week regarding the auction cheque story. Many have said that they want to know the upshot of the auction cheque story. Many times, I don’t tell the full story because it may identify the real estate agent involved. I have checked with the agent, and he doesn’t care!
As the readers will remember, we had an auction. An auction lift of $700K was made by a woman making her first bid in the auction. It took the price to $6million. Contracts were properly exchanged and a $600K personal cheque was handed to the auctioneer. The cheque was rubbery.
The purchaser never had $6million. Moreover, they would not have even had $600K to pay for the property. Although not incompetent, the woman was essentially mad.
I understand that, due to the failures to pay the deposit, the vendor’s solicitor terminated the contract for sale of land and replaced the property on the market. As noted in last week’s newsletter, the property sold for $5million.
Due to there being an offer of $5.3million on the table at the auction, and the vendor was happy to put it on the market at that price; the vendors believed they had a $300K loss. As usual, they blamed the agent. The vendor sued the agent for $300K. They claimed the agent had been negligent in not taking all reasonable steps to defend the vendor against the cheque.
Although it cost the agent $20K, the agent successfully defended the claim of professional negligence. It should be noted that, most professional indemnity insurance policies will protect the agent against this sort of action. Hence, we would anticipate that most of you have professional indemnity insurance to protect you against professional negligence claims of this kind.
The vendor then turned their attack on the purchaser. The purchaser had a little house somewhere in the Eastern Suburbs, which was not of any value. The vendor was victorious in their case against the prospective purchaser and was awarded the sum of $600K. Unfortunately, the would-be purchaser never had this amount of money. The little house in the Eastern suburbs was sold and the profits of that sale went to the vendor. We understand that the amount was approximately $170K.
Although it did not make up for the loss of $300K, it did go some way towards redeeming the loss caused by the would-be purchaser. I should note that, the vendor still made well over $1million from the deal.
I hope that this satisfies the appetite of those who wanted to hear the end of the story. Remember the moral of the story is that you should have professional indemnity insurance to make certain that if you are sued, somebody else pays for it!
View this on the blog: http://www.leverageaustralia.com/auction-cheques-sequel-2/ 638 people read this article
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#3 BACKDOOR TO EXCLUSIVE AGENCYIn tough times, agents do things to ensure that they keep their business afloat. There is no secret to the fact that, success in real estate is about having listings. In other words, having stock on the shelf.
One of the juiciest praise for a real estate agent going through tough times is an expiring agency agreement. An agent who has worked with a vendor, marketed a property, done everything to sell the property, but cannot obtain a buyer, is a fresh victim.
It is true that all is fare in love and war, and if you are unable to sell something, somebody else should be given a chance. There are some restrictions however that agent’s should take into account.
Section 58 of the Property, Stock & Business Agents Act 2002 states:
1. A licensee must not enter into an agency agreement with a person in respect of the sale or purchase of residential property or rural land by the person if:
o The agreement provides for an entitlement to commission in respect of services to be provided at a time when the property or land is or is to be the subject of a sole agency agreement or exclusive agency agreement with another licensee for the provision of those services, and
o The licensee knows or has reasonable cause to suspect that the person has entered into that sole agency agreement or exclusive agency agreement.
2. A licensee must not solicit or encourage a person to enter into an agency agreement with the licensee if the licensee is prohibited from entering into the agreement by this section. Maximum penalty:
o 200 penalty units in the case of a corporation, or
o 100 penalty units in any other case.
3. A licensee is not entitled to any commission or expenses from a person for or in connection with services performed by the licensee pursuant to an agency agreement entered into by the licensee in contravention of this section.
4. In this section: “commission” includes fee, gain and reward. “exclusive agency agreement” means an agency agreement under which an agent agrees to act for the seller or buyer (“the client”) on the sale or purchase of property and that provides for the agent to be entitled to commission on the happening of an event whether or not the agent is the effective cause of the happening of the event and whether or not the client is the effective cause of the happening of the event. “sole agency agreement” means an agency agreement under which an agent agrees to act for the seller or buyer ( “the client”) on the sale or purchase of property and that provides for the agent to be entitled to commission on the happening of an event (whether or not the agent is the effective cause of the happening of the event) unless the client is the effective cause of the happening of the event.
What this section says is two things:
It is an offense for an agent to get a vendor to sign an agency agreement when they know that it is currently under an exclusive agency agreement with another agent; and
If an agency agreement is signed whilst another agency agreement is in force, the second agent is not entitled to their commission.
Therefore, if you are intending to pursue a property which has been on the market for some time, ensure that they are not under an exclusive agency agreement. The exclusive agency agreement is not terminated until it lapses in accordance with the agency
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agreement. This is usually when termination is given in writing.
Hence, if you are going to take this route, make certain that you site the termination notice from the vendor. In fact, a clever vendor could get you to sign an exclusive agency agreement with them and pay neither agent any commission.
It is also important that you do this to make certain that there is not a chance of two
commissions against your prospective principal.
As stated above, all is fair in love and war, just make certain that you’re the one who’s not in the firing line.
View this on the blog:
http://www.leverageaustralia.com/appraisal
-backdoor-to-exclusive-agency
623 people read this article
#4 GRABBED THE CASH AND GONE What does a consumer do when an agent empties out a trust account and has gone? Leverage has been approached by a person who has gone through that and a little more.
