KEY TAKE OUTS:
- What are some of your most common legal requirements as set out in the Property Stock and Business Agents Act
- When can you offer a property for sale and what is considered ‘offering’ a property for sale
- As the Agent, what do you have a duty to disclose
- When it comes to the Contract, what are you allowed and not allowed to do
In NSW, Real Estate Agents are regulated by The Property Stock and Business Agents Act 2002. The Act provides conduct and competence standards required for you to carry out your profession.
Here are some of the most common and more interesting of the legal requirements set out in the Act.
Section 63(2) of the Property Stock and Business Agents Act 2002 states that you cannot offer a property for sale until you hold a Contract for Sale that contains all prescribed documents. You may think you are across this one, but I would encourage you to read on…
An Agent is considered to ‘offer’ a property for sale when they expressly or by implication:
- indicate that the property is for sale by advertising or promoting it in any way, placing a sign on or near the property and/or having a description and/or photos on display at their office
- advertise or indicate in any way that the property is to be auctioned at any future time
- offer to sell the property
- invite offers to purchase the property
- show the property to a prospective purchaser
- give the address to a prospective purchaser
If you carry out any of the actions listed above, prior to holding a Contract for Sale that contains all prescribed documents, you are in breach of the Act and penalties apply.
Let’s consider this scenario. Your Vendor has instructed you to sell their property. Their property contains a swimming pool. You are keen to market the property for sale, so you follow up the Contract from the Vendors Conveyancer. The Vendors Conveyancer advises you that they haven’t yet been provided with a Certificate of Compliance or Non-Compliance for the Pool. You ask them to issue you the Contract anyway. You now hold a Contract for Sale which does not contain a Certificate of Compliance or Non-Compliance for the Pool. You then post an ad online, marketing the property as ‘for sale’. Have you complied with the Act? The answer is no. You are in breach of the Act. A Certificate of Compliance or Non-Compliance for the Pool is a prescribed document. You do not hold a Contract for Sale that contains all prescribed documents and are therefore not able to list the property for sale.
Here’s another scenario for your consideration. You have been instructed to act for the Vendor of 42 Wallaby Way, Sydney. The Vendor has signed your agency agreement but hasn’t yet instructed a Conveyancer to prepare the Contract. He says he will get around to it later this week. Meanwhile you recall an older woman you once sold a property for, Dory. She sold her large family home and told you she was looking to downsize but wanted to stay in the CBD area. You think this property might be right for Dory, so you reach out to her and tell her you have a property coming up for sale in Sydney which is smaller than the one she sold. You give her the address. Have you complied with the Act? The answer is no. You are in breach of the Act. You do not hold a Contract for Sale but have offered the property for sale by giving the address to a prospective Purchaser.
Section 52 of the Property Stock and Business Agents Act 2002 states that you cannot persuade someone to enter into a Contract by providing false or misleading representations or promises or by failing to disclose a material fact that you know or ought reasonably to have known. A material fact is considered:
- If, within the last 5 years, the property has been subject to flooding or bushfire
- If the property is subject to significant health or safety risks
- If the property is listed on the register of residential premises that contain loose-fill asbestos insulation
- If, within the last 5 years, the property was the scene of a crime of murder or manslaughter
- If, within the last 2 years, the property has been used to the manufacture or supply of drugs
- If the building contains external combustible cladding to which there is a notice of intention to issue a fire safety order or building product rectification order
- Where a building work rectification order, prohibition order or stop work order is in force
The importance of disclosing a murder that had occurred at a property was highlighted in the case of the Lin family who, in 2004, were not told that they were purchasing the family home of Sef Gonzales who had murdered his father, mother and sister in the home at North Ryde just 3 years earlier. The ABC reported that the Real Estate Agent who sold the house without disclosing the history of the home was found in breach of the Act and fined more than $20,000.
Section 47 of the Property Stock and Business Agents Act 2002 states you have a duty to disclose:
- Any personal or commercial relationships you have with anyone you are referring the client too (including a Conveyancer or mortgage broker)
- Whether you will or expect to derive any consideration, be it monetary or otherwise, from the person who you are referring too. If so, you must disclose the amount or value of the consideration
This duty to disclose applies to both the Vendor and any prospective Purchaser.
Section 64 of the Property Stock and Business Agents Act 2002 states that you are allowed to do any of the following:
- Participate in exchange of Contracts;
- Insert the following information on the front page of the Contract – purchasers name and address, purchasers solicitors name and address, purchase price and Contract date; and
- Insert or delete from the Contract any description of any inclusions.
If in exercising these rights, you cause a person loss, damage or expense due to any unauthorised action or any act of negligence or omission, you will be liable to compensate that person.
Have you ever amended the completion date on the front page of Contract? It is important to consider that the Act doesn’t allow you to.
CONCLUSION
Coutts have a team of experienced Solicitors and Conveyancers that understand the law and the legislation that governs it.
ABOUT MELINA COSTANTINO
Melina joined the Coutts team in 2010 working as a Licensed Conveyancer within our Property & Conveyancing team, based out of our Campbelltown office. Her commitment to client services saw her progress further and into the role of a Senior Licensed Conveyancer in July 2022.
She graduated with a distinction in the Advanced Diploma of Conveyancing and is accredited with the Australian Institute of Conveyancers NSW.
For further information please don’t hesitate to contact:
Melina Costantino
Senior Licensed Conveyancer & JP
info@couttslegal.com.au
1300 268 887
This blog is merely general and non-specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.
