This outline sets out a summary of the relevant provisions that affect Victorian Estate Agents since 2003.
Sale of Land Act 1962
DUMMY & FICTITIOUS BIDS
1 Prohibits vendor bids, except where the auction conditions allow the auctioneer to make a vendor bid;
2 Requires the availability of auction conditions at the auction;
3 Requires auctioneers to say at the start of the auction, that under the auction conditions, he can make a vendor bid;
4 Requires auctioneers making vendor bids to declare that a bid is a "vendor bid";
5 Creates offences for dummy and undeclared vendor bidding imposing monetary penalties;
6 Allows purchasers within 2 years of the auction to apply to VCAT for damages if they suffer a loss due to a breach of the dummy bidding provisions;
7 Allows the Director or Chief Commissioner of Police to have VCAT conduct an inquiry to see if an agent has contravened the Sale of Land Act with the consequential power to cancel licenses etc.
CONDUCT AT AUCTIONS
There are prohibitions at auctions on bidders or buyer's advocates from:
1 Harassing or coercing others intending to prevent or hinder them from bidding or procuring their absence;
2 Disrupting (does not include asking reasonable good faith questions on the property), preventing or stopping an auction, or
3 Inducing or attempting to induce others refraining from bidding
COOLING-OFF (NON-AUCTION SALES)
Purchasers have a right to cooling-off for all residential non-auction sales even if the price exceeds $250,000.00. The new right to cooling-off will not apply to:
1 Auction sales and sales made within 3 business days before or after an auction;
2 Industrial and commercial properties;
3 Farming properties;
4 Residential sales where a purchaser obtained legal advice before signing the contract, or if the vendor and purchaser previously entered a similar contract for the same land, or if the purchaser of residential property is an estate agent or body corporate
Estate Agents Act 1980
ADVERTISING & OTHER REBATES
Agents cannot retain rebates for advertising or other outgoings purchased for the client. Agents must pass the benefit of monetary and non-monetary rebates to clients and there are penalties for offences about rebates. There is a new offence for a continuing such a course of conduct if an agent on three separate occasions in a 12-month period illegally retains a rebate or breaches other rebate provisions.
UNDER QUOTING & OVER QUOTING
The Legislation imposes higher standards and obligations on agents and:
1 Makes it an offence, imposing monetary penalties for agents or agent's representative to represent falsely to vendors or prospective vendors about the true estimated selling price;
2 Makes it an offence, imposing monetary penalties for agents or agent's representative to understate falsely to buyers or prospective buyers the estimated selling price, including written or oral understatements;
3 Requires agents to provide the Director, evidence of the reasonableness of any estimate of the selling price made by the agent or an agent's representative employed by that agent, including estimates made in advertisements;
4 Requires Authority & Agency Agreements for the sale of property, in which agents or agent's representative must record the estimated selling price, and be in a format the Director approves. Agent or agent's representative can record an estimated selling price being a single figure, or a price range (the difference between the top of the range and the bottom of the range cannot exceed 10% of the bottom figure). Monetary penalties apply for failing to record an estimated selling price.
DEFINITION OF 'ESTATE AGENT'
The New Legislation repeals that part of the definition of 'estate agent' in section 4 of the Estate Agents Act relating to any person in the business of 'compiling information or preparing reports on the sale purchase exchange letting taking on lease of or otherwise dealing or disposing of any real estate…’
RECOGNITION OF PRE-EXISTING QUALIFICATIONS & COMPETENCIES
The Legislation permits regulations establishing licensing criteria, which explicitly address competence, allowing the recognition of relevant pre-existing qualifications, for example, to recognise the qualifications of lawyers for licensing purposes.
50% RULE FOR LICENSED CORPORATIONS
The current Estate Agents Act requires not less than 50% of all directors of a corporation engaged in estate agency be licensed estate agents and the New Legislation now:
a) Requires that only one of the directors be licensed with a 2-year sunset clause to review its need;
b) Requires all directors seeking a licence meet probity requirements, for example:
Has there been a claim against the Estate Agents’ Guarantee Fund;
Is the director a represented person under the Guardianship and Administration Act 1986
Convictions that would disqualify the director;
Has the director been disqualified from holding a licence in another state, etc
c) Provides for the automatic cancellation of the corporation’s licence 30 days after a director becomes ineligible to be licensed, or cannot obtain a licence under section 14(5) Estate Agents Act
. Where a licensed corporation notifies the Authority of the appointment of new director, the corporation’s licence is automatically cancelled 30 days after the Authority notifies the corporation the director is ineligible to obtain a licence under section 14(5);
d) Allows a corporation to apply to the Authority for permission to continue to be licensed, if that corporation whose licence is automatically cancelled 30 days after a director is, or becomes, ineligible to be licensed, or to obtain a licence under section 14(5).
