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Legislative Assembly for the ACT: 2003 Week 2 Hansard (4 March) . . Page.. 471 ..

MR STEFANIAK (continuing):

They think that is the case, and they suddenly find that someone has offered to pay $280 and the landlord says, "You beauty! I'll take that."Then their expectations are dashed, and there is that first, traumatic aspect of it when your dream home suddenly goes out the window.

Then there is the cost, which is a very significant issue. It is quite common for people being gazumped to have taken out a couple of searches, employed a solicitor, had a builder check over the property and incurred some bank fees. They would be up for about $1,000 before they sneeze. Then they are gazumped, and they are out of pocket. At this stage, there is no way they can get that back.

In other states, there are different laws. New South Wales has a cooling-off period in its contract. It does not actually stop gazumping. In fact, there is a practice in that state now where the vendor's solicitor might offer a couple of contracts for the same price and whoever gets in first gets the contract. That is not a very satisfactory situation but, again, it is a case of a lot of demand and very little supply. And in that five-day cooling-off period, too, there are some potential problems.

Mr Hargreaves says it is different in South Australia and Queensland. If we went down that track, it would probably require a fairly substantial rewrite of the standard contract of sale used in the ACT. That may or may not be a bad thing, but I recall from discussions with various bodies, that there may be some promise in that. We need to look at it fairly carefully.

If there were to be any alteration to the contract of sale, it would have to ensure that, if something was wrong with the property-something the buyer could not genuinely anticipate-the buyer could, after signing the contract, get out of that contract in a reasonable sort of way. That is pretty well standard with most contracts, but I think it would be essential, if, once the contract is signed, that is basically it.

That is one of the benefits-if you can call it a benefit-of making inquiries before you formally exchange contracts, which is the point everything starts happening from. That is the point I raise there. The department has done some work on this, and there have been concerns in relation to what would be a very substantial rewrite.

Another possibility that is certainly worth looking at was raised by the former head of the Real Estate Institute and also the Law Society. It has considerable merit because it ensures that no-one is wrongfully out of pocket. If someone is gazumped and they have suffered financial loss-they have spent the $1,000 I have mentioned-the seller has to reimburse them that, so that they are not out of pocket.

If the seller has made a handshake deal and then accepted a higher offer, then the seller should pay the aggrieved party whatever the aggrieved party expended as a result of that. That way, the aggrieved party, whilst they do not get their dream home, at least can continue searching for something and are not out of pocket. The seller obviously benefits from a higher price and the gazumper gets the property but, at least, the victim is not out of pocket. It is worthy of consideration and could also be applied-in whatever reverse way you would need to-in a bad market, where the seller is more likely to be the victim than the buyer, who would be the victim in the normal gazumping situation.

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