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Legislative Assembly for the ACT: 2003 Week 2 Hansard (4 March) . . Page.. 466 ..

MR HARGREAVES (continuing):

ACT buyers of property often believe that a seller is legally, or ethically, bound once a seller accepts an offer. Sometimes buyers pay a 1 per cent holding deposit under the misapprehension that this secures them the right to buy the property. Buyers then proceed to spend money engaging a solicitor, undertaking searches and obtaining finance after their offer has been accepted but before written contracts are exchanged.

The fact remains that, until a contract is signed and exchanged by both parties, a seller can accept further higher offers. This is when a buyer can be gazumped, leaving them without the property they believe they have purchased and out of pocket for the expenses they have paid.

Agreements to buy and sell land are treated differently from any other type of agreement. If it was a contract for goods, an oral agreement would be sufficient. Not so for land. Agreements to buy and sell land are governed by the Statute of Frauds, a centuries old doctrine that requires a contract for land to be in writing for it to be binding.

The solution is not to do away with contracts in writing, because this requirement gives certainty to contracts for what are significant consumer financial transactions, and written contracts are essential to reducing expensive and drawn-out litigation over alleged oral agreements about property that cannot be substantiated.

Gazumping is a problem for consumers for a number of reasons: buyers lose the property they thought they had secured; buyers feel cheated and deceived; buyers lose the money they spent on searches, solicitors and bank fees; and gazumping creates an environment of mistrust between buyers and sellers in the property market.

As an aside, the reputation of any profession can be determined by the lack of honour perpetrated by a few of them. Real estate agents in this town are among the most honourable people that we have within the work force, but their reputation suffers because some people operate without any semblance of honour at all.

Gazumping can also be a risky business for sellers. Every time a seller engages in gazumping, they run the risk of losing the second buyer as well as the first. If the second buyer evaporates and the seller is forced to go back to the first buyer, it is unlikely that the first buyer will trust the seller and take the risk of being gazumped again. Sellers may also become frustrated with the length of time the property remains on the market, particularly if no new buyers appear.

A buyer who is gazumped loses more than just the money paid out in searches and solicitors' fees. Gazumped buyers have told the government and the Real Estate Institute that they are angry because they feel they have been deceived. A promise was made by the seller-a deal was struck-and then that promise was broken. Buyers in the ACT expect sellers to stand by their word.

There is nothing wrong with a seller seeking to make the best deal they can for the sale of their property. Their right to obtain the highest possible price for their property should not be interfered with, nor should their right to choose the buyer to whom they wish to sell. I understand that the government is working with stakeholders to develop a solution that balances the interests of both buyers and sellers. To achieve an effective solution it

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