Description

First Home Owner

Grant Fraud Warning

OPINION
by Peter Mericka B.A., LL.B
Real Estate Consumer Advocate
Real Estate Lawyer
Qualified Practising Conveyancer Victoria
Director Lawyers Real Estate Pty Ltd

Since 14 October, 2008 we have receive numerous telephone enquiries from purchasers of residential real estate who want to change the date of their purchase contract in order to become eligible for the increased First Home Owner Grant. Consumers are warned that the changing of dates on a contract could constitute a serious criminal offence.

What happens if a person, having purchased their new home a week ago, only just misses out on the increase in the First Home Owner Grant for purchases made on or after 14 October 2008, and before 30 June 2009?

And what if a person who was intending to have purchased before 30 June 2009 finds that negotiations take longer than expected, and the contract is not actually executed until 3 July 2009?

Easy! Just change the date on the contract, it'll be the easiest $7,000 or so that you'll ever make. It may also be the easiest way to be charged with a serious criminal offence.

Take a look at the First Home Owner Grant application form - it can be found at First Home Owner Grant Application - and note the warning on the front page:

"It is an offence to make a false or misleading statement, and heavy penalties may be imposed"

It's not just a matter of changing the date

Let's look at this scenario. An assessment officer at the State Revenue Office receives a First Home Owner Grant Application Form after 30 June 2009 and examines it carefully to ensure that meets the criteria for the increased FHOG. On close inspection it appears that the date of sale was 3 July 2009 (too late to claim the increased FHOG), but this has been crossed out, and changed to 29 June 2009. Does the changing of the date on the contract alter the fact that the sale took place after the FHOG increase had expired? Should the assessment officer allow the application to be processed? If the assessment officer allows this application through, what about similar applications received over the next months or years? And if it is just a simple matter of changing the date, why bother having an ending date at all?

It is the same where the date is changed to make it appear as though the sale occurred after the starting date of the offer, when in fact the purchase had taken place before the offer had come into effect.

The basic rule of thumb is that if there is some form of "trick" involved in obtaining money, then a criminal offence is likely to have been committed. In this case the purchaser is attempting to trick the State Revenue Office assessment officer into believing that the the purchaser is eligible for the increased FHOG when the purchaser is not eligible. The trick is perpetrated by falsely stating on the First Home Owner Grant Application Form that the property was purchased during the period of eligibility, and by deliberately hiding this fact by changing the date on the contract to make it appear that the contract was executed earlier or later than it really was.

The offence is called "Obtaining Property By Deception", and it is a criminal offence under Section 81 of the Crimes Act 1958 with a maximum penalty of 10 years' imprisonment.

Estate Agents, Brokers and Legal Representatives Beware!

Some of the people who have called us about changing dates on contracts have indicated that advice on changing the date of the contract has come from estate agents, mortgage brokers, conveyancers and even as the result of telephone enquiries with the State Revenue Office itself!

For those whose role it is to assist and advise purchasers on matters pertaining to the First Home Owner Grant, the following may be of interest.

The offence of Obtaining Property By Deception is committed not only by a person who is acting for themselves, but also by a person who is assisting another person. According to Section 81(2):

"...a person is to be treated as obtaining property if he obtains ownership, possession or control of it, and obtain includes obtaining for another or enabling another to obtain or to retain."

And saying that it's not your fault because you just signed the documents that were put in front of you won't wash either, because Section 81(4) makes it clear that deception:

"means any deception (whether deliberate or reckless) by words or conduct as to fact or as to law, including a deception as to the present intentions of the person using the deception or any other person"

The changing of dates on contracts is a very serious matter. If changing the date could result in someone being "tricked" alarm bells should ring, and legal advice from a qualified legal practitioner (preferably a lawyer practising in criminal law) should be obtained. The "trick" could affect not only the State Revenue Office, but also other parties associated with the sale, including the purchaser's bank. The flow-on effect could render the purchaser's home loan contract invalid and place the purchaser in danger of financial difficulty, failed settlement and consequent loss of deposit, and penalties and costs.

Can the first contract be cancelled?

If a purchaser has entered into a contract before 14 October 2008, and so is not eligible for the increased FHOG, but cancels this contract and enters into a fresh contract to buy another property during the eligibility period, there would be no problem.

What if the first contract is cancelled, and then the purchaser enters into a fresh contract to purchase the same property? Again, there should be no problem, as this is quite a common occurrence. It all comes back to the question of whether any "trick" is involved. If there is an element of "trick" there is likely to be some element of criminality.

It should be borne in mind, however, that cancelling one contract and drawing up another can have collateral affects. The cancellation and re-purchase would have to be done properly and legally, without any short-cuts being taken, otherwise the element of "trick" may creep in. The whole process must be overseen by a qualified legal practitioner.

There are other problems associated with cancelling and re-purchasing:

• What if the vendor decides not to sell to the same purchaser again? In a competitive market there could be a competing purchaser just waiting for an opportunity to pounce.
• What if the vendor wants to increase the price of the property?
• The purchaser will not have a second "cooling off" period (although this will probably not be a major consideration).
• Will the estate agent want a second commission for the second sale?
• Will the State Revenue Office regard the cancellation and re-purchase as an "avoidance strategy"? 

 NOTE: The Queensland Office of State Revenue has warned those who attempt to cancel contracts as an avoidance strategy as follows:

"Warning to first home buyers who may be contemplating replacing existing contracts to purchase or build a home in order to access the Commonwealth First Home Owner Boost.

The Queensland Office of State Revenue will be carefully examining all First Home Owner Grant applications in which the existing date of the contract has been altered or where the contract has been cancelled since the announcement of the Commonwealth boost scheme...

...An anti-avoidance provision will be implemented as part of the new scheme in respect of contracts dated prior to 14 October 2008 that have been cancelled."

Legal Advice Is Essential

Secret Agent Maxwell Smart often said in frustration, "Missed it by that much" and we all laughed because we could identify with his frustration.

It is extremely frustrating to have just purchased a property and to find out that, had it been purchased a day later or a day earlier, thousands of dollars would have been available through the increased First Home Owner Grant. It may be possible for a purchaser to arrange their affairs such that they become eligible for the increased First Home Owner Grant, but doing so requires careful thought and good advice.

Before doing anything unusual to become eligible for the First Home Owner Grant a purchaser must obtain written legal advice from a qualified legal practitioner.