JUNE 2013
REGULATE ALL PROPERTY SALES? We all felt that any further regulation (i.e. other than the regulations already governing all estate agents working in a particular country) was not necessary. The sale of non- investment overseas property should be treated exactly the same as a the sale of a local property.
THE ROLE OF THE REGULATOR The regulator should make sure that that the key factors about a proposed purchase are passed on to buyers and that buyers are advised of the dangers associated with their plan.
THE ROLE OF ‘DUE DILIGENCE’: WHAT SHOULD BE CHECKED? All those around the table thought that, at least in countries where the purchase of a property was usually dealt with by a lawyer, estate agents should have little responsibility for checking the legal status of the properties they were selling or the contract proposed. That was the lawyer’s role. In some places the checking is done by a notary. In others, agents play a larger role and are already responsible for undertaking the necessary checks. Yet, one way or another, various things need to be checked on any purchase. They will vary from place to place but will include whether the property has good legal title, whether is has a building license, whether it is free of debts or other encumbrances and whether the contract is fair. This applies as much in off -plan
as in regular purchases but the checks are even more important in the purchase of off -plan property.
THE ROLE OF PROFESSIONAL BODIES Professional bodies, such as NAR and AIPP, need to be at the leading edge of this process of moving toward regulation. They have codes of conduct and should enforce them with a view to better protecting the public. They should consider laying down special rules relating to the sale of investment properties.
the project – rather than working constructively to safeguard as much of their investment as they can. Gareth had worked with forums and had, mainly, poor experiences with them. “Group members hiding behind opaque usernames is not a good sign.”
Can the industry – via AIPP and others – off er preliminary help in these cases? For example, by producing guidance notes or by giving preliminary advice?
Taking action when the cracks appear
THE ROLE OF OWNERS’ GROUPS When a project fails – and, often, for months or even years before – there are usually owner’s groups and forums relating to a troubled project. In cases of commercial failure (as opposed out out-and-out criminality) such groups can often assist with the survival of the project: usually something greatly to their advantage. They can use their collective power and leverage, for example, to improve and monitor both management and construction and, often necessary, to raise necessary funds.
Yet such groups are often mainly negative: sniping at the developer and precipitating the collapse of
Checks are even more important in off-plan sales
DO LAWYERS HELP?
In many cases, the use of lawyers is inevitable; they are the only ones with any chance of salvaging anything from the wreckage. However, to be successful, both Neil and Gareth agreed that the lawyers need special skills. This is not a job for your ordinary lawyer! They need to investigate, negotiate and litigate – often at the same time! They also need to manage a disparate group of owners. And they need to do all this at reasonable cost.
SUMMARY Too many developments fail. An unacceptable number. Nothing can stop failures
but regulation, coupled with more self help by owners and constructive action by lawyers, can limit the number of failures and limit the amounts lost when a failure occurs.
As an industry, we ought to be putting all our weight behind these measures and, wherever it is possible, providing practical help in diffi cult cases.
This is not only “right”, it is also in our own interests. We need public confi dence; these steps will all engender it. Trying to hide from the reality of such disastrous failures – with the probability of more to come – puts the fragile recovery in our market under direct and serious threat.
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