Lawyers Can Sell Real Estate On Commission
'Step Right Up' - Lawyers Can Sell Real Estate On Commission
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Strong lobbying for the removal of the ban on lawyers charging commission on real estate sales has been unsuccessful, said former NZLS president, Ian Haynes, at a recent seminar on the new Rules of Conduct and Client Care for Lawyers.
When the Lawyers and Conveyancers Act takes effect on August 1, lawyers will be able to provide real estate services in the ordinary course of their business which is currently prohibited.
However, the legislation provides that practitioners may not charge commissions for their real estate services, a prohibition which is also contained in the Real Estate Agents Bill currently before Parliament.
Mr Haynes said that extensive submissions had been made by NZLS to the Select Committee considering the real estate bill, but the legislation had just been reported back to the House by the select committee and the ban on commissions had been retained.
He told an NZLS seminar Lawyers and Conveyancers Act – Rules of Conduct and Client Care that the outcome was very disappointing but he hoped that the law would soon be changed. There was no other country in the world that permitted lawyers to sell real estate but banned them from charging by commission.
Mr Haynes said that Rule 16.3 of the draft Rules of Conduct and Client Care stated that lawyers setting fees for real estate services could take into account the following matters:
the importance of the work to the client and the
the degree of risk assumed by the lawyer, including the amount or value of the property involved;
whether the fee was fixed or conditional; and
any quote or estimate of fees given by the lawyer.
Mr Haynes referred to the notable success of Scottish lawyers in capturing a majority of the real estate market through property shops. In Edinburgh, over 80 per cent of house sales were completed through lawyers, while in Aberdeen the figure was 90 per cent.
He said that the fees charged were far lower than those charged by real estate agents in New Zealand. One Scottish law firm charged 0.75 per cent for real estate services and one per cent if legal services were provided as well. The draft rules are currently with the Minister of Justice awaiting final approval. All practitioners will be required to comply with them once the new legislation takes effect.
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