First home buyers forward dating contract to get extra grant money - Article

[Alex P Keaton]

First home buyers forward dating contract to get extra grant money

HOUSE buyers are allegedly faking contracts to illegally claim the boosted first-home grant.

Some dodgy real estate agents and mortgage brokers are encouraging the fraud, suggesting buyers change the date of existing contracts to fall after October 14 so they qualify for the latest lucrative federal government grants.

Forward-dating contracts could net first-home buyers $14,000 instead of $7000 under the old grant system.

A Herald Sun investigation has also discovered:

SOME financiers are reporting a 25 per cent surge in Victorian mortgage sales since the Government doubled the grant a month ago.

INQUIRY rates on new and established homes jumped 80 per cent in the week after the new grant was announced.

HOUSE sales in some areas of country Victoria have leapt 300 per cent on the back of first-home buyers in rural areas being eligible for state and federal grants totalling $29,000 on new homes.

MORE than 1300 wrongly claimed first-home grants, worth almost $11 million, have been detected since the scheme began in 2000.

RORTERS have been fined $411,000 in the past year alone and ineligible applicants forced to pay back $3.7 million in the same period.

AMONG frauds detected by the State Revenue Office inspectors were greedy investors and owners of multiple properties.

ALMOST 300,000 Victorians have received $2.9 billion in first-home grants since 2000.

The new grants, coupled with low interest rates and falling prices, are luring potential first-home buyers.

But the influx of new money has sparked fears prices could spiral out of reach of ordinary Australians.

While industry figures remain cautious, early data shows sales rose in October on the back of the grant boost.

Australian Finance Group, which controls about 10 per cent of the national mortgage market, said a surge in first-home buyers saw Victorian mortgage sales soar by 25.1 per cent in October.

With house sales drying up as the global financial crisis hit home, developers had slowed building new homes.

Nick Collishaw, head of Mirvac, said some of its projects had been put on hold for three to six months. But a fortnight ago it sold 36 homes, mostly to first-home buyers, compared with 15 the week before.

The grant increase has sparked a sales boom in regional Victoria.

Villawood boss Rory Costelloe said sales at the company's Bendigo estates had skyrocketed 300 per cent.

 

[Alex P Keaton]

If they get caught (and I think they will) the real estate agent cops a $20,000 fine. Their crazy.

I hope they do get caught. Its not fair.

 

[Bayside]

Crazy huh, I thought about this for about 5 seconds but there is no way in hell i'd do it.

 

[Nth Brisbanite]

I know a person who recently sold his house on the 10th October to First Home Buyers. The buyers' solicitor asked that the old contract be cancelled so that the FHB could get the $14,000 grant. The seller said that he wanted a clause put in to indemnify him of any action that the government may take against him.

Some real estate people say that there were quite a lot of young people who changed their contract dates in October. It's not necessarily the fault of agents, solicitors who should know better, are the ones who are encouraging it.

 

[LynnH]

The seller said that he wanted a clause put in to indemnify him of any action that the government may take against him.

Would such a clause give the seller any real protection? After all, it could be reasonably claimed that s/he is knowingly participating in fraud.

Can any of our solicitor forumites give advice on this???

Cheers
LynnH

 

[Raddles]

Hi there
don't know that an indemnity for fraud would stack up.

It is an obvious concern for those involved in the industry. Just by way of background, have just helped our eldest daughter purchase her first home - all legitimate by the way - we were already looking and the extra boost came at a good time. We are now at the stage of going through the process with the contract - fulfilling special conditions etc - and have asked one of my friends who is a lawyer - if we can do the stamping at her office. She has asked for an indemnity - so that if there is any problems further down the track - and money had to be repaid etc - she is covered in the situation. I have no problem with giving the indemnity because once again all is legitimate - my daughter will be living in the property - and should be entitled to the grant boost and the concessions for stamp duty.
thanks

 

[Nth Brisbanite]

Would such a clause give the seller any real protection? After all, it could be reasonably claimed that s/he is knowingly participating in fraud.

Can any of our solicitor forumites give advice on this???

Cheers
LynnH

The person I know did it in good faith thinking that by cancelling the 10th October contract and drawing up a new one dated 15th October, he was helping the new FHBs get an extra $7,000.

