real estate

Industry Fundamentals NSW — Toolbox

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Industry Fundamentals NSW — Toolbox

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Industry Fundamentals NSW

Contents

Overview .............................................................................................................. 2

1 State legislation ......................................................................................... 2

Agent legislation ................................................................................................ 2

NSW Legal Dictionary ........................................................................................ 2

Regulatory authority for property..................................................................... 2

Other property related NSW legislation ........................................................... 3

2 Working in the property industry ............................................................... 5

Licence levels ..................................................................................................... 5

Continuing professional development requirements ....................................... 6

3 Ethical and conduct standards for agents ................................................... 7

Agent rules of conduct ...................................................................................... 7

Disclosure of material fact information ............................................................ 8

Disclosure of conflicts of interest ...................................................................... 8

Restrictions on obtaining beneficial interest .................................................... 8

Secret commission ............................................................................................ 9

Underquoting guidelines ................................................................................... 9

4 Trust account requirements ....................................................................... 9

5 Industry associations and groups ............................................................. 10

Real estate industry associations .................................................................... 10

Employment related associations ................................................................... 11

References .......................................................................................................... 12

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Overview Knowledge of state-based legislation relevant to your state is an important part of this subject. This document contains state-specific website links to assist you with your learning.

You should regularly refer to the information provided in this document when reviewing the topics to learn about the NSW specific requirements.

1 State legislation

Agent legislation The main legislation under which agents operate and which governs agency practice in NSW is: • Property and Stock Agents Act 2002 No 66 • Property and Stock Agents Regulation 2014.

NSW Fair Trading is the regulatory authority that administers this legislation.

Visit the NSW Fair Trading website at: <www.fairtrading.nsw.gov.au>.

This legislation can be located on the NSW Government legislation website at: <www.legislation.nsw.gov.au>. Click on ‘Search’ and complete the required information fields to find the legislation (viewed 15 February 2021).

You can also access this legislation on the NSW Fair Trading website at: <www.fairtrading.nsw.gov.au> About Fair Trading  Legislation and publications  List of legislation and locate the name of the legislation you want to access (viewed 15 February 2021).

NSW Legal Dictionary To assist you with reading legislation, you may like to visit the LawAccess NSW ‘Legal Dictionary’ at: <www.lawaccess.nsw.gov.au/Pages/representing/lawassist_legalwords.aspx> (viewed 15 February 2021).

Regulatory authority for property NSW Fair Trading is the regulatory authority that administers the Property and Stock Agents Act 2002 (PSAA) and Property and Stock Agents Regulation 2014 (PSAR).

To understand the role Fair Trading NSW plays in the property sector, visit the NSW Fair Trading website at: <www.fairtrading.nsw.gov.au>  Housing & property (viewed 15 February 2021).

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Other property related NSW legislation All of the legislation listed can be viewed on the NSW Government Legislation website at: <www.legislation.nsw.gov.au>. Click on ‘Search’ and complete the required information fields to find the legislation (viewed 15 February 2021).

Consumer protection

NSW-based Consumer Protection legislation includes: • Fair Trading Act 1987 • Fair Trading Regulation 2019.

NSW Fair Trading is the state regulator for this legislation.

You can also access this legislation on the NSW Fair Trading website at: <www.fairtrading.nsw.gov.au>  About Fair Trading  Legislation and publications  List of legislation, and locate the name of the legislation you want to access (viewed 15 February 2021).

Conveyancing

In NSW, the conveyancing legislation is: • Conveyancing Act 1919 No 6.

Gazumping

Access and read the NSW legislation on Gazumping.

Residential Tenancies legislation

In NSW, the residential tenancy legislation is: • Residential Tenancies Act 2010 • Residential Tenancies Regulation 2019.

Besides the NSW Government Legislation website, you can also view this legislation on the NSW Fair Trading website.

