PROTECT ME FROM POISON
8th January 2007
PROTECT ME FROM POISON
Buyers need to be alert and alarmed.
A major Gold Coast developer has stated - in court, under oath - that all his sales contracts contain clauses that seriously disadvantage the buyers. The clauses are known as "poison clauses".
The developer told Southport Magistrates Court: "In every contract we place clauses that favour us." He claimed that every developer uses such clauses.
These clauses allow a developer to cancel the contracts at any time within three and a half years without having to give any reason.
The reason, however, is obvious. If the property market rises after the buyers sign the contract, the developers tell the buyers to get lost. If the market falls, the developers force the buyers to go-ahead.
What a neat stitch. Heads they win, tails you lose.
"I wouldn't know a developer who doesn't provide a contract that benefits them in this way," said the developer who added that it's up to the buyers and their solicitors to be alert enough to spot the poison clauses and demand they be removed.
He's right, legally. Developers can do what they like when preparing contracts to sell their properties. They call it business, buyers call it a rip-off.
Buyers need to be alert and alarmed before they sign a contract to buy from a developer.
For example in one case in Brisbane a developer cancelled all the sales contracts just months before an apartment building was completed. The apartments, which originally sold for $340,000, had reportedly increased in value by $100,000 making them worth $440,000 each. The developer just told the buyers to get lost. Business is business.
Poison clauses are a classic example of how experienced property players take advantage of inexperienced buyers.
It's just another reason to remember the most important words when buying or selling real estate. Don't sign anything - until you get independent legal advice.
Go to a lawyer of your choice and make this statement - "Protect me from poison."
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Consumer Alert is the opinion of Neil Jenman and The Jenman Group.
This Consumer Alert is taken from the Alerts page of the Jenman website.
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