Tax and legal advice

$6m profit for ‘deceitful’ agent’s illegal scheme

By Reporter
Investors ripped off by agent

An ex-real estate agent, whose land deals reaped a $6 million profit for his family, has been slammed for “the worst possible betrayal” of buyers which resulted in the loss of his agent’s licence.

Former York, Western Australia real estate agent, Colin Maxwell King – who operated The King and I Pty Ltd trading as Colin King Real Estate and his son Paul Anthony King who worked as a real estate sales representative at the agency – were found to have engaged in misleading conduct after a “deceitful” land deal resulted in a $6 million profit for family members.

Consumer Protection WA alleged the Kings breached the code of conduct for agents and sales representatives in six rural land deals. The State Administrative Tribunal (SAT) upheld the allegations.

The land deals occurred between 2008 and 2010, and involved the separate sales of six rural lots, with the Kings acting as selling agents for three of them and introducing the ultimate buyers to each sale, Consumer Protection said.

All six lots were first sold to an intermediary company controlled by another of Colin King’s sons, Michael King, who was not a licensed real estate agent or sales representative.

The land lots were then immediately on-sold to Malaysia-based investors at substantially higher prices resulting in a $6 million profit that directly benefited Michael King, Consumer Protection said. The original owners and the Malaysia-based investors were not aware on the on-sale arrangements.

The SAT upheld Consumer Protection’s allegations that the Kings had:

  • Failed to act in the best interests of the seller
  • Failed to act fairly and honestly in facilitating the on-sale scheme
  • Misled or deceived the original sellers
  • Failed to disclose material facts to the sellers
  • Acted in the circumstance of a conflict of interest

With regards to the three lots not sold through Colin King Real Estate, Colin and Paul King were still found to have acted unfairly and dishonestly by facilitating the on-sale scheme.

Colin King had also appealed for the SAT to review the decision by the commissioner for Consumer Protection not to renew his license in August 2014, but the SAT upheld the decision. It agreed that due to Colin King’s misconduct in the on-sale scheme, he was not of good character, and not a fit and proper person to hold a licence.

The SAT, however, was unable to impose a penalty in this case, as Colin King and The King and I Pty Ltd were no longer licensees, and the tribunal had no jurisdiction although it found the allegations proven.

The SAT will impose a penalty on Paul King, who no longer holds a sales representative’s certificate, at a later date.

Acting commissioner for Consumer Protection David Hillyard said the on-sale scheme was one of the worst cases of deception perpetrated by a real estate agency in WA.

“Colin King and his two sons Paul and Michael acted deceitfully to manipulate a circumstance where they made massive profits at the expense of landowners who had put their faith in the agency to act in their best interests,” Mr Hillyard said.

“That trust was betrayed in the worst possible way by denying the owners the true profit from the sale of the land. The loss of Colin King’s licence was more than justified as his actions, and those of his sons, were reprehensible by being involved in this illegal on-sale scheme.

“This was deception on a grand scale, and reinforces the importance of having a licensing system and codes of conduct for the real estate industry to protect the interests of buyers and sellers of property in WA.”

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  ["title"]=>
  string(51) "Boost for investors as app sets up off-site bidding"
  ["alias"]=>
  string(55) "boost-for-investors-as-new-app-sets-up-off-site-bidding"
  ["introtext"]=>
  string(144) "

Property investors are now able to identify and bid on auctions remotely using a new live-streaming functionality launched by Gavl.

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Called “Request an Auction”, the new functionality enables users to watch and bid on any Sydney or Melbourne auction remotely.

Through Gavl, prospective buyers are now able to register to bid on their preferred auction. The platform will obtain permission from the listing agent and confirm within 48 hours.

Vendors can also request to have their auctions broadcast to a larger buyer audience.

Co-founder Joel Smith said that auctions streamed on Gavl attract 47 per cent more viewers than traditional ones.

He said that Request an Auction will be valuable for remote buyers.

