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Real Estate Agents and Finance Brokers Beware- Case Dodds versus Kennedy

By: admin|

Real Estate Agents and Finance brokers now need to be very careful when dealing with clients wishing to borrow money to purchase a property and the offer and acceptance is noted subject to finance clause. A recent case in the Western Australian court of appeal ruled in favour of the seller and the buyer was required to compensate the seller for the shortfall on the sale of the property which was sold to another buyer at a lower cost.

Issued raised by the appeal judges in reaching their final decision were as follows;

* The offer and acceptance stated that the finance was to be sort via their bankers ANZ and the finance broker concerned did not submit the loan application due to the fact that the finance broker knew it would not meet the lenders guidelines. Given the fact that the finance broker issued the letter of decline the contract was breached by the buyer as the loan application should have been submitted to the ANZ and they where to decline the application.

All parties concerned must now be aware that if a lender is mentioned in the offer and acceptance contract then the loan application must be submitted to the nominated lender to comply with the contract as currently written. The judges have recommended that a rewrite of the REIWA contract be undertaken to ensure these issues and their other findings are addressed.

This decision now raises many issues concerning the NCCP and the duties and roles of the Finance Broker in regards to placing clients into hardship areas along with know your client, know your products and placing the clients in the best products to meet the clients needs.

For full information regarding the findings see the following attached.$FILE/2011WASCA0131.pdf

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