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Are your sure they’ve understood?

4 Jul 14

How many times have you, as a Real Estate practitioner, sat in front of a person signing a contract for sale, a sales agency agreement or any other similar legal document and experienced an uneasy feeling that perhaps the person sitting across from you doesn’t fully understand or appreciate the significance of the commitment they’re signing up to? Regardless of whether this has happened to you before, this article is for you.

Agents should consider the legal precedent set by the High Court case Commercial Bank of Australia Ltd v Amadio (1983) where the “lack of knowledge and understanding of the contents of the document was that … they lacked assistance and advice where assistance and advice were plainly necessary if there were to be any reasonable degree of equality between themselves and the bank”.

Projecting this to a Real Estate scenario, if a person entering into an agreement with or through an Agent lacks assistance or advice where assistance or advice is plainly necessary then REISA believes that the agreement could be in jeopardy if challenged.

Our best practice in these cases would be for Agents to require the signing party to seek appropriate external advice or assistance where it is necessary, and ideally obtain a written confirmation that advice or assistance has been provided. For example, a Purchaser of a residential property who has rudimentary English skills might be referred to a conveyancer with a working knowledge of that person’s language to seek advice or assistance prior to entering into the transaction. When working in Real Estate I followed this procedure consistently and on those occasions when I asked people to seek advice or assistance I felt a sense of ethical and legal compliance well worth the additional effort required.


If you have any questions, please feel free to call me - George Ganter - on 8366 4300