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Censure and fine for inadequate advice

07 July 2017

A lawyer who failed to properly advise the buyers of a property has been censured and fined $2,500 by a lawyers standards committee.

The lawyer, P, was also ordered to cancel and refund his $1,201 fee for work on the purchase.

The clients, a husband and wife, bought a property where they planned to build a new energy efficient home.

Sewage easement

The title to the section was subject to a three-metre wide sewage easement, running the full length and width of the land. This meant the clients could not construct a house to the design specifications or in the position they had planned.

The clients learned of the easement from their builder after the purchase was complete.

“The title to the property and any easements, conditions or covenants affecting the title are standard documents for lawyers to review,” the standards committee said.

It was not sufficient for the lawyer to simply advise the clients to read the documents, without providing any explanation or advice on the title and the implications of the registered interests.

The clients, as non-lawyers, “cannot be expected to understand the implications of the easement or the restrictions and conditions applying to the easement land without legal advice.”

The committee also noted that P had included “perusing the title” in his invoice and for this and other reasons found that a review of the title formed part of the agreed retainer.

No LIM

P told the committee that he did not consider that a Land Information Memorandum (LIM) was necessary because the purchase was bare land in a new subdivision, with which P was familiar. The clients also did not seek a LIM and had a copy of one for the underlying subdivision. The clients had advised P’s assistant they were happy to obtain a LIM but relied on P to advise whether it was needed.

The committee said it considered P was wrong to determine a LIM was unnecessary. The reasons for that included:

  • A LIM is an important component of a purchaser’s due diligence and a standard document for lawyers to review before a purchaser commits to buying a property;
  • The LIM the clients had was issued some nine months before the contract, was out of date, and pertained to the subdivision as a whole and not the property the clients were buying;
  • New information can be included in a LIM by a council at any time;
  • Buyers should obtain their own LIM rather than relying on one provided to someone else, as they will have no claim against the council if the information is inaccurate or incomplete because the council only owes a duty of care in respect of information contained in the LIM to the party requesting and paying for it.

The committee found P’s determination that a LIM was unnecessary and his failure to provide adequate advice about the title and the easement was unsatisfactory conduct.

As well as the censure, fine and order to cancel fees, the committee ordered P to pay $1,500 costs.

Last updated on the 4th August 2017