Foreclosure fallout: Houses go for a $1

Ron French / The Detroit News

DETROIT -- One dollar can get you a large soda at McDonald's, a used VHS movie at 7-Eleven or a house in Detroit.

The fact that a home on the city's east side was listed for $1 recently shows how depressed the real estate market has become in one of America's poorest big cities.

And it still took 19 days to find a buyer.

The sale price of the home may be an anomaly, but illustrates both the depths of the foreclosure crisis in Detroit and the rapid scuttling of vacant homes in some of the city's impoverished neighborhoods.

The home, at 8111 Traverse Street, a few blocks from Detroit City Airport, was the nicest house on the block when it sold for $65,000 in November 2006, said neighbor Carl Upshaw. But the home was foreclosed last summer, and it wasn't long until "the vultures closed in," Upshaw said. "The siding was the first to go. Then they took the fence. Then they broke in and took everything else."

The company hired to manage the home and sell it, the Bearing Group, boarded up the home only to find the boards stolen and used to board up another abandoned home nearby.

Scrappers tore out the copper plumbing, the furnace and the light fixtures, taking everything of value, including the kitchen sink.

"It about doesn't make sense to put the family out," Upshaw said. "Once people are gone, you're gonna lose the house in this neighborhood."

Tuesday, the home was wide open. Doors leading into the kitchen and the basement were missing, and the front windows had been smashed. Weeds grew chest-high, and charred remains marked a spot where the garage recently burned.

Put on the market in January for $1,100, the house had no lookers other than the squatters who sometimes stayed there at night. Facing $4,000 in back taxes and a large unpaid water bill, the bank that owned the property lowered the price to $1.

$1 sale to cost bank $10,000

While it's not unusual for $1 to be exchanged when property is transferred for legal reasons, listing a home in the Multiple Listing Service for $1 was surprising and unsettling to Kent Colpaert, the listing real estate agent for the property.

"I've never seen a home listed for $1," Colpaert said.

"But it's been hit hard: It's just a shell."

On Tuesday, Realtor.com listed one other single-family home, one duplex and one empty lot at $1 in Detroit.

Dollar property sales are the financial hangover from the foreclosure crisis, said Anthony Viola of Realty Corp. of America in Cleveland.

Lenders that made loans to unqualified buyers during the height of the subprime market now find themselves the owners of whole neighborhoods of vacant, deteriorating homes.

"No one has much sympathy for these banks that made subprime loans," Viola said. "And in some cities like Cleveland, judges aren't letting them sit on the properties -- they're ordering them to tear them down or sell them."

So desperate was the bank owner of 8111 Traverse Street to unload the property that it agreed to pay $2,500 in sales commission and another $1,000 bonus for closing the $1 sale; the bank also will pay $500 of the buyer's closing costs. Throw in back taxes and a water bill, and unloading the house will cost the bank about $10,000.

"It doesn't make sense in some neighborhoods to keep paying costs and costs," Colpaert said. "It can make more financial sense to give it away."

Buyer calls it an investment

Colpaert declined to provide the name of the prospective purchaser, because the deal had not been through closing. The agent did say that the buyer agreed to pay the full list price of $1, and planned to pay cash.

The buyer, a local woman, considers the home to be an investment property and will not live there, Colpaert said, though exactly how soon the buyer can expect to recoup her four-quarter investment is questionable. Replacing the guts of the house will costs tens of thousands of dollars, and the owner will have trouble keeping scrappers from stealing the improvements as quickly as they're installed. Home demolition costs about $5,000, Colpaert said.

Meanwhile, the new owner will owe $3,900 in property taxes in 2009 on her dollar purchase unless she challenges the tax assessment.

While selling a home for the amount of change most people could find between their couch cushions is unusual, some abandoned homes in Detroit sell for $100; vacant lots can be purchased for $300.

"My 14-year-old son could buy a block of Detroit property," said Ann Laciura, senior servicing specialist for the Bearing Group.

You can reach Ron French at (313) 222-2175 or rfrench@detnews.com.

Conveyancing Company Advice

The Legal Practitioners’ Liability Committee (LPLC) has advised that any conveyancing company that is wholly owned by legal practitioners or one or more principals of an incorporated legal practice will need to: 

• obtain a licence under the Conveyancers Act 2006 (Act); and
• appoint a non lawyer director who is a licensee under the Act.

The LPLC has further advised that any such company will need to obtain insurance in accordance with the Act rather than from the LPLC. Further information is available from the Business Licensing Authority website.

Source Friday Facts - LIV 

Apartment building dives

THE credit crisis is taking its toll on apartment construction, with the number of new blocks started diving 17.1 per cent in the June quarter.

New private houses are still being built, with a 4.1 pwer cent rise in commencements in the quarter, but economists believe the total number of new dwelling units being built is not enough to keep pace with growth in the population.

Commonwealth Bank economist James McIntyre said the national stock of houses was rising at its slowest pace since months after the introduction of GST in 2000.

"With strong population growth and continued growth in incomes, rents will continue to rise at near 10 per cent levels for some time," he said.

The world credit crisis has made it much more difficult to arrange finance for any sort of commercial building. Apartments make up about 30 per cent of all new housing.

Mr McIntyre said housing construction was running at about 157,000 new homes a year, while demand from rapid population growth is rising at between 190,000 and 210,000 a year.

Turnover in the existing housing market remains slow, as individuals become more wary about taking on housing debt.

Auction clearance rates down to around 50 per cent or less in all state capitals except for Melbourne, according to Australian Property Monitors.

