On 11 March 2016 the Supreme Court of Victoria held that a purchaser's notice of termination was ineffective because it was given to a real estate agent. The Court decided that the estate agent’s role was confined to a marketing and sales mandate, with the consequence that the agent did not have the authority to receive a notice of termination. The Court’s analysis considered the scope of the estate agent’s ostensible authority, implied authority and authority under the Sale of Land Act 1962. There may of course be a different result in other circumstances, for example if the evidence shows that a vendor makes it clear that the estate agent has a much broader role than the Court identified here.
The case highlights the need to:
A. Keep in mind that when you serve an important notice, attention should be given to not only what it says, but also to how it is delivered; and
B. Be cautious about relying on agents as standing in the place of their principal / client.
At the same time, it also provides food for thought about how you instruct an agent, and the impression on third parties of how much authority your agent has.
In this case, with a contract of sale for $4.48m, not paying enough attention cost the unfortunate purchaser in the order of a million dollars because instead of recovering a deposit the purchaser had to lose the deposit plus pay the difference between the $4.48m and the lesser price which the property sold for, as well as interest and legal costs.
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