Geoff Thompson is the Director of Barry Plant Real Estate in Croydon Victoria, and the Barry Plant Real Estate tag line is “The red carpet experience”. I felt that the red carpet had been pulled out from under me and my client when Geoff Thompson’s sales representative Pauline Ferguson switched contracts without my knowledge and without any explanation.
Secret contract switch
Contract switching is a major problem in the real estate industry. The reason contracts are switched by estate agents has nothing to do with protecting the client’s interests, and can cause all kinds of problems for the client and their lawyer.
In an effort to reduce the likelihood of lazy or incompetent estate agents tampering with our clients’ contracts, I advise every estate agent in writing, ‘The REIV “Contract Note” is not to be used in this sale…‘, and I provide detailed instructions designed to ensure that the estate agent doesn’t spoil the client’s sale.
Unfortunately, some estate agents choose to disobey both the law and the directions of their client’s lawyer.
Pauline Ferguson, switched the contract my firm had prepared, and replaced it with a simple “fill in the blanks” Contract Note. Neither Pauline Ferguson nor her boss, Geoff Thompson, made any attempt to discuss the matter with me (probably because they knew they would be told reminded that it is illegal for them to tamper with contracts), and secretly switched the contracts without my knowledge.
Geoff Thompson offers no explanation
As I have done with other contract switchers, I sent a fax to Geoff Thompson, addressed to “The Principal, Barry Plant Real Estate Croydon”. I put the following to Geoff Thompson:
“We seek your explanation for the improper and unlawful “switching of contracts”. We understand that it was Pauline Ferguson of your office who has switched the contracts, and that she is neither a legal practitioner nor a fully licensed estate agent.
In our fax to your office of 19th May 2008 we stated quite clearly:
“The REIV “Contract Note” is not to be used in this sale. We have been instructed to prepare the legal documents by which the sale of the above property is to be effected, and we have prepared the combined Contract Note and Section 32 Vendor’s Statement for this purpose. There is no need for the preparation of an REIV Contract Note
Our Contract Note and its Special Conditions provide the vendor with maximum legal protection, and take into account such issues as land identity, purchaser acknowledgements and warranties, and comprehensive default provisions. No part of it is to be altered without prior consultation with us.”
Despite these clear instructions, the contract was secretly switched and replaced with a Contract Note drafted by a non-lawyer from your office. No person from your office made any attempt to discuss the matter with the vendor’s legal representative, nor was our client advised to seek our advice before being invited to execute the substitute contract note.
We believe that the switching of contracts was kept from us because you and your staff knew that we would not allow it.
We regard this conduct as an illegal act of deception, requiring a full and immediate explanation.”
Neither Geoff Thompson nor Pauline Ferguson had anything to say on the matter, apparently believing that by keeping quiet the problem would just go away.
Why do estate agents switch contracts?
The problem of contract switching is out of control. Ask any lawyer or conveyancer if they have experienced contract switching, and the answer is always “Yes”. I have asked other lawyers what they think is behind the phenomenon, and the most common suggestion is that estate agents simply don’t understand contracts, and they are too ashamed to admit this to vendors and purchasers. At the same time estate agents don’t want to run the risk of losing a sale by referring a client for legal advice. Thus, the average estate agent finds it easier to scrap a properly prepared contract and to switch it with a simple “fill in the blanks” Contract Note.
What kinds of harm can result from contract switching?
The potential for harm is enormous. A particularly upsetting example is where a client of mine had requested that a set of hand-made stained-glass windows, a wedding present from his brother-in-law, be excluded from the sale. I drafted a special condition which made it quite clear to any potential purchaser that the stained-glass windows were not included in the sale, and would be replaced with conventional windows prior to settlement.
The estate agent found contracts too difficult to comprehend, and in his real estate TAFE course he had only been taught about filling in the blanks of a Contract Note. The estate agent rifled through the sale documents, ripped the Section 32 Vendor’s Statement out, and slapped the simple Contract Note on the front.
The first thing I knew about it was when the estate agent sent us a copy of the fully executed Contract Note. When I rang the estate agent and complained about his conduct he responded with,
“I’m a busy man, I haven’t got time to go through reams of terms and conditions. The REIV gives us Contract Notes to use and we use them. If you’ve got a problem take it up with the client, he was the idiot who signed the thing and if he didn’t ask you about it first it’s his own fault.”
When I explained the situation to the client he broke down in tears. His wife had miscarried their first child, the sale had been an absolute nightmare because of the bullying of the estate agent, and he had had enough. “Just write it all off; it’s the least of my worries at the moment” was his response.
How do estate agents get away with contract switching?
Usually, estate agents get away with contract switching because lawyers and conveyancers are too scared to take them to task. This is particularly so where there is a special relationship between the estate agent and the lawyer or conveyancer. (For an example of special relationships between estate agents and lawyers see “Richard Wood Solicitors – Gifts To Agents For Client Referrals“).
Also, estate agents are ever ready to blame the vendor client for having signed the Contract Note. The estate agent’s defence is that the vendor client should obtain legal advice before signing anything, including the estate agent’s Contract Note. But when we ask a client about having signed the Contract Note, we’re usually told that the estate agent pointed out that the Contract Note is “the standard document” used by all estate agents, and it’s issued by the REIV, so it must be safe.
And some estate agents, like Pauline Ferguson and Geoff Thompson, don’t even bother with an attempt to defend the indefensible.