Perth is the worst effected market, with only 21 per cent of the properties put to auction in the last two months actually being sold.

Property is also failing to sell in Brisbane, with only 30 per cent of the houses put up for auction in August selling. In Sydney, the clearance rate last month was 52 per cent while it was 62 per cent in Melbourne and 40 per cent in Adelaide.

"Auction clearance rates for all capital cities are well below their average and significantly below the rates witnessed this time last year," APN economist, Liam O'Hara said.

The number of properties being put up for auction has been increasing in most cities

David Uren, Economics correspondent | September 16, 2008 | The Australian

Identity Farming

  by Bruce Schneier
     Chief Security Technology Officer, BT
            schneier@schneier.com
           http://www.schneier.com

Let me start off by saying that I'm making this whole thing up.

Imagine you're in charge of infiltrating sleeper agents into the United States. The year is 1983, and the proliferation of identity databases is making it increasingly difficult to create fake credentials. Ten years ago, someone could have just shown up in the country and gotten a driver's license, Social Security card and bank account -- possibly using the identity of someone roughly the same age who died as a young child -- but it's getting harder. And you know that trend will only continue. So you decide to grow your own identities.

Call it "identity farming." You invent a handful of infants. You apply for Social Security numbers for them. Eventually, you open bank accounts for them, file tax returns for them, register them to vote, and apply for credit cards in their name. And now, 25 years later, you have a handful of identities ready and waiting for some real people to step into them.

There are some complications, of course. Maybe you need people to sign their name as parents -- or, at least, mothers. Maybe you need to doctors to fill out birth certificates. Maybe you need to fill out paperwork certifying that you're home-schooling these children. You'll certainly want to exercise their financial identity: depositing money into their bank accounts and withdrawing it from ATMs, using their credit cards and paying the bills, and so on. And you'll need to establish some sort of addresses for them, even if it is just a mail drop.

You won't be able to get driver's licenses or photo IDs in their name. That isn't critical, though; in the U.S., more than 20 million adult citizens don't have photo IDs. But other than that, I can't think of any reason why identity farming wouldn't work.

Here's the real question: Do you actually have to show up for any part of your life?

Again, I made this all up. I have no evidence that anyone is actually doing this. It's not something a criminal organization is likely to do; twenty-five years is too distant a payoff horizon. The same logic holds true for terrorist organizations; it's not worth it. It might have been worth it to the KGB -- although perhaps harder to justify after the Soviet Union broke up in 1991 -- and might be an attractive option for existing intelligence adversaries like China.

Immortals could also use this trick to self-perpetuate themselves, inventing their own children and gradually assuming their identity, then killing their parents off. They could even show up for their own driver's license photos, wearing a beard as the father and blue spiked hair as the son. I'm told this is a common idea in Highlander fan fiction.

The point isn't to create another movie plot threat, but to point out the central role that data has taken on in our lives. Previously, I've said that we all have a data shadow that follows us around, and that more and more institutions interact with our data shadows instead of with us. We only intersect with our data shadows once in a while -- when we apply for a driver's license or passport, for example -- and those interactions are authenticated by older, less-secure interactions. The rest of the world assumes that our photo IDs glue us to our data shadows, ignoring the rather flimsy connection between us and our plastic cards. (And, no, REAL-ID won't help.)

It seems to me that our data shadows are becoming increasingly distinct from us, almost with a life of their own. What's important now is our shadows; we're secondary. And as our society relies more and more on these shadows, we might even become unnecessary.

Our data shadows can live a perfectly normal life without us.

Data shadow essay:
http://www.schneier.com/essay-219.html

Interesting commentary.
http://www.examiner.com/x-536-Civil-Liberties-Examiner~y2008m9d4-Im-not-myself-today-or-manufacturing-a-new-you orhttp://tinyurl.com/5g883m

This essay  previously appeared on Wired.com.
http://www.wired.com/politics/security/commentary/securitymatters/2008/09/securitymatters_0904 or http://tinyurl.com/5kmh2s

Auction clearances surge

• Chris Vedelago | The Age
• September 15, 2008

MELBOURNE'S auction clearance rate has surged to a six-month high as buyers continue to return to the market following the recent interest rate cut.

The Real Estate Institute of Victoria says the number of properties that sold at auction at the weekend rose to 68%, up four percentage points on last week and nine percentage points in a fortnight.

Just two weeks ago the clearance rate had dropped to 59% — its lowest point in more than three years.

REIV chief executive Enzo Raimondo said the rebound was the result of renewed interest in the market with the start of the spring property season, and growing buyer confidence after the Reserve Bank this month cut the official interest rate for the first time in nearly seven years.

But some analysts caution that these kinds of rapid, short-term movements in sales are often driven more by emotional reactions than a careful reading of the market.

"Sentiment is fairly clear from the RBA about the interest rate and that's got to be having some influence, but I don't know whether it translates into a nine percentage point difference," the director of strategic research with analyst group Charter Keck Cramer, Robert Papaleo, said.

"The market tends to over-react on the upside as well as the downside, and with (the interest rate cut) being the first bit of positive news in a while, people may have gotten a little too confident.

"The surging clearance rate has also come at a time when supply levels have been historically low, suggesting the improvement may have more to do with competition for a smaller pool of stock than across-the-board growth in demand."

There were 539 properties put up for auction at the weekend, 29.54% below the level for the same time last year (when the clearance rate was 82%) and 10.3% lower than in 2006 (when sales were at 70%).

The last time supply levels were lower for this weekend in September was during the market downturn of 2004 and 2005.

