These guys paid Rick tens of thousands of dollars to be taught the right way—- So they thought!
WA “rent to buy’ scheme ruled deceptive and illegal with other similar schemes facing investigation
By Larry Schlesinger
Wednesday, 06 June 2012
WA’s Supreme Court has ruled that a ‘rent to buy’ scheme operated illegally because the owners were not licensed estate agents and also misled people who signed up.
The landmark ruling handed down by Master Craig Sanderson declared that unlicensed promoters of a rent-to-buy scheme, No Loan Home Pty Ltd, its sole director Filip (Fil) Butkovic and employee Nikola (Nik) Butkovic, of Nedlands, had engaged in misleading and deceptive conduct.
Under the ruling No Loan Home Pty Ltd, the proprietor of the business Perth’s Easyhomes WA has been restrained from advertising and promoting the scheme or entering into any further rent-to-buy transactions without first obtaining a real estate agent’s licence.
WA’s Consumer Protection first raised allegations about the scheme.
It says the ruling has implications for all promoters of rent-to-buy schemes, and is now looking into other similar schemes.
Rent-to-buy schemes are targeted at people who don’t qualify for a home loan.
Buyers enter into a contract whereby they agree to pay rent to the seller in return for being able to purchase the property at a later date.
Under the scheme being promoted by No Loan Home, the buyer paid an “upfront option fee” to the business of about $15,000, as well as an “ongoing option fee”, a proportion of which was to be credited towards the final purchase of the property.
The buyer was required to sign a tenancy agreement with the seller in which rent was payable until the end of the contract period, usually four years, when the option to purchase would to be exercised.
“The Supreme Court judgment [handed down on May 30] supported the WA Commissioner for Consumer Protection’s allegation that the promoters had also breached the Australian Consumer Law by misleading potential purchasers regarding the future value of the property, the potential equity that they are able to build up over a four to five year period and their ability to obtain finance at the end of this period,” said WA’s Department of Commerce’s consumer protection division.
“The company’s website and advertising material makes misleading representations as to future property values without setting out the basis for these estimates.
“The Supreme Court ruled that the ‘rent to buy’ transactions are real estate transactions for the purposes of the act,” it said.
“The Supreme Court supported Consumer Protection’s belief that the promoters of these schemes were engaging in real estate transactions so were required to be licensed and were therefore operating outside the law,” said acting commissioner for consumer protection Gary Newcombe following the ruling.
“Our major concern was that the consumers who took part in these schemes didn’t have the protection that the licensing system and laws offer and now we have legal clarity over these issues following the Supreme Court ruling.
“Consumers have recourse to a fund for reimbursement where serious misconduct of a licensed real estate agent causes loss, and licensed agents are accountable to the Commissioner under a Code of Conduct and the Act. Those operating without a licence provide no such protections.
“These schemes prey on vulnerable people who are finding it difficult to either sell or buy a home. We urge consumers who have had dealings with No Loan Home or any other rent to buy scheme to contact us.”
Consumer advocate Neil Jenman, a long campaigner against rent-to-buy schemes, calls them “dangerous scams” that are “designed by predators who prey on the poor” in 2007.
“They are a complete rip-off and should be outlawed,” Jenman said.
“Like all slick scams, ‘rent-to-buy’ schemes are so seductive. The pitch goes like this: We are here to help you. We have a unique system. If the banks reject you, we can help you.
“And on and on and on it goes. One twisted truth after another.”
According to Jenman, victims of these scams are ripped off in three ways.
“First, they are charged an exorbitant amount of rent … second, as well as the exorbitant rent, the “buyers” (victims) pay an exorbitant price for the home, and thirdly, buyers are not the owners of the homes they are buying,” he says.