Licensed Conveyancing - Deader Than Dead!

Published 06 July 09 10:08 AM | Peter Mericka 

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

 

There are hard times ahead for the real estate conveyancing industry, and particularly for licensed conveyancers. Since non-lawyer conveyancers became licensed their lot has become ever more difficult. On top of these difficulties comes the gloomy prediction of NAB Chief Economist Alan Oster.

The following article appeared in the Legal Affairs section of The Australian Financial Review (Friday 3 July, 2009 p.46):

Conveyancing is 'dead'

It is a rare thing indeed for anyone to declare a fondness for lawyers, but that is just what National Australia Bank group chief economist Alan Oster did this week at a Law Institute of Victoria breakfast.

The economist was there to give what turned out to be a reasonably gloomy view of Australia's economic future until at least 2010. But when asked whether banks were taking a hard line on lending to law firms, he said his own department rated industries "and for what it's worth we still like accountants and lawyers...we would like you guys to come and borrow".

But Oster later told a small group at the breakfast he was far less enthusiastic about people involved in conveyancing, with predictions that the rate of house sales would plummet.

"If you are a lawyer who is specialising in conveyancing, you are dead," was his none-too-promising pronouncement.

Being a licensed conveyancer is a miserable existence, plagued by uncertainly and ever increasing costs.

Cost of compliance

First came the costs associated with the obtaining of a conveyancer's licence. Next came the expense of an all-but-worthless professional indemnity insurance cover which leaves licensed conveyancers, and their clients, wondering where the goal-posts are, and when they will stop moving (See "Licensed Conveyancers - PI Insurance Problems).

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Filed under: Conveyancing, licensed conveyancer, conveyancers

Comments

# George Rousos said on July 6, 2009 12:37 PM:

Hi Peter,

Things would be alot less complicated without the conveyancing act. We have the real property act and the common law of contract to get us out of trouble.

The conveyancing legislation only leads to a bottleneck in the system.

Here is a prime example of what I mean.

Caveats

An unregistered interest in Torrens title land may be protected by a “caveat” lodged with the Registrar- General. By section 74F(1) of the Real Property Act 1900, a person ( the “caveator”) who claims to be entitled to a “legal or equitable” estate or interest in Torrens title land by virtue of an unregistered dealing or by devolution of law or otherwise,may lodge a caveat prohibiting the recording of any dealing affecting the estate or interest claimed.

Failure to caveat can be a huge risk

In some situations, failure to lodge a caveat may play a more direct role in postponing an earlier interest to a later one. It is true that no provision in the Real Property Act requires the holder of an unregistered interest to lodge a caveat to preserve the interest’s priority. Nor does lodging a caveat improve the priority an unregistered interest would otherwise enjoy. But it is well established that failure to lodge a caveat may, in certain circumstances, deprive an interest of the priority it would otherwise enjoy.

For example assume that the vendor ( registered proprietor) contracts to sell land to Purchaser A ( or to give a mortgage to A). Purchaser A does not lodge a caveat. Assume then that the vendor contracts to sell the same land to Purchaser B ( or to give a mortgage to B). Purchaser B searches the register before entering into the contract ( or mortgage) but, of course, finds no reference to any interest of Purchaser A. By failing to lodge a caveat, Purchaser A has allowed the vendor(registered proprietor) to create the interest in favour of Purchaser B without the existence of Purchaser A’s interest being brought to Purchaser B’s attention.

As a result, Purchaser A’s interest is almost certainly postponed to Purchaser B.

To understand the procedure of execution here, the Vendor (registered proprietor) hands the certificate of title and a signed transfer acknowledging receipt of the purchase price. Possession of the certificate of title and signed transfer enables Purchaser B to represent herself as the absolute owner.If armed with these documents, Purchaser B creates an equitable interest in favour of Purchaser A, who has failed to lodge a caveat in time to preserve their interest’s as a priority.