Buyers' advocate Peter Rogozik said this year's tougher market conditions had led many vendors to keep second-tier properties out of the market for fear they would not sell.

Death, Debt & Divorce

Death, divorce and debt are the market makers for property prices in periods of economic slowdown and a retreating property market. Such vendors are the "willing vendors" who will to a large degree chase the buyers. Executors, divorcees and debt stressed vendors are more likely than not, have to sell. And when buyers are thin on the ground, any reasonable offer will more often than not result in a sale. The 3Ds provide the buoyancy the market needs when other vendors may have deserted the market waiting for better times to return. If vendors don't have to sell, they will happily postpone their decision to sell and wait for more favourable times, especially the investor.

Buyers have been spooked and affected by economic factors: higher interest rates, fuel and food increases, layoffs and the wealth affect of a lower stock market.

Jonathon Dixon, managing director of J. P. Dixon, was quoted in the Domain section of the Age online: He says he has never seen the market turn down as fast as it has over the past few months."It's as skinny as I've ever seen it." In June, Australian property statistics were saying that despite the harsh winds emanating from the US subprime mortgage meltdown, prices here were generally "flat but not falling". In the three months since, the widespread wisdom is that many metropolitan districts have come off 10-15% from the prices that were being achieved in 2007. Last year was an odd market bubble." Too hot," says Mr Dixon "It's a different ball game now."

In an up market, you have buyers chasing vendors. In a down market vendors chase the buyers.

The Reserve Banks about face on interest rate increases may be seen to be the tipping point for the property market. At least another interest rate cut will hopefully restore a sense of normality to the property market and kick start the economy. Investors and owner occupiers have been waiting for such signals that there were to be no more interest rate increases and feel more confident in their buying decisions. And we may well see more vendors and buyers returning to the market, that is, those who have been sitting on the sidelines thus giving more depth to the auction and private sale markets.

Vendors must meet the market

Jonathon Dixon, managing director of J. P. Dixon, an agency servicing the high realty grounds of Brighton, Sandringham, Sorrento and Toorak, has been in the business of moving property for 36 years.

He says he has never seen the market turn down as fast as it has over the past few months."It's as skinny as I've ever seen it."

In June, Australian property statistics were saying that despite the harsh winds emanating from the US subprime mortgage meltdown, prices here were generally "flat but not falling". In the three months since, the widespread wisdom is that many metropolitan districts have come off 10-15% from the prices that were being achieved in 2007.

Last year was an odd market bubble."

Too hot," says Mr Dixon."It's a different ball game now."

But while the agents are all too aware of the slide into a "buyer's market" situation, and while suburban streets are papered with an increasing number of For Sale hoardings, they are chorusing that an awful lot of vendors are yet to catch up with the news that the wind has changed."

Last year was a record-breaking year," says Robert Namour, director of three Barry Plant agencies in the Monash belt of Wheelers Hill, Mount Waverley and Oakleigh. He too says that while the change hit Monash earlier, in February- March, "the change was so sudden it was a shock".

In this tougher selling market, the task of easing vendors into the new reality that their property is not worth what it so recently might have been, is not being helped by intensified competition between agencies touting for business. Some will, says Mr Namour, "lead buyers into being over-optimistic, sometimes by $100,000 or more"."

We've walked away from vendors who are over-optimistic, rather than leading them up the path where they get caught out."

Mr Namour's agency has watched more than a few buyers in his $450,000-$500,000 family home catchment be seduced by other agents promising $600,000 results only to see them come back disillusioned and poorer for the experience."

They put the property back on the market for $100,000 less, plus the time and money it has cost them. The time difference has also cost them in terms of market variance."

Mr Dixon says that at the tip of the top end, properties over $4 million seem relatively unaffected. But vendors selling properties priced between $1.5 million and $3 million, "probably owned by people whose shares have lost one-third of their value, are sweating".

His story of a returning disappointed vendor involves a property that lost $400,000 in the translation from an unrealistic price estimate to "what the market was prepared to pay four months later. It's not too uncommon."

Being a vendor today, says Tim Fletcher, principal of Fletchers Canterbury, is about being realistic "and having reasonable expectations".

Along with the other agents, he exhorts vendors to listen well to their chosen agent and to trust their judgement about what the market is willing to pay, rather than believing their house will sell for the same price their neighbour achieved five months ago."

If you don't trust your agent," he says, "don't employ them. If you do, respect what they are telling you."

Mr Namour says his people are working harder today to keep close contact and to educate their clients about the current market.

And Mr Dixon says: "Vendors can't afford to be deluded now, because it has been such a quick change on the market. The quickest I have ever seen."

The silver lining for vendors in this situation is, according to Mr Fletcher, "that they will also be buying on the same market".

Selling in a buyer's market

- Be realistic about price. The spring property market of 2008 is down on last year's.

- Research the local market. Go to auctions and see which properties are selling.

- Take advice from your agent, especially that on what is a "good offer" for your home. If you get two similar offers - that's where the price is at.

- Beware of over-optimistic valuations. They might cost you money and time as ultimately it is the market that sets the price.

- Do not buy before selling your own house.

Although 60% of properties are selling at auction, others take longer to sell.

- Follow the golden rules about presenting your property well.

- You will probably be buying on the same buyer's market. So any vendor price disadvantage is ironed out when you buy.

The Age | Jenny Brown | 10 August 2008

Rate cut revives auction action

The Real Estate Institute of Victoria said the number of properties sold at auction yesterday rose to 64% from the more than three-year low of 59% it hit last weekend.

