How does a seller protect himself if he has allowed the buyer to appoint the conveyancer

One of the questions he is most frequently asked, says Tony Clarke, MD of Rawson Properties, is why, if the buyer of a property is paying the conveyancing attorney, the seller has the prerogative to appoint him.

The arrangement, says Clarke, is logical because in a property transaction the seller is far more at risk than the buyer. As the normal costs payable by a purchaser are insignificant in comparison to the property’s value it is important that the seller keeps control, says Clarke.

“This is especially true where the buyer takes possession before transfer and pays an occupational rent that is lower then his bond repayments. It is then in his interests to delay transfer as long as possible, within the four month period allowed before the Receiver charges double transfer duty.”

If the seller does not have his own attorney, says Clarke, the real estate agent is allowed to recommend a conveyancer. This can give rise to questions as to why the conveyancer has been appointed but in his experience agents almost always to recommend a conveyancer who has a proven track record, is reputable, efficient and can expedite the transfer.

At Rawson Properties, he said, training courses stress the importance of identifying good conveyancers and building relationships with them.

Most conveyancers fees, said Clarke, are the same because they are prescribed and regulated by the law societies of SA – but in some cases the buyer will ask for a specific conveyancer to be appointed because this conveyancer has offered a reduced fee.

Conveyancers, said Clarke, are often be willing to do this if they are allowed to handle both the conveyancing and the bond registration assignments.

However, many commercial banks now insist that different conveyancers are made responsible for these tasks. The reason for this, he said, is that with two conveyancers, the chances of the price being 'loaded' and fraud committed against the banks are significantly reduced.

“A loaded deal is one in which a fictional higher price is listed on the sale document so that the buyer can get a bigger bond. In these cases an ancillary secret agreement allows the buyer to pay less or to pay back the seller in cash on the excessive amount.”

If a buyer does ask that his conveyancer be used, the way to prevent any conflict of interest, said Clarke, is to insert a clause to the effect that the seller nominates this conveyancer. This reinforces the message that the conveyancer represents the seller’s interests.

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