AGENT REPRESENTATIVES SHAREHOLDINGS
1 Removes the restrictions on agents representatives’ shareholdings, which prevented a corporation being granted a licence where more than 10% of its shares were held by anyone employed as an agent's representative or where persons employed as agent's representatives held more than 35% of the shares;
2 Strengthens the Estate Agents Act, which requires a proprietor and officer in effective control to supervise properly the estate agency business by:
Combining them into one comprehensive unit governing the obligations of licensed agents and officers in effective control, and
Making it an offence for a person to perform, permit, or aid and abet, any action that is inconsistent with proprietors or officers in effective control complying with the statutory duties.
POLICE CHECKS FOR FORMER SUB-AGENTS
Former sub-agents must when the business changes hands meet the same standards for police checks as other agent's representatives.
DISQUALIFICATION OF AGENT'S REPRESENTATIVES
Agent's representatives must apply to the Business Licensing Authority for permission to continue employment if their eligibility has been automatically cancelled, because person was convicted of a specified offence, or has had an Estate Agents’ Guarantee Fund claim allowed against them, or became insolvent.
POLICE CHECKS FOR AGENT'S REPRESENTATIVES
The Legislation relaxes the section 16(4) police-check requirements on a prospective employer of an agent's representative to:
1 Sight and retain a copy of a police check no more than six months old; or
2 Sight and retain a copy of a police check more than six months old, or a notice from the former Estate Agents Licensing Authority; and
3 Obtain from the prospective agent's representative, a statutory declaration that he has not been found guilty of a disqualifying offence; and
4 Sight, within six weeks of employing an agent's representative, a police check that is no more than six months old.
EMPLOYMENTS OF AGENT'S REPRESENTATIVES
There is no longer a prohibition to allow an agent's representative, other than an agent's representative employed as a branch manager, to be employed by more than one agent. An agent's representative cannot, however, be employed by another agent as a branch manager.
Agents can pay the whole or part of any commission to anyone other than a licensed agent, or agent's representative as long as they disclose to the client before the client engages, the agent will share the commission.
The Legislation regulates how agents can advertise themselves, their businesses, and advertising on the Internet.
PURCHASE OF LISTED PROPERTIES
There are tighter controls where agents can buy a listed property by:
1 Clarifying that an agent’s application for approval to buy a property listed with that agent must be made before
signing the contract of sale and
2 Removing the agent’s defence that he acted honestly, reasonably, ought fairly to be excused, and the vendor is in substantially as good a position as if the prohibition had not been breached.
Agents must deposit unidentified money into their trust account by the end of the next business day after the agent becomes aware of such a payment. If the source or intended recipient of the payment has not been identified at the end of 12 months, the agent must treat the money under the Unclaimed Moneys Act 1962
TRUST ACCOUNT RECEIPTS
Agents must now:
1 Keep duplicate copies of receipts for cash
payments if electronic records of the payments were made as soon as practicable after receiving the payments; and
2 Issue receipts for payments by cheque or electronic funds transfer
if electronic records of the payments were made as soon as possible after receiving the payments and the person making the payment did not request a receipt, and
3 Retain receipts or duplicate copies of receipts for payments made by cheque or electronic funds transfer
if electronic records of the payments were made as soon as possible after receiving the payments.
TRUST ACCOUNT AUDITS
Trust accounts must be audited according to Australian Auditing Standards.
QUALIFICATIONS OF AUDITORS
The eligibility criteria for agents' trust accounts auditors is similar to the criteria for auditors of solicitors' trust accounts (i.e., membership of one of two professional bodies (CPA Australia or ICAA), or eligibility to practice as an accountant).
ESTATE AGENTS WHO HAVE NOT HELD TRUST FUNDS
Agents who have not held any trust money must lodge a statutory declaration on a 'as needs' basis.
CONTINUING PROFESSIONAL DEVELOPMENT
Agents and agents' representatives must undertake training, or continuing professional development as the Director specifies.
CONSUMER PROTECTION INFORMATION
Agents and agents' representatives must give prospective clients, before the client engages the services of the agent, any information the Director specifies.
Other Relevant Changes
Agents who receive bond cheques payable to the Residential Tenancies Bond Authority can send the cheques to the Authority without having to first deposit it in the trust account.
CONVERSION OF TRUST MONEY
The Legislation extends the offences about wrongful conversion of trust money and issuing false accounts by agents, to cover the behaviour of agents' representatives and other employees.
CONSUMER AFFAIRS VICTORIA
Consumer Affairs Victoria inspectors can require persons to produce documents or provide information for seeking court orders.
RECOVERY OF AUDIT COSTS
The Director can recover the costs of a trust account audit from agents where the audit uncovers breaches of the trust account requirements.
INJUNCTION RESTRAINING UNLICENSED BUSINESS
The Director can apply to the Magistrates' Court for an injunction requiring a person to cease conducting an unlicensed business.
MANAGEMENT BY AGENT'S REPRESENTATIVES
Agent's representative cannot manage the day-to-day operations of an estate agency even where authorised to do so by a licensed agent.
NEED MORE INFORMATION
Behan Legal assists and advises on these important issues. For an appointment, call 03 9646 0344