The rebound comes as a growing number of real estate agencies begin closing, selling up or merging in a bid to survive Victoria's property slump.

REIV figures show that more than 100 estate agencies have shut down or changed ownership so far this year, up nearly 28% on the same time last year.

The shake-up may be just the start of a long-term trend in the industry. Macquarie Bank research released last month indicates that 10%-15% of Australian real estate agencies are considering selling part or all of their businesses, compared with just 3% late last year.

REIV chief executive Enzo Raimondo said an increasing number of agencies — particularly small, independently run firms — were facing tough decisions about whether they could continue to operate.

"Some of those agencies that sprang up to take advantage of the good times probably aren't prepared to handle the bad times," he said.

The Sunday Age has found that several larger agencies and franchise groups have closed or consolidated at least eight offices across Victoria this year.

David Morrell, of buyer's advocacy group Morrell & Koren, said the extent of the cost-cutting, job losses and office closures was being concealed by some operators in a bid to protect their image.

The Age | Chris Vedelago | 10 August 2008

Brumby under pressure to cut stamp duty

September 9, 2008 - 1:43PM
• Natalie Craig - The Age
  

The Victorian Government is under pressure to cut stamp duty after Queensland abolished the charge for first home buyers for properties under $500,000.

- Brumby under pressure to cut stamp duty
- Queensland increases exemption to $500,000
- Victoria now highest charges in nation

Victoria now has among the highest stamp duty charges in the country, according to the Property Council, and will lose its competitive advantage over other states if it continues to charge tens of thousands of dollars for the transfer of land.

"In Victoria you're still looking at up to $30,000 stamp duty on your first home,'' said Caryn Kakas, executive director of the council's residential development division.

"Queensland has just upped the ante and we're really going to start falling behind in terms of affordability. We're not going to be able to compete for migrants with the other eastern states.''

Queensland has increased the stamp duty exemption for first home buyers from $350,000 to $500,000, in line with NSW and Western Australia.

Ms Kakas said the Government was struggling to give up revenue from stamp duty, which covers the transfer of land titles from one owner to another.

"Really, you're probably looking at about $200 worth of paper work, which is paid for by the two people transferring the land,'' she said. "It's a completely ineffective tax.''

Victorian Premier John Brumby announced a 10% increase to stamp duty thresholds in May and removed a policy loophole, allowing first-home buyers to access both the stamp duty concession and up to $12,000 in government grants.

This means the buyer of a house worth $317,000 would pay $2460 less stamp duty as well as pocketing the government grants.

But Opposition planning spokesman Mathew Guy said increasing house values will eliminate any savings.

"The Government is still going to achieve more stamp duty than ever before, according to the next forward estimates,'' he said.

"We are just asleep at the wheel in trying to maintain our competitive advantage. The Queensland Government is seeking to be as competitive as possible in terms of taxation and yet we've done nothing about it.''

Conveyancers need solicitors support in Queensland

Chris Merritt, Legal Affairs editor | August 29, 2008 | The Australian

THE great unknown in the conveyancers' battle to break into Queensland is whether they can find solicitors who will be willing to front their businesses.

To come within the requirements of the Queensland Legal Profession Act, every incorporated legal practice must have a solicitor director who supervises all the legal work.

"It can't just be for show. It has to be genuine," Legal Services Commissioner John Briton said.

These solicitors are not required to hold any equity in the business, but they must hold a principal-level practising certificate.

"This means they are the sort of people who could be sole practitioners or principals in law firms," Mr Briton said.

If a solicitor agrees to become the solicitor-director, the incorporated legal practice would also need to meet the normal regulatory requirements that apply to law firms. It would need to have the same level of professional indemnity insurance that is compulsory for legal practices.

"The way we look at this is that an incorporated legal practice is a law firm that just happens to be a company, not a partnership," Mr Briton said. "So an incorporated legal practice that does conveyancing is no different to a partnership that employs conveyancers who are not legally trained.

"That is quite proper so long as they are supervised or the lawyer is doing the component of conveyancing that counts as legal work," he said.

There is, however, some uncertainty about exactly how much of each conveyancing transaction is legal work.

If the role of the solicitor-director in supervising the legal work of an incorporated legal practice turned out to be a sham, the lawyer concerned could be banned from practice. Without a solicitor-director, an incorporated legal practice would be unable to continue to practice law -- which includes providing conveyancing services.

Mr Briton said conveyancing was an area that drew a lot of complaints against solicitors.

"The firms that get into trouble about conveyancing are generally small practices that do high-volume conveyancing," he said.

Mr Briton said the incorporated legal practice structure would make it possible for conveyancers "to jump the border" and work in Queensland provided they met all the regulatory requirements imposed on incorporated legal practices.

They would be unable to do business in the same way they currently work in other states, he said.

"They will need to accept that a solicitor will be calling the shots when it comes to legal work," Mr Briton said.

2007 Victorian Stamp Duty Scandal

One of the franchise offices of LJ Hooker in Hampton Park, a suburb of Melbourne, is currently involved in a class action that has been taken out by over 200 former customers, who allege that the previous owner of the branch (which is now owned by the previous owner's wife) backdated sale contracts which has landed the customers with over $1.3 million in additional stamp duty charges. The matter is currently before the Federal Court of Australia and list LJ Hooker Corporation as one of the defendants, along with the former owner of the franchise. The Victorian Department of Justice (Consumer Affars) is also investigating the actions of the parties involved.

Herald Sun [2]

Herald Sun [3]

Jenman [4]

Source Wikipedia

Conveyancing system better for consumers

Chris Merritt, Legal affairs editor | August 22, 2008 | The Australian

THE Law Institute of Victoria says consumers will benefit from the licensing system for non-lawyer conveyancers.