Strata legislation

The strata legislation in NSW is: • Strata Schemes Management Act 2015 • Strata Schemes Management Regulation 2016.

Besides the NSW Government Legislation website, you can also view this legislation on the NSW Fair Trading website.

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Retail tenancies

For retail tenancies, the legislation in NSW is: • Retail Leases Act 1994 No 46.

Civil and Administrative Tribunal

The legislation that supports the function of the NSW Civil and Administrative Tribunal is: • Civil and Administrative Tribunal Act 2013 No 2 • Civil and Administrative Tribunal Regulation 2013.

Anti-discrimination

The NSW Anti-discrimination Act is: • Anti-Discrimination Act 1977 No 48.

This legislation is administered by the anti-discrimination Board at: <www.antidiscrimination.justice.nsw.gov.au>.

Complaints about discrimination can be made to the anti-discrimination Board.

Discrimination can take many forms, including harassing or treating people unfairly on the basis of their: • race • race • sex • gender identity (e.g. transgender) • sexuality (e.g. homosexuality) • disability (e.g. physical, intellectual or psychiatric) • marital status • age (includes discrimination due to having children).

You should refer to the document ’Factsheet 17: Discrimination’ at: <https://files.tenants.org.au/factsheets/fs17.pdf>.

Work Health Safety

The Work Health Safety legislation in NSW consists of: • Work Health and Safety Act 2011 • Work Health and Safety Regulation 2017.

SafeWork NSW administer, provide advice and monitor and enforce compliance with this legislation at: <www.safework.nsw.gov.au>.

Land titles

Land titles in NSW are handled by the NSW Land Registry Services at: <www.nswlrs.com.au>.

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2 Working in the property industry

Licence levels There are three licence levels in NSW. These are determined by the applicant’s qualifications and experience in the sector: • Certificate of registration as an assistant agent • Class 2 licence as a licensed agent • Class 1 licence as a licensed agent or licensee in charge of a business.

Assistant agents

Entry level to the industry is a certificate of registration as an assistant agent. Assistant agents perform entry-level roles while they obtain the qualifications and experience necessary to become a fully licensed agent (Class 2 or Class 1 licence). All certificates of registration are issued for a fixed term of four years, with no extensions of time or renewals allowed beyond that time. This provides for assistant agents to advance to a Class 2 or Class 1 licence as they build on work experience and improve their knowledge of the industry.

By the end of the four years, the certificate of registration holder can either obtain a Class 2 licence or cease working as an assistant agent. A person may apply for a new certificate of registration one year after the expiry of their previous certificate of registration.

A person who is an assistant agent cannot: • enter into a contract for the sale of land • enter into an agency agreement (this includes a sales agreement or a property

management agreement) • enter into a franchising agreement • authorise the withdrawal of money from a trust account.

Class 2 licence

The next step upwards from an Assistant Agent level is a Class 2 licence. Any person holding a Class 2 licence can: • enter into a contract for the sale of land • enter into an agency agreement (this includes a sales agreement or a property

management agreement) • enter into a franchising agreement.

However, only a person holding a Class 1 licence who is the nominated licensee in charge can authorise the withdrawal of money from a trust account.

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Class 1 licence

A person who is the licensee in charge of a business needs to obtain a Class 1 licence.

Note: You can obtain a Class 1 licence but not be nominated as the licensee in charge. Only the nominated licensee in charge of a business can authorise the withdrawal of money from a trust account.

Under an unrestricted real estate agent’s licence, an agency may carry out the following functions: • business agent • on-site residential property manager • real estate sale or leasing functions.

Applicants for a licence can choose a licence duration of 1, 3 or 5 years.

Eligibility requirements

There are eligibility requirements to work in the real estate industry, at both registration and licensing level. To read about these, visit the NSW Fair Trading website at: <www.fairtrading.nsw.gov.au>  Housing and property  Property professionals  Becoming an agent  Applying for a licence or certificate (viewed 15 February 2021).

