PLEASE NOTE: This article was published on the date listed below and may now contain information that has since been updated or changed. We have retained this article as it may still contain helpful comments. However, we advise you to make an appointment to see us for the most up to date information on this topic.
Buy back schemes crisis
There has recently been considerable media interest in what has become known as “buy-back schemes”.
These schemes seem to be common in South Auckland, and many parties have been caught out by these schemes. There are many variations, but essentially owners of a home are encouraged, cajoled or tricked into transferring their home to a company fronted by unscrupulous promoters. Frequently this transfer will occur without the owner ever receiving any money. The company will then rent the home back to the owner and the company fully mortgages the title to get cash out for itself. Inevitably, many of these homes are sold in mortgagee sale proceedings. The initial owners no longer have a home nor cash for its original value.
In some cases these owners are taken to see a lawyer. Usually, they have never met this lawyer before. They leave the lawyer’s office not understanding what the transaction involves and what the implications are. Greg Stringer, a Partner of our Firm and a representative on the Auckland District Law Society was recently quoted in the Society’s weekly publication Law News that “there are real concerns about whether they leave the lawyer’s office understanding anything at all. Mr Stringer says clients may be accompanied to the lawyer’s office by the scheme promoter, and may spend only half an hour signing documents”.
Investigations of these schemes and the actions of lawyers who are involved in these transactions are ongoing. We have become actively involved with Court proceedings to try and rescue the situation for some clients caught up with the schemes.
Home owners are urged to avoid any scheme involving elements of a “buy-back”. In all property transactions extreme care should be exercised. If you have been caught up in any such scheme we are able to assist with injunction proceedings or negotiating in an endeavour to resolve the situation.
As we have indicated in a range of articles over the last several years, our best advice is to obtain competent legal assistance before signing any documentation.