Institute chief executive Michael Brett Young said the scheme would ensure that community safeguards would be extended to cover conveyancers as well as solicitors.

"These people now have to have trust account requirements, education requirements, fidelity and insurance requirements -- it's just better for the community," he said.

Before the licensing scheme was introduced, consumers had no way of knowing if conveyancers were insured and up to date on the law, he said.

"Conveyancers now have to meet the high standards that lawyers have been meeting forever. They are better regulated than they were previously."

But, he said, consumers should still take their conveyancing business to solicitors.

"Lawyers have had five years at university, they have done articled clerks' courses, they have been trained and have a lot more legal education.

"They are better trained than conveyancers and people would still be safer taking their work to solicitors," Mr Brett Young said.

The Australian Institute of Conveyancers said its members already handled about half of the conveyancing transactions in Victoria.

This compares with 95 per cent in South Australia, 85 per cent in Western Australia and 30 per cent in NSW.

Finance Minister Lindsay Tanner said conveyancers would have a key role in designing the planned national electronic conveyancing system.

The new entity that would control the national system would have a skills-based board that would include directors with banking, conveyancing, information technology and other relevant commercial skills, as well as directors with knowledge of state and territory processes concerning land registries, duties and taxes, he said.

The creation of this board was a matter for the states, he said.

Competition hots up

PREJUDICE: Chris Merritt | August 22, 2008 | The Australian

IN Victoria, the war between conveyancers and solicitors is almost over. But in Queensland, it's just about to start.

As the Law Institute of Victoria has found, the tide of reform has made it impossible to maintain the traditional monopoly that solicitors in some states once enjoyed over conveyancing.

In Victoria, the process has been remarkably painful -- not just for the Law Institute, but also for consumers of legal services. They might not know it, but every time they left their money on deposit in a solicitor's trust account, the interest was being skimmed off to help pay the bills for the Law Institute's litigation-fest against trailblazing conveyancer Lydia Maric.

That exercise -- which is perfectly in accord with state law -- was entirely counterproductive: it did little for the public standing of the Law Institute and might even have persuaded the state Government to accelerate the pace of reform.

Sooner or later, similar change will come to Queensland. But in that state, the level of pain for the legal profession will be much greater. And the reason is that the profession in Queensland has a much greater task ahead of it in adjusting to a competitive marketplace.

In Victoria, solicitors had long been accustomed to competing with conveyancers. The argument in that state was all about how much competition should be allowed.

But in Queensland, where solicitors "compete" among themselves, the arrival of conveyancers could be expected to send shock waves through the profession. But those fears might be unfounded.

The Victorian experience should give comfort for Queensland solicitors whose practices rely on conveyancing.

In Victoria, the fact that conveyancers now compete on an equal footing is actually an advantage for lawyers. Before the change, conveyancers were simply unregulated. As a result, some of them were skilled professionals and others were shonks who chose not to comply with basic requirements such as professional indemnity insurance.

The new system in Victoria means solicitors and conveyancers both face a similar compliance burden and that should have the effect of evening up their cost of doing business.

All conveyancers with a licence must have PI cover. The arrival of licensed conveyancers in Victoria has also coincided with outrageous increases in government charges on paper-based conveyancing, aimed at driving business to the state's flawed, but cheaper, electronic conveyancing system.

So if anyone was thinking that licensed conveyancers were about to drive down the cost of conveyancing and squeeze the state's lawyers, they should think again. The state Government has already put the squeeze on everyone -- solicitors, conveyancers and all their clients.

But consumers in Victoria still benefit from the new system because the licensing arrangements will quickly drive out the marginal players -- a development that should please both the Law Institute and the Australian Institute of Conveyancing.

But what about Queensland? Conveyancers have been trying to enter that market for decades, but this time they have some powerful allies.

It will probably come to a head in December at the next meeting of the Council of Australian Governments. COAG would be extremely embarrassed if the protectionists in Queensland force it to water down its promised push to eliminate inconsistent licensing of trades.

But unless the federal Government -- the force behind the current reform push -- is able to bring the protectionists into line, its promise of a seamless national economy will be exposed as mere rhetoric.

At the very least, the Queensland Government needs to accept that conveyancers from other states have a legal right to ply their trade anywhere in the Commonwealth.

If the state Government continues to prevent Queensland conveyancers from doing the same, its folly will be clear to the world once conveyancers from other states offer their services to Queenslanders.

Property portals: the 50 most powerful websites

A UK property portal research company, Global Edge, along with the US site ranking company, SEOmoz, have team together to rank 50 of the most popular English language property portal sites around the world.

