We commenced a Sydney investment project based on the client’s wish to buy two apartments. As per our practice, we sought and received the finance pre-approval based on the client’s current interstate investment properties being 100% owned.

After 2.5 months of researching and inspecting, our offers on two separate properties on behalf of our client were accepted based on a 0.25% deposit. Both contracts were signed with a 5 day cooling-off period. The outcome of the due-diligence was positive including the lender’s valuation. Un-conditional finance was issued.

Three days into the cooling-off period, the lender emailed the client requesting a copy of the title deeds of the interstate properties. On receiving the facsimile of the deeds, the lender then asked for the originals. The client was in possession of only the photocopies of the deeds (never bothered to ask for the originals when the loans were paid off). The client contacted the interstate lender and requested the originals to be air-expressed next day to Sydney. The lender could not comply because they could not find the originals and advised they will have to arrange for duplicate originals to be issued by the relevant government department.

Consequently, the Sydney lender withdrew the un-conditional approval and the acquisition of the two Sydney properties fell through.

The morale of this experience is two-fold:

1. Ensure you are in possession of the original title of your property.
2. Unconditional finance approval is neither un-conditional nor a guarantee.

I recently had an unpleasant experience with a vendor’s solicitor while I represented my overseas based client in buying a property in Sydney.  It was resolved when the references shown here were presented as evidence that our client’s documentation was correct and in full compliance with the current regulations.

Buyers Agents and Power of Attorney

Buyer’s agents sometimes use a power of attorney to bid on a client’s behalf at an auction. Here’s a guide to help sort out the process.

A power of attorney is a formal document by which the buyer gives their buyers agent  the power to represent them and act on their behalf in the purchase of a property. State laws might defer.  Refer to NSW Public Trustee for example

A buyer who cannot be physically present at the auction (due for example to being overseas) and might wish to give a power of attorney to their buyer’s agent who can actually be there. Alternatively, the buyer might choose not to be physically present at an auction to avoid being recognised. Here are some examples:

• the buyer might have previously negotiated to buy the property but the deal fell through;
• the buyer might be a developer who had already bought five houses in a row and wishes to buy the sixth;
• the property might be one half of a duplex and the buyer owns the other half;

In the above circumstances and many others, the buyer might choose to give a buyer’s agent a power of attorney to attend the auction on their behalf and bid for the property.

If the buyer’s agent has a power of attorney, they don’t have to declare who they are representing when registering at the auction, in accordance with Clause 15(4) of the Property, Stock and Business Agents Regulation 2003

Note that this exemption only applies if the buyer’s agent has a power of attorney and not just a letter of authority – and there is a difference.

At first glance a power of attorney and a letter of authority can appear to be similar concepts. Like a power of attorney, a letter of authority enables someone to bid on another’s behalf. For example, a buyer might give their agent a letter of authority to bid on their behalf because they lack confidence at auctions – perhaps they’re afraid they won’t be able to keep their cool and will accidentally bid past what they can afford – and so wish for their agent to bid instead.

The Property, Stock and Business Agents Act 2002 No 66 provides in section 69(1)(b) that a letter of authority must include the prospective buyer’s name, address and identifying number of their proof of identity. This letter of authority must be produced when registering prior to the auction.

Fred Haggar – Buyers Agent

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