REIV – LIV Co-operation or Conspiracy?

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

We start the New Year with a big question, raised by the use of these two logos on documents designed for use by estate agents. Our question is,

Is the relationship between the Real Estate Institute of Victoria (REIV) and the Law Institute of Victoria (LIV) one of co-operation for the benefit of consumers, or is it a conspiracy against the consumer?

The following image is a reproduction of the standard Contract Note, used when the estate agent acts on behalf of the purchaser at the offer stage of a sale, and again when the estate agent acts on behalf of vendor at the acceptance stage.

The presence of the logo of the LIV on this document, and the words “approved by the Victorian Lawyers RPA” (a name formerly used by the Law Institute of Victoria), confirms to the average consumer that the Law Institute condones and encourages the role of the estate agent in acting for both purchaser and vendor, and undermines the relationship between the lawyer and his or her client.

In coming posts we will examine the relationship between the REIV and LIV in some detail, and invite comments from representatives of each.

We’ll begin the discussion with a few observations:

• The estate agent used to have an important role in bringing vendors and purchasers together, but advances in information technology are making this service increasingly irrelevant.
• In order to remain relevant, estate agents are moving into areas traditionally serviced by the legal profession.
• The Law Institute of Victoria has facilitated the delivery of legal services by estate agents by developing documents for use specifically by estate agents, by condoning contract negotiation by estate agents, and advising its members to protect estate agents from legal action by consumers.
• The Law Institute of Victoria appears to have ignored the economic and market changes that have placed lawyers in a position to compete with, and even displace, estate agents.
• A “black market” has developed in the delivery of real estate related legal services, with estate agents and unlicensed conveyancers freely providing pre-contract legal services to unsuspecting consumers.
• The Law Institute of Victoria has not undertaken any effective marketing or promotion of its members’ services as a better option for consumers.

Consumers in Victoria will continue to pay artificially inflated real estate fees while the Law Institute of Victoria and the Real Estate Institute of Victoria maintain their cosy and anti-competitive relationship.

We have long complained about the unhealthy relationship between the Law Institute of Victoria (LIV) and the Real Estate Institute of Victoria (REIV).

A quick look at the two organisations offers some insight into the uneven balance of power each has in real estate. The REIV represents estate agents. Its role is to further the interests of estate agents, and to this end it focuses all of its attention on those matters and things that affect the average estate agents. The REIV works hard to maintain its members’ waning relevance in the real estate industry.

The Law Institute of Victoria (LIV), on the other hand, represents not only conveyancing and real estate lawyers; it represents all lawyers in all areas of law. When it comes to recognising business opportunities for its property lawyers, the LIV has neither the resources nor the marketing skills to assist its members. As a result, the LIV has largely ignored the plight of its property lawyers and their clients.

The average suburban property lawyer must presently accept that any client interested in buying or selling real estate is likely to make first contact with an estate agent who will commonly:

• Advise a vendor client on the contents and legal effect of the agent’s Sale Authority;
• Instruct the lawyer as to the form and content of sale documents on behalf of the vendor client;
• Advise vendors and purchasers alike to utilise the services of the estate agent’s “pet” conveyancer or lawyer (often in return for a secret commission);
• Advise a purchaser as to the legal meaning and effect of terms and conditions appearing in a contract;
• Advise a purchaser as to the most appropriate special conditions for insertion into the purchaser’s offer, and draft these on the purchaser’s behalf;
• Advise the purchaser to seek finance through the estate agency’s mortgage broker;
• Send sale documents to the purchaser’s lawyer after waiting for the 3 day cooling off period to expire;
• Advise the vendor or purchaser to “talk to the lawyer” in the event that any problems arise.

These are just some of the realities of every-day suburban legal practice.

The black market in real estate legal services appears to be regarded by the LIV as an insurmountable problem because of evidentiary issues. “Provide us with the evidence, and will issue an injunction” is the common response to complaints by its members. It does not appear to have dawned on the LIV that proper marketing and promotion of the legal profession could have the same effect.

Suburban lawyers are too busy trying to look after the day to day running of a small practice to take the initiative.

For the suburban lawyer, watching the movement of the estate agent into the lawyers’ market, is like a park ranger at Kakadu observing the approach of the cane toad. And like the Kakadu ranger, the lawyer is virtually powerless to assist those who are in need of protection from the invader.

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