Original Link - Property Portals: The 50 most powerful websites

Property Portals: The 50 most powerful websites

Rank	Site	Areas covered	Domain strength
1	Zillow.com	US	74%
2	Trulia.com	US	73%
3	Realtor.com	US	71%
4	Realestate.com.au	Australia	67%
5	Propertyfinder.com	UK & overseas	65%
6	FindaProperty.com	UK & overseas	62%
7	Primelocation.com	UK & overseas	61%
8	EscapeArtist.com	US & overseas	55%
9	Rightmove.co.uk	UK & overseas	53%
10	Globrix.com	UK	50%
11	HotProperty.co.uk	UK & overseas	45%
12	Daft.ie	Ireland & overseas	45%
13	Properazzi.com	Overseas	41%
14	ThinkProperty.co.uk	UK & overseas	41%
15	Green-Acres.com	Overseas	40%
16	Kyero.com	Spain	40%
17	MyHome.ie	Ireland & overseas	40%
18	TheMoveChannel.com	Overseas	39%
19	ThinkSpain.com	Spain	37%
20	Look4aProperty.com	UK & overseas	36%
21	FrenchEntree.com	France	35%
22	Viviun.com	Overseas	35%
23	French-Property.com	France	34%
24	Holprop.com	Overseas	34%
25	Propertyworld.com	Overseas	34%
26	BulgarianVenture.com*	Bulgaria	33%
27	EuropeanProperty.com	Overseas	33%
28	Property-Abroad.com	Overseas	33%
29	Zoomf.com	UK	33%
30	HomesGoFast.com	Overseas	32%
31	WorldofProperty.co.uk	Overseas	32%
32	HomesandProperty.co.uk	Overseas	31%
33	SunshineEstates.net	Overseas	31%
34	InSpain.tv	Spain	30%
35	FrenchPropertyLinks.com	France	29%
36	PropertyShowrooms.com	Overseas	29%
37	Spanish-Living.com	Spain	29%
38	PropertyMagnate.com	Overseas	29%
39	Escapes2.com	Overseas	28%
40	YourKeyToSpain.co.uk	Spain	28%
41	HomesWorldwide.co.uk	Overseas	28%
42	IdealSpain.com	Spain	26%
43	KeyItaly.com	Italy	26%
44	HomesOverseas.co.uk	Overseas	25%
45	AMLASpain.com	Spain	23%
46	PropertyIndex.com	Overseas	23%
47	Newskys.co.uk	Overseas	21%
48	Nestoria.com	UK	20%
49	Medhead.com	Overseas	18%
50	Libercasa.co.uk	Overseas	17%

QBE buys PMI Mortgage Insurance for $1 billion

Katherine Jimenez | August 15, 2008| The Australian

QBE Insurance is set to become the biggest mortgage insurer in Australia after securing a deal to buy PMI Mortgage Insurance for more than $1 billion.

QBE last night revealed it had signed definitive agreements to acquire PMI Mortgage Insurance in Australia and New Zealand and had entered into an in principle agreement to acquire PMI Mortgage Insurance Asia.

Sale talks between the two parties have been under way for several weeks, following a decision by PMI's struggling parent company a few months ago to refocus capital on its American operations and begin a sale process for the Australian operation. The Australian operation is considered to be the jewel in PMI Group's crown, with an AA minus rating.

"The purchase of PMI in Australia and Asia is in line with QBE's strategy of diversification," said highly regarded QBE chief Frank O'Halloran, who will consider his future at the end of the year.

"The acquisitions have been structured to allow us to meet or exceed our minimum profit requirements even in the event of extremely adverse economic conditions over the next three years."

Under the deal, QBE will pay 80 per cent in cash at completion of the transaction from existing capital and $300 million in short-term funding.

The balance will be paid in the form of a promissory note payable in three years at an accumulating interest of 3.8 per cent a year.

The promissory note, together with accumulated interest, will be paid to PMI only "if the claims ratio on policies in force is less than 50 per cent of the US GAAP unearned premium liability of $525 million at June 30, 2008".

The note will be reduced by $1 for each $1 the claims ratio is more than 50 per cent. QBE said PMI would contribute $50 million to the cost of reinsurance protection above the unearned premium liability.

The acquisition is expected to be profitable in the first year.

PMI writes about 40 per cent of the residential mortgage insurance market in Australia and is expected to generate gross written premiums of $200 million in 2008, including $5 million through its New Zealand branch.

That result is $63 million less than the previous year, largely due to the fall in lending, and is also down on the $218 million reported in 2003. Net tangible assets (US GAAP) at June 30 were $969 million.

PMI Asia is projected to deliver gross written premium of $12 million.

Mr O'Halloran made a point of saying that PMI had a 40-year track record of consistent profitability in lenders' residential mortgage insurance.

"In the 15 years to June 2008, which includes two significant downturns in the Australian housing market, gross incurred claims were $345 million against gross earned premium of $1.68 billion."

PMI Australia and PMI Asia booked an operating profit after tax using US GAAP of $109 million in 2007.

QBE said it would provide support to PMI Australia and PMI Asia to maintain Standard & Poor's AA- rating. It does not expect the acquisition to have a significant effect on its capital adequacy.

The acquisition is due to be completed next month and is subject to regulatory approval.

Shares in QBE closed down 40c to $25.50 before the announcement.

State's $40m e-conveyancing system in the auditor's sights

Chris Merritt, Legal affairs editor | The Australian | August 15, 2008

THE Victorian Auditor General is considering a performance audit of the government's $40 million electronic conveyancing system.

The system has been used for just one property settlement since its launch last year and is set to be superseded by a planned national system.

The auditor general is considering adding the e-conveyancing system to the list of projects that will be subjected to a performance audit next financial year.

A preliminary examination of the system has been launched in response to suggestions from Opposition frontbencher David Davis.

Mr Davis said the system's only real impact had been to increase the cost of paper-based conveyancing in Victoria in order to drive business to the electronic system.

Because the main private sector players in conveyancing had refused to use the system, Victorians had been hit with increased charges of $6 million a year, Mr Davis said.

Unless the state government reversed its fee increases, Victorians would be paying the extra charges until the national system was in place in 2010, he said.

"The government will pocket a $12 million windfall from everyone who buys and sells property," Mr Davis said.

The Law Institute of Victoria called last month for the original fee structure for paper-based conveyancing to be restored because Victorians were not using e-conveyancing.

