Beneficial Interest.......Again

Rosy Sullivan

As I sit at my desk writing this fortnight’s College Chronicle, I reflect on what has happened this week.  Apart from being very tired today after attending the Andre Rieu concert last night – I am inspired from the concert by Andre’s approach to life.  He firmly believes that music is food for the soul and if we fill our lives with good music, then there would be much less need for doctors and those associated medical professionals that work to make us better.

I also reflected on the “goodness” of so many people.  I am currently involved in the planning and execution of the Premier Auctioneers Competition which is being held at the end of next week (BTW check out the website at ).  The people that I am working with, together with the sponsors and the key supporters would have to be some of the “best souls” that I have met in a long time.  According to Andre Rieu, they must have listened to a lot of music in their time.

Unfortunately, I have also heard a scenario this week of an agent who is concerned about the issue of gaining beneficial interest in a property.  He has lived and worked in the same rural area for most of his life and knows many of the local people.  One older gentleman of 79 years in this local community is currently organising the sale of his mother’s home (his family home).  His mother has just moved (reluctantly) into a nursing home at the ripe old age of 97.  The elderly gentleman, who is now responsible for his mother’s affairs, asked the agent in question, (someone he has known for a number of years) what the property is worth.  The agent said the property could bring about $220,000 to $240,000.  The vendor said that he wanted the agent to organise a quick sale of the property, and added to his instructions “unless of course you want to purchase the house, and in that case, you can have it for $160,000”.  Yes…..that is almost a 25% discount on the price the agent believes the property to be worth.  The agent made it very clear to the vendor that he did not want to purchase the property at such a reduced price, and that he could offer it to some of the neighbours who had already indicated that they would be interested in purchasing the property.  The vendor adamantly refused to sell the property to any of the neighbours at that reduced price and said if the neighbours were interested then they would need to pay at least $220,000.

The elderly gentleman is being very good natured and attempting to assist the young agent to get ahead in life.  All proceeds from the sale of the property are going to the son, whose intention it is to leave the money to charity.

Whilst the property is being made ready for market and the contract is being prepared, the elderly gentleman continues to contact the agent and ask him to purchase the property at the reduced price.

Now, we all know that according to the Property, Stock and Business Agents Act 2002, that the agent would need to formally identify himself as the interested party in purchasing the property, in writing to the vendor.  The vendor obviously will have no problem in approving the sale to the agent, as he is the one suggesting it.  So what is the problem I hear you all ask?

Perception of what the agent is doing is the problem.  Many of you have heard me say in CPD classes in particular, that “perception will kill you 10 times faster than reality ever will”.  The perception out in the community (remember it is a very small rural community) of the agent purchasing the property at such a reduced price, will be that the agent has acted improperly in some manner.  Whilst we know that he has done no such thing, the perception may well ruin the good reputation that he has spent years building.
At the end of the day, the property sold to a non-related buyer for $250,000. Well done to the agent!

In this scenario, both the elderly gentleman and the agent have good souls – the vendor wants to help a young person get ahead, and the agent does not want to be seen to be taking advantage of the situation.   

If you want more information on beneficial interest, refer back to our College Chronicle of 6th September 2013, which you can find on our website.

Legal issues surrounding beneficial interest aside, there is obviously a lot of music in this little rural community.