# Dan (conveyancing software developer) said on July 6, 2009 6:16 PM:

Conveyancing is a really complex process. It's amazing how many people out there are trying to promote DIY conveyancing. This is just crazy. Why don't people just forget about saving a few hundred pounds, and appoint a qualified professional to do the work. After all, you wouldn't try to perform an operation on yourself, or let someone unqualified to it, just to save some money. There are many things in life where DIY cost cutting is inappropriate and risky, and conveyancing is one of them!

# david said on July 6, 2009 7:48 PM:

I dont understand Georges position about the law on caveats in respect to a diminishing conveyancing climate as suggested by the guy from teh nab.

george doesnt explain teh bottleneck other than if everybody lodged a caveat in every instance the titles office couldnt cope with it firstly.  and secondly how is it relevant to teh posting.

I believe the guy from teh nab is wrong.  would he now not lend to lawyers and accountants who work mainly in real estate?  so what is he saying he loves only lawyers who dont do conveyancing.

gee whiz Peter I hope you dont bank with  NAB otherwise you will dead too, if not already.

# getalawyer said on July 7, 2009 7:53 AM:

What were the precise reasons for saying "Conveyancing is dead"?

# George Rousos said on July 7, 2009 9:15 AM:

David, what I'm saying is this.

You don't have to wait until you have entered into a legally binding unconditional contract to lodge a caveat on a property.

The Vendor (registered proprietor) hands the certificate of title and a signed transfer acknowledging receipt of the purchase price. Possession of the certificate of title and signed transfer enables a purchaser to represent themselves as the absolute owner.(Can still have something in writing, but keep it simple).

When armed with these documents, the purchaser creates an equitable interest before having to formalise a binding contract.

A lawyer can facilitate this process and prepare a common law contract, which certainly simplifies the process.

# david said on July 7, 2009 7:39 PM:

george   your answer still doesnt answer the blog which is about conveyancing being dead according to someone from the nab and that conveyancers are dead or more dead according to the evergreen hater of conveyancers peter mericka  but nothing in this blog says why either is more dead than the other. with respect george you have done what most people are critical of lawyers doing.  giving more information about crap thats not needed its no wonder conveyancers are taking a bigger slice of the conveyancing market with many thanks to peter who was always critical of them not being licesnsed and now that they are its still not good enough. for some inexplicable reason peter suggests in this blog that conveyancers are dead  how so?  my experience is that many of them are very good at their profession better than some solicitors who only dabble in it occasionally.   it seems to me on a national basis that we will follow most other states and conveyancers will do the great majority of domestic conveyancing in the future like the other states and like england etc.

alive and well and growing i suggest

# Peter Mericka said on July 7, 2009 8:32 PM:

Hi David,

The problem with licensed conveyancers is that they cannot do the whole job, and yet they now charge the same as lawyers.

Conveyancers are known to "dump" their clients when things get difficult.  And those who struggle through the difficulties are unable to determine what their PI insurance will cover, and what it will not.

Added to this is the bribery problems which have exploded through the need for conveyancers to bribe real estate agents for referrals.

David, licensed conveyancers did not evolve through need, they grew through greed.

While they like to pretend to be specialists, they are more like a musician with a one song repertoire, but one who can't perform without the assistance of a backing group of lawyers.

"Chirpy Chirpy Cheap Cheap" was the conveyancers' anthem, but now that they're no longer cheap, they are very much on the nose with consumers.

# George said on July 8, 2009 8:54 AM:

David,

Alan Oster is refering to licensed conveyancers.

I'm also referring to the state conveyancing legislation.

Therefore, the issues go deeper than what Alan Oster is saying.

# George said on July 8, 2009 2:35 PM:

Hi David,

In respect to myself giving to much information about crap.

Is this how you respond to an agent and a client when a question about caveats pops up?? or do you just say??

CRAP, LETS DUMP IT ONTO THE SOLICITOR!!!!

Many of our real estate clients have indicated that what you consider crap is something that needs to happen more often inorder to speed up the process of selling the property, which also eliminates unnessary paperwork and some of the dreadful provisions of the state conveyancing legislation, in particular the cooling off period.

I think conveyancers should become valuers. We need more of them in the marketplace, especially giving the pounding the industry has absorbed since the economic meltdown and the fact, that price estimates have become very difficult to assess in such a tough real estate market.