The facts of the case are as follows:
Our client rents out his property over Christmas break. He has his own little home-stay website, on which he includes a photograph of his house.
The agent copied this photograph and put it up on his own website for sale. This was done with no authority or contact with the vendor.
The owner of the house gets contacted by a friend stating “I didn’t know your house was for sale.” Our client replied that “I didn’t know it was for sale either!”. He looked at the website and was astonished to find that his house was for advertised sale with a particular agent.
He approached the agent who he knew as a personal friend. The agent said, “I just put it up there to see what would happen”. The agent went on to say “However , I have good news. I have a buyer!”
The agent drafted up an agency agreement and it was signed by the husband and not the wife. The agency agreement did not have a price to be offered nor did it have any commission included.
The property was exchanged and was settled. Prior to settlement, the agent changed his rate. Initially, the agent wanted $20,000 commission, but on settlement he wanted $62,000 commission. The vendor quite properly opposed this and would not provide him with an order on the agent. Nor did the purchaser provide him with an order on the agent.
To avoid the dispute, the agent merely took the money out of the trust account for himself. The agent has now closed his doors and left the industry. He has ‘grabbed the cash and gone’.
What should a consumer do in these circumstances? Well, under Section 173 of the Property, Stock and Business Agents Act 2002, any consumer can make a claim on the Property Services Compensation Fund to have this money reimbursed. Additionally, the Compensation Fund will pay all reasonable expenses associated with the claim that is, including legal fees.
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The Compensation Fund is the government’s way of underwriting money in all trust accounts in NSW. We don’t tell the public enough about the safety of using real estate trust accounts, but the fact is, we have a system whereby all the money kept in our trust accounts is underwritten by the State Government. There is an ability to claim bacl any money which is lost or taken out in contravention of the law.
The agent might have gone, but in real terms, the money of the client hasn’t.
View this on the blog: http://www.leverageaustralia.com/grabbed-the-cash-and-gone/
518 people read this article
#5 DISCRIMINATION
The Anti-Discrimination Act and various Commonwealth Statutes make it an offense to discriminate against people in relation to accommodation, services, education etc. The seven grounds for discrimination are sex, sexual preferences, marital status, HIV, race, disability and age.
I am now confused about retirement villages! Retirement villages are for people above the age of 55 years of age. This means that, people under 55 cannot live there. People tell me this is lawful. How can it be? We are refusing access to accommodation to a group of people that being, people under the age of 55.
There was a case many years ago of a 38 year old living in a retirement village. Sutherland Shire Council wanted this person removed, and took action to have the person removed. They courts found that she could remain there because nothing could refuse her access to accommodation because of her age. Well that answers the first question, retirement villages are a furby??. You cannot refuse to allow a person to live in a retirement village purely because they are under 55.
The conundrum for me is, why does Government continue to allow retirement villages? Making grant approval to a retirement village is under the SEPP “aged and disability” policy, but you can’t prevent people under 55 from living there. What is this purpose? I don’t know. Maybe it is just something that Government likes to do to confuse us.
View this on the blog: http://www.leverageaustralia.com/conundrum-discrimination/
432 people read this article
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STAFF REFLECTIONS
“My reflection on the last year at Leverage is that all staff worked through and conquered all challenges that walked through the door. We have such a diverse range of matters that we come across and as a team I felt that we achieved above average results for our clients.
My ultimate goal for the new year at Leverage is that I want to assist our firm with business planning which includes taking a critical look at the services that we are offering and eliminate those that are draining our resources and not adding to our bottom line. I want us to look at what tasks we do on a daily, weekly and monthly basis and try to turn these into regular procedures that can either be streamlined, automated or delegated. I would like us to research new tools to make our work more efficient”
GIA GHAZI, SOLICITOR [email protected]
“My goal for 2013 is to take the tools at hand in Leverage and carve out my desired results. I plan to
ensure success in all that I do in the year to come by striving for plan A and knowing my plan B.”
ERIKA JASERAVIC, LEGAL COUNSEL [email protected]
“My goal in 2013 is to keep learning and developing in conveyancing and using all the building blocks at my disposal to do so.”
RITA VICKERS, CONVEYANCING PARALEGAL [email protected]
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MOST MEMORABLE MOMENTS OF 2012
RUN4FUN On the 4th of November the whole team at Leverage Solicitors took part in Run4Fun. It was a great day that aims to raise much needed funds for more than 650 charities!
PRIDE OF AUSTRALIA MEDAL It was a tremendous moment when our Georgina Kenaghan won the Inspiration medal at the Pride of Australia Awards!
MOVEMBER The boys took part in Movember and what a success! We raised over $600 this Movember, so thank you for all of your Support!
NEW OFFICE What better way to have a fresh start than to move! Our new premises is at L1,S105 /2 Brookhollow Dr, Norwest Business Park.
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LEVERAGE AUSTRALIA SOLICITORS
LEVEL 1, SUITE 105
2 – 8 BROOKHOLLOW AVENUE, BAULKHAM HILLS
SYDNEY NSW 2153
EMAIL: [email protected]
WEBSITE: www.leverageaustralia.com
PHONE: 1300 438 538
FIND US ON: