(Based on Australia's Corporate Law)

Question 1

Theresa signed a contract to purchase an investment property. In the backyard there is a fishpond four metre wide. A hole had been dug and the pond placed into the hole. Theresa thought that the pond would stay. After settlement Theresa discovered the pond has been removed, leaving a hole in the backyard. Theresa wants to get the fish pond back.

Required

Advise Theresa about her legal rights.

Question 2

After months of searching, your best friend Ben has finally found the house of his dreams in the suburb of Hawthorn. He is keen to buy the house. He knows you have been studying 'law of investments' and seeks your advice about the legal matters he should consider before entering into a contract of sale.

Required

Advise Ben.

https://www.consumer.vic.gov.au/housing/buying-and-selling-property/checklists/due-diligence(Links to an external site.)

Question 3

Do you think a real estate agent selling a property should be legally obligated to warn potential buyers about the pitfalls of property investment? Why or Why not?

Question 4

Read the following article about investment seminars.

Investment seminars

Psst! Want to be a millionaire?

You've received an 'exclusive' invitation through the mail to attend a 'premier wealth event'. There will be motivational speakers. Their financial secrets have the power to turn you into a millionaire within a few years. Sounds great but such claims are almost always over-hyped or misleading. The recommended investments can be expensive, highly risky and lose you money. Here are some warning signs to help you recognise dodgy investment seminars and avoid being ripped off.

• Unlicensed speakers(Links to an external site.)
• Big promises equal big risks(Links to an external site.)
• High fees(Links to an external site.)
• Get independent advice before you invest(Links to an external site.)
• Report suspicious activities(Links to an external site.)
• Seminars often promise a motivational speaker who claims to be a self-made millionaire, and who will share their secrets to financial success.

Big promises equal big risks

Here are some promises typically made by dodgy investment seminars:

• One seminar featured 'Four of Australia's greatest financial superstars'. When ASIC checked them out, none of the presenters had an Australian Financial Services (AFS) licence. In fact, three of the four speakers were found to live and work in the USA. Who knows if they were 'financial superstars' or just slick salesmen?
• Risk-free investments;
• Be a millionaire in a few years;
• Above average returns at little or no risk.

Look carefully at the strategies suggested by the seminar to achieve these results. Shares typically return around 10% a year, year after year, and property 6%. If you're offered returns of 1-2% more than these typical returns, get a second opinion and ask for a detailed written explanation.

Other seminars promote schemes that involve you lending money with little or no security. Another twist is to get you to invest in offshore schemes where you lose the protection of Australian laws. You may never see your money again.

Seminars often don't deliver any concrete investment opportunities. The first event may be free. When you attend you will be pressured to buy reports or books and 'sign up' for more expensive seminars or educational courses. The only person making any money will be the seminar organiser through the fees you pay.

Check that it's legal. Get financial advice from someone not linked to the seminar

If you want to attend seminars, consider reputable providers like the Australian Securities Exchange(Links to an external site.) and Department of Human Service's Financial Information Service(Links to an external site.).

If the promotional material does not clearly state that further training or other services will be sold at the seminar, under the Australian Consumer Law you have 10 business days to change your mind if you sign up.

If the seller doesn't tell you about this cooling-off period, you are entitled to a longer cooling-off period. To find out more, including details for relevant state and territory agencies, visit the Australian Consumer Law(Links to an external site.) website.

If you've been invited to a seminar that doesn't seem right or if you're worried you have invested in a scam you should report the scam(Links to an external site.). Also warn family and friends so they don't fall for the same deal.

If you change your mind

• If you attend a seminar, never make any decisions about money or investments on the spot. Always give yourself time to consider things calmly and seek independent financial advice(Links to an external site.). The atmosphere at these events can be quite exciting but not the right environment for making rational decisions.
• Check ASIC Connect(Links to an external site.) and search within 'banned and disqualified' or the ACCC's Undertakings Register(Links to an external site.) to see if they have taken any action against the promoters. It is also worth checking whether yourstate or territory consumer affairs agency(Links to an external site.) has taken any action against them. Even if the seminar providers appear to have a clean slate, that doesn't mean the scheme is safe or legal.

Required

What are the main legal risks for consumers attending these investment seminars?