Leave contracts to solicitors.

# George said on July 8, 2009 5:25 PM:

Hi David,

Further to my previous blog posting.

I should also point out to you, that under the standard contract for sale of land 2005 edition here in NSW.

It has the following provision in the contract

IMPORTANT NOTICE TO VENDORS AND PURCHASERS

Before signing this contract, you should ensure that you understand your rights and obligations, some of which are not written in this contract but are implied by law.

This is actually referring to the common law of contract, the most complex area of the law and unless you are legally qualified to advise on contract remedies at law or in equity, it's best that only solicitors dabble in the preparation of contracts and the drafting of terms and conditions.

What I have said all along only adds further weight to what Alan Oster is saying, end of story..

# Peter Mericka said on July 9, 2009 8:15 AM:

Sorry David, but your intemperate and personal attack on George had to be moderated.  Spirited debate is one thing, but pure anger manifesting as offensive language and personal attacks is quite another.

# stuart said on July 11, 2009 8:44 PM:

can i ask what getalawyer asked on 7 july?

what are the precise reasons for saying conveyancing is dead? and why more dead for a conveyancer over a lawyer?

peter george or someone?

# Peter Mericka said on July 11, 2009 11:51 PM:

Hi Stuart,

I quoted the entire article from the Financial Review, and I gave the citation.  You will have to take up the matter with Alan Oster himself if you want a further explanation.

If conveyancing is dead for lawyers who specialise in conveyancing, then it stands to reason that licensed conveyancers are deader than dead.  You see, lawyers who specialise in conveyancing also offer complimentary services, such as wills, probate etc.  Licensed conveyancers on the other hand only offer “cheap” conveyancing, and even then they have to pass some of their clients to lawyers when it all gets too difficult for them.

To put it into different words, if a conveyancing lawyer with a number of strings to their bow is seen by Alan Oster as “dead”, then the poor old licensed conveyancer who has a single string to a comparatively cheap and nasty bow is deader than dead.

# Peter O'Brien said on September 11, 2009 2:16 PM:

There will always be a number of the public who do not like dealing with lawyers.

I have practiced as a licensed conveyancer in two jurisdictions for over 30 years and I could count on one hand the number of people I have had to send to a lawyer whilst acting for them.  I have never been accused of not sending someone to a lawyer when I should have. I have only had one claim against my professional indemnity insurance and that was because the surveyor who made the mistake had ceased to practice and the aggrieved party, or more likely their solicitor, wanted to have a go at someone. It was settled out of court as the former client asked for a truce from his high legal costs.  

A large enphasis in my training was to spot a problem early and know what a licensed conveyancer could and could not do.  I send people to lawyers before I accept instructions if I have a doubt as to whether I should handle a job.

Over many years I have heard a small number of lawyers trumpet the demise of licensed coneyancers but things go on the same and I am confident they will for many more years although tough times will be around on and off just as they have been in the past.  

# Peter Mericka said on September 11, 2009 4:05 PM:

Hi Peter,

Your first sentence is really quite deceptive.  Ask anyone why they don't like dealing with lawyers and you'll find that they've had an expensive and disappointing experience with a legal matter such as family law, criminal law, personal injury etc.  Conveyancers seize on this to suggest that consumers want conveyancers instead of lawyer for property matters - nonsense.

Peter, licensed conveyancers simply do not have the ability to provide the protections offered by lawyers.  There are conveyancers who are very good at what they do (I know, because the most competent and professional conveyancers I have ever met actually work for me), but licensed conveyancers cannot offer legal advice beyond conveyancing work, and their PI insurance turns into a pumpkin as soon as the line is crossed, leaving the client extremely vulnerable.

Finally, while we have a corrupt real estate industry with conveyancing bribes and referrals to benign estate agent "pets" the licensed conveyancers will thrive.  I would prefer to see licensed conveyancers do a bit of value-adding to their services by becoming incorporated legal practices, as Jill Ludwell, President of the Australian Institute of Conveyancers publicly recommended.