Contract Note

Most commission estate agents use and prefer the Contract Note over any other form of contract. This is because the Contract Note allows the commission estate agent to take control of the sale closure:

• It prevents the vendor’s own lawyer from protecting the vendor from the commission estate agent.A lawyer’s duty is to protect the vendor client, and this is often done by the insertion of conditions into the contract. These conditions draw the purchaser’s attention to obligations the purchaser is to assume, or matters for which the vendor will not accept responsibility. If a commission estate agent has to deal with a comprehensive contract, it means that the commission estate agent must read it and understand it. It also means that a purchaser may wish to seek legal advice about it. By using the simple one-page Contract Note the commission estate agent simplifies matters – for the commission estate agent. (The commission estate agent is always out of the way when the problems arise after the sale has been finalised).
• It allows the commission estate agent to convince the purchaser that there are very few or no conditions in the contract.The Contract Note uses the device of “incorporation by reference” to introduce conditions that neither the vendor nor the purchaser will ever see. On the front of the Contract Note, under the heading “Subject to”, at item 4 the Contract Note declares that all of the conditions contained in the standard Contract of Sale of Real Estate are to be regarded as included in the Contract Note. There are over 20 conditions in the Contract of Sale of Real Estate, one of which incorporates another set of over dozen conditions from the Transfer of Land Act. This simple little document is very long and cumbersome indeed.
• It allows the commission estate agent to prevent the purchaser from obtaining proper legal advice.Most commission estate agents will not let the Contract Note out of their sight. The purchaser will be required to attend at the commission estate agent’s office to “make a written offer” and the commission estate agent will complete the Contract Note then and there – and have the purchaser sign it. If the purchaser wants to obtain legal advice before signing, the commission estate agent will explain that there is no point, because it is such a simple form. If the purchaser insists, the commission estate agent will hand the purchaser a blank form, so that the purchaser feels a fool. (We have had numerous instances where a purchaser client has attended at our office for advice, and when we have contacted the commission estate agent for a copy of the Contract Note, the commission estate agent has arrogantly faxed us a blank form.)
• It allows the commission estate agent to destroy the Contract of Sale prepared by the vendor’s lawyer.If you go into the office of any conveyancing lawyer in the State of Victoria and ask if they have ever experienced a case where a commission estate agent has destroyed the lawyer’s carefully drafted Contract of Sale and replaced it with a Contract Note, you will hear an angry “Yes” from every one of them. Why does this improper practice persist? Because the regulating bodies have too many other complaints to deal with, and they suggest that it is a matter for the vendor to take up with the agent after the event.
• It allows the agent to decide what conditions will or will not appear in the contract.Because the commission estate agent has possession of the contract at all times until it crystallizes to become a binding contract, the commission estate agent has the opportunity to “advise” or otherwise persuade or dissuade either party from “complicating matters” by inserting or changing conditions.

  Amazing as it may sound, very few people ever seek legal advice until after the Contract Note has become a binding contract.

  We believe that this state of affairs exists because the Law Institute of Victoria has allowed its logo to be placed on this document, and to the average consumer this appears to legitimise both the document and the commission estate agent’s behaviour.