Claw backs.

Interesting email arrived today with an attached Invoice.

A previous Broker is demanding I pay Clawback for lost commissions some 4 months after the fact.

They did half a job. Original Equity release refi on IP went fine. Trying to secure a new Construction Loan for next IP took 3 Finance Extensions and a lot of my sanity.

I switched Brokers and refinanced 2 Loans inclusive of original equity release, and got the Construction Loan across the line too. Problem handled.

Until lovely email today. I made a rookie mistake jumping too early, but the question is, am I obligated to pay Clawback to the original Broker as the Loan was paid out inside 2 years.

 

It's unusual. Did you sign any agreement with them saying you wouldn't jump early.

Even if you did I think the chances of them pursuing anything further would be pretty remote.

 

If you signed their quote and proposal where it states that clawback would be payable, then yes you are liable to pay. If you're not happy, you can dispute it but if you signed the paperwork I'm not sure how that will go.

 

Not unless you contracted for this.

 

Did you obligate yourself by signing an agreement to pay the clawback if loan was paid or or refinanced with 2 years?

This will answer your question.

 

Interesting.

Great straight forward replies too, thanks all.

 

What's the commission worth? It may not be practical for them to do any more than send you a nasty letter from a solicitor in order to retrieve funds.

Legally you may be obliged to pay but practically what can he do if you tell him his service sucked and to go jump?

Tell him to sue you for it and take the bet that he wont for such a small amount of funds. Or if he actually did do some work and you think he is entitled to at least some fair value for the effort he put in make an offer to settle the amount.

 

Thanks all. No mention of payment. First I've heard of it. Rang my current Broker and he said tell em to go jump in the lake. It is just shy of $1,400, so it's not a petty sum.

 

@Sonamic
Best to check what you have signed with them..
I know a Mortgage broking house in Sydney has clearly written agreement that explains and demands commission claw back amount.

 

This is what's wrong in this world - poor attitude and terrible mentality.

I'm not defending the failed broker one bit, but there are elements to the story that make your opinion invalid.

Firstly, the OP chose the broker (likely contracted) , not the other way around. So it's a 2 way street.

Secondly, what steps did the OP take to rectify/mitigate the problem? OP already mentioned they 'jumped ship early' meaning the OP solution was to just give up and move on without perhaps calling/emailing rectification process, calling industry body, OFT etc. Granted there are strict timeframes for the OP, but we don't have the brokers side of the story. Perhaps there was something in the deal that stank, or the lender was slow etc etc?

Also the fact that they did get the OP the deal in the end means there was some performance. Not paying for some or all the performance is not kosher even if it was slow, poor etc. Perhaps it was not in the brokers control.

An amount of $1400 is probably worth pursuing for this broker, and if the OP was contracted then they are obliged to pay or dispute - not just ignore.

It's easy to play tough without the brokers side of the story.

pinkboy

 

The amount of time, money and hassle wouldn't be worth it for $1400. Put yourself in the brokers shoes, would you chase the amount knowing what would be involved to get it? You would have to go to court and there is a saying about that: If you win you lose and if you lose your f***

I would personally pay something though. Particularly if he did actually do work for you. No one should have to work for free.

 

If telco and utility companies see fit to recover <$1400 amounts via credit recovery than if this broker had the time and patience going through small claims they could certainly **** you over.

This is the risk the OP takes by ignoring/head in the sand/doing nothing. This was the opinion attack - not the rest.

Best case the broker won't pursue you, but worst case they could potentially damage your investing by getting a judgement. OP's call.

pinkboy

 

Hi there Sonamic

As others have said, you would have to sign an agreement to repay for a certain period, without that there is no recourse in my opinion and it is just poor form if the demand is made without a written agreement that of course would be explained to you before signing.

Cheers Ivan

 

It's simple - did you sign a credit quote indicating that claw back would be payable?

 

Its certainly worth chasing and can be done with low costs and low risk. Small claims courts see amounts like this or less all day long.

 

I just remembered an incident from many years ago where a broker I knew sued a client over a $2000 fee. He issued a statement of claim, obtained a default judgment and then sent the sheriff around to the guys house to seize property to the value of the debt (plus court costs). The guy then quickly paid up on the spot at that point, but he would have had a court judgment recorded on his credit file for the next 5 years.

 

Exactly the point I was trying to make.

pinkboy

 

I should stress that I am not saying you should pay the alleged debt or shouldn't pay it. That will be up to you decide, mainly based on your written or oral contract.

 

Thankyou all for the replies.

I shall read through Finance again in detail to see if there is specific mention of who wears the "loss" in the event of Early Payout. There was definitely no oral warning prior, during or after Signing. Learning the hard way.

And yes for the doubters I did contact the Broker in question via email for details on how the Construction Loan was progressing. Received a reply from her "assistant" that Broker would contact me with answers to my questions. Broker was CC 'd into this assistant conversation also. Zero reply. As the Land was Under Contract and approaching Registration and Settlement, time was of the essence. I did what needed to be done to Complete. I'm not crying poor me. Just asking for thoughts. And have received such.

 

But was there a written agreement? It could be part of the credit disclosure document or other documents.

I would check this and if you cannot find it then write to the broker and tell them there was no agreement for you to make any payment for discharging the loan early and if they think otherwise ask them to show you the document where this was agreed.