Qualifications

The educational qualifications required to work in the industry can be researched on the NSW Fair Trading website at: <www.fairtrading.nsw.gov.au  Housing and property  Property professionals  Becoming an agent  Qualifications (viewed 15 February 2021).

Continuing professional development requirements In NSW, all individuals who hold a Class 1 licence, Class 2 licence or a Certificate of Registration must complete the CPD specified for their licence or certificate category each year.

Failure to comply with your CPD requirements may result in the suspension or cancellation of your licence or certificate.

The CPD year for all licence and certificate holders starts on 23 March each year and ends on 22 March the following year.

The CPD activities that you have to complete depends upon the level and type of licence you hold.

A Class 2 Real Estate Agent is required to undertake six hours of CPD each year. Of this, three hours are compulsory topics determined annually by Fair Trading and three hours are elective topics.

A Class 1 Real Estate Agent is required to undertake nine hours of CPD each year. Of this, three hours are compulsory topics determined annually by Fair Trading, and six hours are elective topics. Three hours of the elective topics must be related to business management.

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Certificate of Registration holders, as an assistant real estate agent, must complete at least three units each CPD year from a valid Certificate IV qualification that is required for the issue of a Class 2 Agent licence in Real Estate (with or without restrictions). Assistant agents can complete any of the units from their Certificate IV qualification.

Compulsory topics are delivered by industry associations, government agencies and approved entities. The details of approved providers are published on the Fair Trading website.

To view the details of the required CPD training, visit the NSW Fair Trading website at: <www.fairtrading.nsw.gov.au>  Housing and property  Property professionals  Working as an agent  ‘Continuing Professional Development (CPD) requirements (viewed 15 February 2021).

3 Ethical and conduct standards for agents

Agent rules of conduct In NSW the agent conduct standards are known as the Agent ‘Rules of Conduct’.

The Agent Rules of Conduct in NSW are located in the schedules to the Property and Stock Agents Regulation 2014.

You can access the Regulation on the NSW Government Legislation website at: <www.legislation.nsw.gov.au>.

You should review the information regarding Rules of Conduct on the NSW Fair Trading website at: <www.fairtrading.nsw.gov.au>  Housing & property  Property professionals  Working as an agent  Rules of Conduct (viewed 15 February 2021). • Schedule 1 of the Property and Stock Agents Regulation 2014 contain the

General Rules of Conduct which apply to all agents and assistant agents. • Schedule 2 of the Property and Stock Agents Regulation 2014 contain Rules of

Conduct that are applicable to real estate agents and assistant real estate agents. – Part 1 of Schedule 2 applies to real estate and business sales. – Part 2 of Schedule 2 applies to property management and leasing functions. • Schedule 3 applies to stock and station agents and assistant stock and station agents • Schedule 6 applies to strata managing agents and assistant strata managing agents.

Note: Schedule 4 and 5 are repealed.

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Disclosure of material fact information Section 52 of the Property and Stock Agents Act 2002 requires that a licensee or certificate holder must not induce a person to enter into any contract or arrangement by: • any statement, representation or promise that is false, misleading or deceptive

(whether to the knowledge of the agent or not), or • any failure to disclose a material fact of a kind prescribed by the regulations

(whether intended or not) that the agent knows or ought reasonably to know.

A material fact is a fact that would be important to a reasonable person in deciding whether or not to proceed with a particular transaction.

An offence under this section can attract a penalty of up to $22,000.

Section 54 the Property and Stock Agents Regulation 2014 lists what material facts must be disclosed in a property transaction.

NSW Fair Trading produce ‘Misrepresentation’ guidelines on their website at: <www.fairtrading.nsw.gov.au/housing-and-property/property-professionals/running-a- property-agency/misrepresentation-guidelines>.

It is important for you to review the ‘Misrepresentation’ guidelines in detail.