"They're making a windfall gain," Law Institute of Victoria chief executive Michael Brett-Young said.

The involvement of the auditor general's office comes soon after The Australian revealed that an employee of the company that helped build the system was running the government agency responsible for e-conveyancing.

James Walker, who is still an employee of computer consultant Ajilon, is one of a number of private consultants running the system.

Another Ajilon employee, Rick Dixon, is the electronic conveyancing project manager in the department of Sustainability and Development.

Mr Davis said he was concerned about the state government's growing use of "alliance-type contracting" between the government and private companies.

"The Government claims that works well in some areas but the auditor has pointed to problems" in other projects, he said.

"There's a fuzziness about what is being purchased and what is being delivered," he said.

Austraclear Electronic Conveyancing Settlement Facility

ASX Austraclear (Austraclear) is the provider of the Austraclear EC Settlement Facility for Electronic Conveyancing (EC) in Victoria. This settlement service is separate from the traditional Austraclear system.

The Victorian EC system allows for the electronic processing of property settlement transactions in Victoria and Austraclear facilitates the related financial settlements on a real time basis via the Reserve Bank Information and Transfer System (RITS). For regulatory reasons a financial institution user of the EC Settlement Facility must apply for admission to Austraclear as a Payment Provider. Only an approved Payment Provider can directly make or receive property settlement related payments through this platform.

There are two types of payment provider within the EC Settlement Facility - an Electronic Conveyancing Participating Bank (ECPB) and a Non-ECPB. The primary difference between the two categories is that ECPBs have an Exchange Settlement Account with the Reserve Bank of Australia while Non-ECPBs do not.

For further information on the Austraclear EC Settlement Facility or on becoming a Payment Provider; please contact Rohan Delilkhan, Senior Manager Interest Rate Markets at Rohan.Delilkhan@asx.com.au.

The following are the current approved Payment Providers in the Austraclear EC Settlement Facility:

* Bendigo Bank Limited
* CUSCAL Limited
* MECU Limited

Big banks spend up on technology overhauls

Mahesh Sharma and Michael Sainsbury | August 07, 2008 | The Australian

THE National Australia Bank has lit the fuse on a five-year, $1 billion program to overhaul its technology platforms and will launch a major assault on internet banking in a bid to take market share from its big four rivals before the end of the year.

The move is part of sweeping changes to Australia's second-largest financial services group.

It is being pushed through the organisation by its board, which is led by Michael Chaney and last week appointed Cameron Clyne as chief executive from November 1.

NAB is the second bank, after the Commonwealth, to commit to replacing its 40-year legacy core banking systems, and the first phase of the project will deliver an online platform to a new business division, Star Direct.

NAB will spend about $30 million to launch a direct banking service, Star Bank, which will deliver customer services solely by internet and call centre.

Star Bank offerings will be launched later this year, with the aim of strengthening NAB in the direct banking market.

"We know there are customers more oriented to a direct branch service that is more innovative and direct," NAB retail executive general manager Andrew Thorburn said.

"This service will help us get to those customers."

Chief information officer Michelle Tredenick said the bank's systems weren't equipped to handle heavier workloads.

"Our platforms are able to deliver what we need right now but they're not sufficient to underpin our future growth strategy," Ms Tredenick said.

NAB has selected US software group Oracle to develop and deploy the infrastructure to support Star Bank over the next five years.

This is the first phase of the bank's plan to deploy next-generation platforms across the business.

Oracle will work with NAB to design and plan the two remaining phases of the core banking overhaul.

Earlier this year NAB finance chief Mark Joiner said the bank would spend about $1 billion overhauling its core banking platforms, and this would be included in its technology budget over the next five years.

Ms Tredenick would not disclose how much Oracle was being paid for the first phase and early development work on the billion-dollar project.

Oracle was preferred over Indian outsourcer Infosys for the job, and Ms Tredenick hosed down reports that there had been internal conflict over the contract.

"We've had all my business colleagues, a technology sub-committee chaired by Andrew Thorburn, and the board and group executives involved," she said yesterday.

"It has been an incredibly inclusive process and this is a unanimous decision.

"There has been no conflict in our organisation."

The Commonwealth Bank is several months into a four-year, $580 million core banking modernisation project to speed the development of new online products and their deployment to the market.

The bank declined to say what stage the project was at.

ANZ has announced an overhaul of legacy systems in its Asian operation, and their replacement with the Infosys Finacle platform.

It is planning to expand this platform to its local operations.

Westpac has said it will not rush into any project at this stage.

The second and subsequent phases of NAB's core banking overhaul will be rolled out in parallel. Planning for the following stages was expected to take another six months, NAB said.

The bank was using Indian outsourcer Infosys to introduce business process outsourcing as part of its sustainable outperformance strategy, Ms Tredenick said.

"One of our key sustainable outperformance strategies is to make sure we're very well buttoned up on our quality of service initiatives.

"As part of that we've been doing processing work with a number of companies, including infosys, and some of that has been business process outsourcing," she said.

ECV - Still another lickin - but keeps on tickin

Mr D. DAVIS (Southern Metropolitan) -- My matter is for the Minister for Environment and Climate Change and concerns the ongoing issue of electronic conveyancing. Members will be aware, to refresh their memories with some background information, that the government introduced a plan for electronic conveyancing four to five years ago, that this plan has moved forward and something in the order of $40 million has been spent on the program.



