OF THE AGENTS ACT – REAL ESTATE
1 September 2003, the Property, Stock and Business Agents Act
2002 took effect and brought in important changes
to the way property agents conduct business in NSW.
consumer confidence in the industry by the introduction
of requirements aimed at raising the competency and
professionalism of agents. If you are associated in any way with the
property industry in NSW, then it is vital you familiarise yourself
with the Act
and how it affects your day-to-day business operations.
REQUIREMENTS FOR LICENCES AND CERTIFICATES
education and training requirements for obtaining a licence or
certificate have been replaced with a more flexible, competency-based
approach. It concentrates on the skills needed to do a particular job
and recognises that competency can be gained in various ways. This
can include undertaking specialist courses, on-the-job learning or
assessment by registered assessors. For more information, go to
Under the Act,
auctioneers need qualifications.
All real estate
and stock and station agent licences are now subject to the
condition that the holder must not act as auctioneer unless their
licence is specifically accredited. People who have obtained the
relevant competency, or completed approved training, can apply to
have their licence accredited – either when applying for their
licence or later. The qualifications cover competency in the areas of
auction conduct and ethical practices. This change was introduced to
counter a discernible drop in auctioneering standards over the past
decade. For more information, go to the auctioneer
Only one of the
directors need hold an appropriate licence. Business operations have
to be supervised by a nominated licensee-in-charge.
imposed on licences and they will appear on the licence or
certificate. For example, a conditional licence may indicate that the
licensee is restricted to acting as a buyer’s agent only.
RESIDENTIAL PROPERTY MANAGERS
category under the Act
includes caretaker-managers of residential premises. On-site
residential property managers continue to be required to own and
reside in a dwelling in the premises they manage.
professional education is a condition of annual licence and
certificate renewals. Agents need a wide range of skills to deliver
their services and keep abreast of current developments in their
fields. Continuing professional development acknowledges the changing
nature of the marketplace and provides agents with the training they
need to meet the demands of the various types of agency work. For
more information, go to the continuing
professional development page.
of employees can cause financial distress for consumers. It is a
serious problem. For this reason, obligations have been imposed to
ensure licensees are responsible for the acts of their employees.
a licensee to be in charge of each place of business unless
an exemption has
been granted by the Commissioner for Fair Trading. Appropriate
supervision is vital, especially when large sums of money and trust
accounts are involved. Proper supervision also helps promote ethical
conduct. The Commissioner for Fair Trading may issue guidelines from
time to time about what constitutes proper supervision.
introduced important reforms designed to ensure that clients are
fully informed about the agency relationship.
TERMS FOR AGENCY AGREEMENTS
it easy for home owners to understand their rights and obligations.
required to give residential land vendors a copy of an
approved factsheet. View or download a copy of the Agency
in PDF format (size: 16k) before the agreement is signed. This will
help prospective clients make informed decisions.
off period of
one business day, including Saturdays, applies to all agency
agreements for the sale of residential property or rural land. This
gives consumers time to read and understand the terms of the
agreement, seek independent advice and consider whether the services
and fees are appropriate.
required to disclose in the
agency agreement the source and estimated amount of all rebates,
discounts or commissions they receive in relation to expenses payable
by the client. These usually involve costs associated with
advertising and maintenance. In the past, many consumers remained
unaware of the existence of these benefits and were charged the full
costs of these services. Now, if agents want to retain entitlement to
these benefits they must obtain the agreement of their clients.
real estate agents and their sales employees from obtaining or being
connected to the obtaining of a beneficial
the sale of a property, unless agreed to by the client. If you, or
anyone associated with you, purchases property you are offering for
sale in your capacity as agent, then the legislation demands you make
that fact known up-front and get the client’s consent in writing.
You also need to get the client’s written consent to be paid a
commission for the sale. A breach of these requirements can lead to
up to 2 years imprisonment. To access the approved form for declaring
a beneficial interest and other forms under the Act.
WHEN PROVIDING FINANCIAL ADVICE
Where agents give
general financial advice as an incidental part of selling land,
they are required to give the following information and
warnings that the advice is general advice, and has not
been prepared taking into account the individual circumstances of the
person to whom it is given
warnings that intending purchasers should assess the
suitability of any investments in the property in light of their own
individual needs and circumstances, which they can do themselves or by
consulting an appropriately licensed person
of information relating to any conflicts of interest of the adviser
(such as if the adviser is also acting for the vendor or the developer).
