“Court slams vendor terms property scam”
There is a small article with the above headline in the latest MPA magazine (Mortgage Professional Australia Issue 4.8, 2004). It is about a Victoria ‘wrapper’ that was taken to the Ballarat Magistrates Court by the wrappee.
It seems the wrappee was a victim of misleading, deceptive and unconscionable conduct, and the wrapper ordered to pay $31,584 plus court costs.
It seems the wrappers purchased a home for $25,600 and ‘wrapped’ it to their client for $55,000. They did everything they could to conceal the true value of the house to their client, and used sales pressure to prevent the client looking around town and from seeking independent legal advice etc etc.
The house had been on the market for 7 years previously.
Ouch!
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Terry, which do you think offensive…
1. the price margin( I know a famous wrap guru puts roughly $25,000 on top of everything he buys)
2. The fact that sales pressure inhibited the client to do their due dillegence?For me it’s the fact that sales pressure inhibited the client to do their due dillegence.
Rgds.
Lucifer_auIts the fact the purchase price was not disclosed to the buyer.
I dont wrap. I acknowledge there should be a premium on top of the purchase price for taking the risk and lending to people the banks wont touch.
But in my view that premium should be disclosed and agreed upon.
As a wrapper I’d say both….. for the following reasons :
1) was a bit excessive, BUT it SHOULD have been disclosed
2) unforgivable…For the record we wrap with full disclosure…. to banks AND customers….
he probably didn’t use Steve’s Wrap pack…lol
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Also for the record, I’ve been a wrapper for years, disclose everything to purchasers, % mark-up and true value and no-one has an issue. In fact they all agree I should have my margin. amazing what the truth will yield.
As a s52 lawyer for many many years before wrapping was able to sustain me full-time, misleading and deceptive conduct is an ever present reality – to which every wrapper is vulnerable. Remember, a person doesn’t actually have to have been mislead to be caught by the section.
I agree with the magistrate – and it’s not a dump on wraps, but on that individual.Caro
Caro, you’ve done wraps for years.
Have you ever sold a house back to someone for the same market price, but only making money on the interest increase?
As far as that wrapper goes, good, he or she should have been hammered for it! The mark up price was just way to high and unfair and unreasonable. The actauly mark up price may have been ok if it was a 200k house but a 27k house and nearly doubling in price. That is wrong. Good on the judge, good decision.
Here is a link to the media report
Luke
ChangingPlaces Real Estate.
Save up to 65% on Real Estate commissions.
Email:[email protected]I wonder how much the property would be worth now? The wrappers may have made more money in the long run from capital growth even after giving $31,000 back to the client. They only paid $25,000 for it apparently.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Still, it’s not the sort of conduct that can be condoned…. AND it further tars wrappers…..
The sooner we get some regulation, the better…..
In the end, if someone is willing to pay the price you’ve put on a house, that’s their choice. I don’t think it should be mandatory to reveal your purchase price if you choose not to.
HOWEVER… they should always be given the opportunity to make comparisons without any undue pressure and seek legal advice. And that’s where I think this wrapper crossed the line – any time you exert pressure, put people in a situation where they can’t make comparisons (talk to some 2nd tier marketers on this one!!) etc. you’re acting without integrity.
If the deal is fair enough, it should stack up without any need for deception.Keep smiling
Felicity
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