REAL
ESTATE RELATED BUSINESSES
WHEN
DO YOU NEED A LICENCE?
Some people have
established small businesses in NSW providing assistance to home
owners wishing to privately sell their home without the intervention
of a licensed real estate agent. The services offered through such
businesses may include the preparation of fliers and signage as well
as assistance with ‘open house’ inspections. These
operators generally charge a set fee, rather then a percentage of the
eventual selling price as agents do and believe they offer their
clients a more personalised service than what may be provided by a
licensed agent.
Some of these
services may be provided without a licence, while others fall under
the jurisdiction of the Property,
Stock and Business Agents Act 2002.
Here are a few examples of the kinds of businesses we have examined
in this area.
John’s
one off showing
John’s
neighbour, Mary asks him to show some prospective buyers through her
house while she is away on holidays. John does so, and the interested
people subsequently purchase the property. Mary rewards John with a
case of wine. In showing the house on this one-off occasion John does
not need a licence.
Phil
goes online
Phil sets up a
website from where he charges a fee to assist people sell their
houses. Phil advertises the properties on his website and includes
his contact details in each one. He also produces the ‘for
sale’ signs which he places on each property. Phil takes calls from
interested prospects and passes them on to the vendors. To conduct
this business, Phil would need a licence under the Property,
Stock and Business Agents Act 2002.
Holiday
Jeff
Jeff sets up a
website to take holiday accommodation bookings on behalf of several
bed and breakfast accommodations operated by friends in his area.
Visitors to his site are referred to his friends and Jeff is paid a
fee when accommodation is booked. Jeff is carrying on a business and
inducing people to enter into a transaction that gives the person a
right to stay in the accommodation. He would require a licence under
the Act
to carry on his business.
ACTIVITIES
THAT DO NOT REQUIRE A LICENCE
As the examples
above illustrate, only a limited range of services relating to the
selling of real estate may be provided without holding a licence,
such as:
(a)
placing vendors’ advertising on your web site provided that
any prospective purchaser can only contact the vendor to express
their interest, and not you
(b)
assisting vendors with the preparation of signage for their property
or the production of advertising fliers.
Before setting up
any business of this kind you should get legal advice to find out if
you require a licence.
Activities
that require a licence under the Act
If you were to
operate a business in the following manner you would require an
appropriate licence under the Property,
Stock and Business Agents Act 2002.
Carrying on a
business, for reward and:
(a)
taking calls or interest from prospective purchasers and passing them
on to the vendor
(b)
including your business's telephone or other contact details on
advertising signage used by vendors
(c)
taking prospective purchasers through the property that is for sale,
or accompanying the vendor when this is done
(d)
providing the contract for the sale of the property to prospective
purchasers or discussing the merits of the property with them
(e)
introducing prospective purchasers to the vendor of the property
(f)
taking calls from prospective users of the holiday accommodation and
passing them on to the owner of the property
(g)
directly arranging for the booking of accommodation by a third party
in relation to holiday or short-term accommodation for which you act
as an agent. For example, the taking of fees and rent.
TRAINING
AND SUPERVISION REQUIREMENTS
The Act
also places stringent supervision and conduct responsibilities on
agents. These requirements reflect the view that qualified
supervision is paramount in the handling of large sums, such as those
that are placed in trust during property transactions. The
requirement also acknowledges the particular need in this industry
for guidance in procedural matters and ethical conduct.
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