This issue has
long been a sore point with consumers and ethical agents. In the
past, some agents gave consumers inflated estimates of the value of
property in order to obtain a listing. The Act makes it an
offence for an agent to quote to a property owner an estimate of
the selling price that does not reflect their true estimate. It
is also an offence to publish an advertisement or make a statement in
the course of marketing a property that falsely understates the
estimated selling price to buyers.
for Fair Trading has the power to ask an agent to justify any
estimate given. A statement in the agency agreement of the agent’s
estimated selling price is recognised as evidence of the agent’s
This substantiation provision
applies to both auction and private treaty sales. The purpose of the
substantiation power is not to penalise agents in a situation where
the eventual sale price exceeds the agent’s genuine estimate, but
to ensure that agents do not deliberately understate their estimated
selling price in order to deceive hopeful buyers.
introduces significant changes to auction procedures in order to
address consumer concerns about the fairness of auctions.
To deter the
practice of dummy bidding, all bidders at auctions have to be
a Bidders Record for the auction. They need to supply their
personal details – name, address and proof of identity. Once
registered, bidders must be given a number to display when bidding.
Auctioneers are not permitted to accept a bid from a person unless
they are registered. The selling agent is responsible for
keeping the Bidders Record and verifying the identification details
restricts vendors to a single bid. This can be used, for example,
to initiate the auction process. The right to use the vendors bid
must be included in the conditions of sale. When the auctioneer
accepts a bid from the vendor or any person acting on behalf of the
vendor, the auctioneer must clearly state that it is the vendor bid.
required to supply consumers with a fact sheet prior to
commencement of the auction. View or download a copy of the Bidder’s
The guide explains the auction process for buyers.
TO DISCIPLINARY PROVISIONS
introduced additional grounds for disqualifying a person from
holding a licence. These include:
being an undischarged bankrupt or a person involved in the
management of a corporation that is being wound up or is in the hands
of an administrator
failing to pay a contribution to the Compensation Fund
failing to pay a debt due to the Crown for money paid out
of the Compensation Fund
failing to pay a penalty incurred as a result of
failing to provide an auditor’s report to the Commissioner
for Fair Trading
having a conviction for dishonesty in the last 10 years
of licence/certificate lending.
now the responsibility of the Commissioner for Fair Trading. This
enables the Commissioner to take prompt and effective action to
protect consumers. The Commissioner is able to initiate disciplinary
action by issuing a notice to show cause. A show cause notice gives
the agent 14 days to respond if they believe that disciplinary action
should not be taken against them. Show cause proceedings will be
commenced in circumstances where, for example, the licensee has
failed to comply with a provision of the Act
is no longer a fit and proper person to continue to hold a licence.
If the Commissioner is satisfied that the grounds for disciplinary
action as specified in the show cause notice would, if established,
justify suspension or cancellation, then a licence or certificate of
registration can be suspended immediately to reduce the potential for
ongoing harm to consumers.
has the power to appoint a qualified manager to the business to
ensure that existing clients are not disadvantaged.
the current Act
are higher than under the previous Act.
For example, a person who commits trust account fraud will be guilty
of an indictable offence and liable to imprisonment for a term of up
to 10 years. A maximum penalty of $22,000 will apply for unlicensed
trading by a corporation and $11,000 for an individual. Similar
penalties apply for collusive practices at auction sales.
action by the Commissioner may be reviewed by the Administrative
the power of the Office of Fair Trading to prosecute for unlicensed
trading. Fair Trading investigators have been given the right to
enter premises to inspect the books and records of a person suspected
of unlicensed trading. Access to the Compensation Fund also
includes clients who have suffered loss from their dealings with an
unlicensed person acting as an agent.
A register of the
licences and certificates issued under the Act is
maintained by the Office of Fair Trading. In addition to licence
and certificate details, the Register includes information
about disciplinary action taken against the holder, payments from the
Compensation Fund and other matters. Members of the public are
entitled to inspect any entry in the Register. Telephone access to
the Register is available by calling 9619 8733.