But in fact only a single conveyancing transaction has been achieved. This is an extraordinary expenditure for what is a very modest, in fact pathetic, outcome for the community. Equally, there are national moves occurring in this area, but the state government has stood out from the national moves and has pushed forward with a Victorian model of electronic conveyancing. At a recent meeting of attorneys-general and related ministers nationally there was an agreement that there would be a national approach to this issue, and the Victorian government demanded that its system be the national system. Of course that has not been accepted; the best I think the Victorian government can hope for is that its system might be in some way cannibalised for such an outcome.

Given that background, my matter for the minister today is to ask him to order a halt to this extraordinary and outrageous waste of government money -- the $40 million -- that has been spent particularly on consultants. I want to single out a firm, Ajilon. It is a major international firm which has been involved with this project from the start and has played a significant and senior role in it.

This firm on its website says: Our approach is simple -- we make sure we understand your business then work alongside you as an extension of your team, using our expertise and proven methodologies.

I have to say that has not been the case on this occasion. That firm has been paid many millions of dollars but has not delivered the results for the Victorian community. As I say, only a single full conveyancing transaction has occurred and around $40 million has been expended on this proposal. I have to say the Australian made the point very well in its editorial recently. I would like the minister to not only call a halt to this outrageous waste of government money but to order an investigation into this waste as well, with a particular focus on the governance issues within the Department of Sustainability and Environment and the excessive closeness of Ajilon employees to a number of employees in the Department of Sustainability and Environment.



This is a scandal of the first order and it should be stopped. I suggest that $40 million is too much; the music has got to stop. Someone has to tell these consultants they have milked enough out of the system, and I call on the minister to halt the contract and order an inquiry.

Hansard

Electronics - A sign of the times

Electronic Signatures do carry the same weight as those written by hand

A fundamental concept in relation to a contract of sale of land is that the contract must be in writing and signed by the parties (or at least "the party to be charged").

This requirement can be traced back to the Statute of Frauds of 1677 and can now be found (if you know where to look) in s126 of the Instruments Act. The requirement that a contract be signed was designed to prevent fraud by stopping one party to an agreement claiming or denying that an enforceable contract existed in situations of uncertainty. By requiring a signature the law created certainty.

The world has come a long way in three centuries and we are now in the electronic age. Indeed, in relation to contracts for the sale of land, we are now in the age of electronic conveyancing. The long-awaited EC system has been operating since November 2007 and conducted its first settlement in May 2008.¹

Independently of any title registration system, there are commercial transactional providers, such as eBay, that facilitate buying and selling of assets as valuable as aeroplanes and, as reported recently in the press, are now facilitating the sale of real estate. Communication between representatives such as estate agents, lawyers and conveyancers is now consistently undertaken electronically and the question of whether a contract of sale of land that has been signed and exchanged electronically is enforceable will no doubt occupy the attention of a Victorian court in the not too distant future. The question therefore will be: is a contract of sale of land enforceable if it is signed electronically?

A preliminary distinction needs to be made between a digital signature and an electronic signature. A digital signature involves an encryption device and implies the existence of an authentication network standing behind the signature. This is the process used in electronic conveyancing for execution of the transfer and involves a trusted third party signing the transfer of land on behalf of the parties. This no doubt satisfies the requirements of the Statute of Frauds. An electronic signature, on the other hand, stands alone and acts purely as a representation of the signature of the party. It is not made by hand, as is the case of a traditional signature, but rather is formed by the placing of the hand on a key, or even conceivably by voice recognition software generating the appropriate keystrokes. Does a party who "signs" an email that in all other respects constitutes an enforceable contract of sale of land become bound by that electronic signature?



At common law (including the Statute of Frauds) the answer is "no". But s126 of the Instruments Act was amended in 2004 ² to provide that its requirements "may be met in accordance with the Electronic Transactions (Victoria) Act 2000". This Act in turn provides in s9 that the requirement of any law for a signature is "taken to have been met in relation to an electronic communication if":
• the signature identifies the person and indicates approval of the information;
• the method of communication was appropriate in the circumstances; and
• the person has consented to the use of electronic communication.

Thus it may be concluded that where two parties to a contract communicate with each other electronically then, subject to any other underlying contractual limitations, any agreement that they reach in relation to the sale of real estate will be binding on them when they have each sent to the other an electronic communication (email) that includes an electronic representation of their signatures. This would be satisfied by the mere typing of the name of the party at the end of the communication and certainly by the inclusion of a more formal "signature box".

However, it is relatively rare for parties to communicate directly in relation to the negotiations for the sale of real estate. Usually estate agents will be involved and party representatives such as lawyers and conveyancers. Parties will not be bound by the actions of these participants in the process unless those third parties are authorised in writing by the party.³ However, such an authorisation could itself be communicated electronically.

Thus, not only will a party who electronically signs a contract be bound to that contract, a party will also be bound if the party's representative has been electronically authorised to sign on behalf of the party and does in turn electronically sign the contract. It is certainly possible to conduct the whole contractual process in cyberspace.

A few cases in Australia and England have considered these issues and there are no doubts that arguments can be raised on the way.⁴ However, essentially it appears that even concepts - such as the importance of signed documents - going back as far as the 17th century are capable of adapting to the electronic age.

1. Land Exchange, EC News, May 2008.
2. Section 9 Transfer of Land (Electronic Transactions) Act 2004.
3. Section 126 Instruments Act.
4. Christensen, Duncan & Low, "The statute of frauds in the digital age", Murdoch University Electronic Journal of Law, Vol 10 No 4 December 2003.

Russell Cocks is the author of 1001 Conveyancing Answers

This Article first appeared in the LIJ August 2008 and has been reproduced by kind permission of the Author