AUGUST 30, 2016
For Victorian couple Henry and Maree Schneider retirement was looking good. They had enough money to live a comfortable life until losing it after being conned by an investment group that made big promises and failed to deliver.
Kevin Young, founder of the Property Club, said unfortunately stories like this are all too real in the property investing space.
“The Schneiders paid out hundreds of thousands for a property sold to them in Emerald, based on photos that did not reflect the true status of the build. In reality, it was just a slab on the ground. The group went broke, they lost their financial security.
“Now we have two people who have worked hard all their lives losing $400,000 and being told there is nothing that can be done.”
Mr Young has been fighting the system for almost 20 years trying to get state and federal governments to put protections in place to ensure this type of story does not happen.
“This could so easily be fixed by politician passing simple laws. There needs to be legislation in place to make: valuations transparent to the buyer. and the marketer give out his credentials and database to prove they are reputable,” he said,
“Yet, every time Property Club raises this, we get howled down with cries of
‘invasion of privacy’ and it will ‘cost too much’.
“Yet it is ok for organisations like Members Alliance to give property valuations on houses not completed, which you are not allowed to do.
“This organisation has fleeced these people and many more. It’s quite simply people doing deals on blocks of land, entering into construction contracts and expecting the buyer to enter into the contract to settle the land. And then they are expected to enter into a contract to pay off a progress payment program on the house.
“That is a red flag.”
Mr Young said what should happen is a deposit is taken, held in a trust account, and when the property is finished, the final draw down is finalised. “So that way if the builder collapses, the buyer is protected,” he said.
Despite protests from the real estate industry, Property Club has been making available its members’ details to new members for full transparency.
“Our members are happy to do this because it protects everyone, especially the buyer,” Mr Young said. “We also provide an overview of the area specific property sales history, which helps people select the right areas to buy in.
“People then know who they are doing business with and that is good business.”
Mr Young said all property investment organisations should put all this in writing so there is nothing to hide behind. “That way there is written evidence and those flashy marketing methods cannot hide behind the truth,” Mr Young said.
“Ask how many properties they own. Ask the people you are getting your advice from to put their promises in writing. You’ve really got to help yourself for the long run. Once you have everything in writing you cannot be conned.”
Property Club has gone into bat for the Schneiders, who after forking out $2,500 on a lawyer, were told they had no recourse because of the cost of litigating this would be enormous. The Club’s in house legal counsel has referred the case to the Queensland Police’s fraud squad and the Queensland Building Authority.
“We cannot have good people being ripped off. Property Club fights for the buyer,” Mr Young said.
“The banks also need to be held accountable. Money should not be lent without the bank checking there is security. In the Schneider’s case, they didn’t check the foundations were in, the framework was up, the roofs on etc.
“It is a breach of their fiduciary duty, certainly a breach of their duty of care. A quantity surveyor could of easily stopped any of the flow of loss had a QS gone onsite when a progress payment was asked for and before the bank issued the money to check that the work had been done.”
The Property Club is hoping for a successful end to the Schneider’s story.