“Buyers are able to have Gavl attend any auction they nominate, so they will never have to miss out on an opportunity due to logistical complications in physically attending the auction.

“Vendors, too, have the opportunity to directly book an auction with us, so they can open up their event to buyers all around the world. With more potential buyers, they’re giving their property the chance to receive more bids and maximise their sales result.”

Mr Smith said that prior to the Request an Auction app, buyers were limited to what they could achieve through the Gavl technology.

Gavl is a live-streaming and bidding platform for real estate auctions.

Mr Smith said that it has streamed more than 6,000 auctions, which have achieved 3.5 million views from 50 countries.

Gavl’s Request an Auction function is currently being offered in Melbourne and Sydney only.

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Boost for investors as app sets up off-site bidding
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Having to split her time between Hong Kong and her original base of Sydney has not slowed Julia Tita’s goal of building a high-performance Australian property portfolio. Instead the resulting alterations to her strategy have positively impacted her investing success.

" ["fulltext"]=> string(3579) "

Having recently purchased her 6th property, Julia joins host Tim Neary to discuss her journey, share her ups and downs over the years, and reveal her thoughts on why some properties are better than others.

Julia also explains why she no longer makes a move without the help of a buyer’s agent, why working with a strong team of specialists is extremely important and discloses her long-term property ambitions.

If you like this episode, show your support by rating us or leaving a review on iTunes (The Smart Property Investment Show) and by following Smart Property Investment on social media: FacebookTwitter and LinkedIn.

If you have any questions about what you heard today, any topics of interest you have in mind, or if you’d like to lend your voice to the show, email [email protected] for more insights!

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AREAS MENTIONED:

Eagleby
Charters Towers
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Sydney
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Melbourne 
Glen Iris
Bondi

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How a move to Hong Kong impacted Julia’s Australian property goals
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  ["id"]=>
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  ["title"]=>
  string(88) "‘Common’ referrer practice of being paid on both sides of the fence coming to an end"
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  ["introtext"]=>
  string(246) "

The practice of property investment firms sharing undisclosed kickbacks among the supply chain involved in development sales will be outlawed in NSW on 1 July this year under the Real Estate Reform being handed down by regulators in NSW.

" ["fulltext"]=> string(2238) "

Property commentator and valuer, Suburbanite’s Anna Porter, said the reform will address conflicts of interest.

She said they arise when a mortgage broker, accountant or financial planner receives part of the commission from the property firm, who receive their fees from the developer or seller.

“This puts the broker into a position by which they are being paid on both sides of the fence,” she said.

“Until now this has been a grey area and there was nothing stopping this practice.” 

Ms Porter said this has been a common practice in the industry.

"Some well-known mortgage broking firms openly admit to receiving $5,000–$10,000 per referral in their pocket.”

She also said this process has been going on for decades.

"Property investment firms commonly pass some of their commission on to the mortgage broker, accountant or financial planner as a reward to them for passing on the referral. This means that many brokers or financial service providers are making significant amounts of money just to refer on to a property firm, often totalling hundreds of thousands of dollars a year," Anna Porter said.

Ms Porter said the Property, Stock and Business Agents Amendment (Property Industry Reform) Bill 2017 will be in force from July this year, and will prohibit this practice unless the broker or referring partner also holds a real estate industry license.

"Under the new laws, if the broker takes a referral fee from the property firm, they will have to be a licensed real estate agent and also hold a corporation’s license,” she said. 

“Subsequently, every transaction that they receive a referral fee from, they will be putting their license up against the transaction and taking full liability for the conduct, practices and outcome of that transaction, even if they have little to do with the transaction; they are a party to it financially and therefore take as much risk as everyone else in the transaction.”

Mr Porter said where a referrer holds a real estate license, and receives a part of the sale commission, they may find themselves in breach of the ethical requirements under the act.

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‘Common’ referrer practice of being paid on both sides of the fence coming to an end

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