At this stage (24 March 2017) of the 2016/2017 financial year property claims, including conveyancing and leasing, account for about 31 per cent of the number of claims. This is up from 26 per cent for the whole of the 2015/16 financial year.
So where are property lawyers going wrong?
Failing to properly advise a party about the contract of sale and section 32 statement is the number one type of claim, followed closely by failing to advise on tax issues such as CGT, GST and duty.
Some property and conveyancing claims are a result of failing to correctly complete the relevant documents such as the lease schedule, particulars of sale and section 32 statement.
In one claim part of the property was leased and details of the lease were provided by the vendor to the practitioner. The lease was for a small area and housed equipment only. Such leases are common for electricity authorities and telecommunications carriers.
Unfortunately the words ‘subject to lease’ were not inserted in the particulars of sale.
Prior to settlement the purchaser discovered the lease. As the tenant had already paid the vendor rent in advance for a period after settlement the purchaser sought payment of the amount referable to the period from settlement.
The purchaser settled on the property under protest and issued proceedings against the vendor. The vendor joined their practitioner as a party to the proceeding due to the practitioner’s omission of ‘subject to lease’ in the particulars. The matter settled with a substantial payment to the purchaser with some of the loss attributed to the practitioner.
The case of A & A Property Developers Pty Ltd v MCCA Asset Management Ltd [2016] VSC 653 is another example of where completing the particulars of sale came into question. This case concerned the interpretation of a contract of sale. ‘GST’ was inserted in the relevant box in the particulars of sale instead of ‘plus GST’. The court concluded that the contract price was GST inclusive.
The key to avoiding these sorts of claims is paying attention to detail.
For more information on conveyancing claims refer to the LPLC practice risk guide Claim free conveyancing.