Well it appears that the 2 lots of solicitors, the real estate agent, the buyer and the seller could all be in strife as they all agreed to the new date. I'm sure that this practise has been rife since the extra grant was announced.

I doubt whether the government would have the resources to audit every contract signed around the announcement of the extra amount for FHBs.

 

[LynnH]

Nth Brisbanite

Possibly that is the case, but I am sure the Government is aware that the practice is rife, and will be checking as many files as they possibly can.

Even if your friend's motives are altruistic, from my memory of contract law (albeit many years ago now), unless there is a substantive change in the terms of a contract (which would not be the case in this situation), then the original date of the contract would apply. Perhaps Raddles or someone else with much more legal knowledge than I could confirm this?

I have to say that I would not be comfortable being in your friend's position.

Cheers
LynnH

 

[Raddles]

Hi Lynn
my understanding of what can happen with the grant is along the same points you have made

... it is believed that State & Territory Government offices that are responsible for administering the Grant will put in place an 'Anti Avoidance Provision', meaning that if you were to cancel a contract dated before 14 October 2008, for no valid reason and then enter a new contract, the Revenue Office will use their original contract date and not the new one entered into so you will still be ineligible for the increase.

thanks

 

[Nth Brisbanite]

I am sure the Government is aware that the practice is rife, and will be checking as many files as they possibly can.

Even if your friend's motives are altruistic, from my memory of contract law (albeit many years ago now), unless there is a substantive change in the terms of a contract (which would not be the case in this situation), then the original date of the contract would apply.

I have to say that I would not be comfortable being in your friend's position.

LynnH

Yes, that could be a bit of a worry for the person I know. Does anyone know whether real estate agents have to submit all contracts (cancelled and uncancelled) to some central office? If they did, then it would be easy to catch out any rorting.

 

[Spectre]

would there be an argument in there that there was something incorrect with the original contract, i.e. agent dated it wrong, signature in wrong spot, illegible reading due to poor penmanship etc.

Or maybe better yet is to define what a 'valid reason' is

 

[Raddles]

Hi there
one argument which I believe could be used successfully - particularly in the contracts for units/apartments etc - is that there is a particular order in which documents have to be submitted to a buyer - appropriate notices from the agent first, the disclosure statement then the contract (referring to QLD in this context). In the particular contract my daughter signed - there is a representation about the presence of an electrical safety switch - which is incorrect at the moment and being remedied. But it too could be used satisfactorily as an argument to scrap an existing contract - and enter into a new contract.
There definately is scope for a valid reason - but it has to be supported with evidence - so better to be safe than sorry in my opinion.
thanks

 

[Stella]

I doubt whether the government would have the resources to audit every contract signed around the announcement of the extra amount for FHBs.

With the amount of date matching the government already does, it wont take much to add another check to their systems.

Not if but when.....

Cheers
Stella

 

[Nth Brisbanite]

With the amount of date matching the government already does, it wont take much to add another check to their systems.

Not if but when.....

Stella

Stella, even if they do have the computer systems to audit the grant, I doubt very much whether the ATO have the human resources to follow it through. The solicitor of the buyer of my friend's property simply cancelled the old contract. He's pretty sure that the old contract didn't have to be submitted to any central government office.

I think that the ATO have much bigger fish to fry.

 

[Stella]

Stella, even if they do have the computer systems to audit the grant, I doubt very much whether the ATO have the human resources to follow it through. The solicitor of the buyer of my friend's property simply cancelled the old contract. He's pretty sure that the old contract didn't have to be submitted to any central government office.

I think that the ATO have much bigger fish to fry.

I guess you are probably right - the old contract doesnt (afaik) have to be submitted anywhere so there is no way of knowing if there was a prior contract.

Cheers
Stella

 

[Alex P Keaton]

Stella, even if they do have the computer systems to audit the grant, I doubt very much whether the ATO have the human resources to follow it through. The solicitor of the buyer of my friend's property simply cancelled the old contract. He's pretty sure that the old contract didn't have to be submitted to any central government office.

I think that the ATO have much bigger fish to fry.

I have heard they are going to be very strict on this. They will be checking up on everything.