Disclosure of conflicts of interest The Property and Stock Agents Act Section 47 requires agents to disclose any relationships that may be a potential conflict of interest, as well as the amount of rebates, discounts or commission obtained by the agent from these relationships.

Refer to Section 47 of Property and Stock Agents Act 2002.

The Section 47 form is available at: <www.fairtrading.nsw.gov.au/help- centre/forms/property-services-forms>.

Restrictions on obtaining beneficial interest Refer to Section 49 of the Property and Stock Agents Act 2002.

Any agent who wishes to obtain a beneficial interest in a particular property must ensure the client consents in the approved form (see below), the agent must act fairly and reasonably, and not take commission unless the client consents in writing.

Refer to Section 49 Form on NSW Fair Trading website at: <www.fairtrading.nsw.gov.au/help-centre/forms/property-services-forms>.

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Secret commission A secret commission in real estate includes receiving any funds from a third party without the knowledge and permission of the principal (client).

Part 4A of the NSW Crimes Act 1900 prohibits the following conduct: • Receiving or soliciting, as an agent, an inducement or reward for doing or not doing

something in relation to the affairs of their principal. • Corruptly giving or offering an agent an inducement or reward for doing or not doing

something in relation to the affairs of the agent's principal. • Use of misleading documents or statements by agents with the intent of defrauding

their principals. • Corrupt inducements to a person for giving advice to a third party which induces

them to enter into a contract or appoint the person who gives the inducement to any office.

Penalties for infringements include fines as well as imprisonment for up to seven years for individuals that are involved.

A secret commission is also potentially misleading and deceptive conduct under the provisions of the consumer protection legislation, which could lead to an action for damages by an aggrieved party (such as the principal) or the ACCC itself. There may also be a misrepresentation under that legislation giving rise to a liability for a fine.

Finally, any agent that accepts a secret commission will be likely to have committed a default under the agency agreement, thus exposing the agent to termination of the agreement and liability for damages.

Underquoting guidelines NSW Fair Trading produce ‘Underquoting guidelines for residential property’ to assist agents to comply with Section 72–76 Property and Stock Agents Act 2002 at: <www.fairtrading.nsw.gov.au/__data/assets/pdf_file/0010/367975/Underquoting_guid elines_for_residential_property.pdf>.

Read through these underquoting guidelines carefully.

4 Trust account requirements Trust account requirements can be located in the Property and Stock Agents Act 2002 and Regulation 2014, which can be assessed on the NSW Government Legislation website at: <www.legislation.nsw.gov.au>.

You should review: • Property Stock and Business Agents Act 2002: – Part 7: Trust accounts and Part 8: Records • Property Stock and Business Agents Regulation 2014: – Part 4: Trust money.

If a real estate agency is offering both sales and property management services, there must be separate trust accounts for these two areas.

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Only a licensee in charge (LIC) of a business may authorise trust account withdrawals from a trust account.

LICs are responsible for reviewing and approving all transactions for the trust account before they occur, including electronic fund transfers and payment of trust money by cheque.

There can also only be one LIC who is able to authorise withdrawals for a trust account.

An LIC is unable to delegate their authority to another person.

Generally, no cash is paid to agents anymore. This is because accepting cash can be a security issue in the agency, and if stolen, may not be covered under the agent’s business or professional indemnity insurance. The agency you work for should provide specific instructions about whether you are allowed to take cash from clients. If you do accept cash as trust account money, it must be banked into the trust account by the close of business on the next banking day.

You can also access information regarding trust accounting requirements from the NSW Fair Trading website at: <www.fairtrading.nsw.gov.au>  Housing & property  Property professionals  Supervising an agency  Trust accounts and audit requirements – real estate (viewed 15 February 2021).

5 Industry associations and groups

Real estate industry associations

Real Estate Institute of NSW

The Real Estate Institute of NSW (REINSW) assists agents with industry training, best practice help line, industry journal, conferences, webinars and membership of specialist area chapters at: <www.reinsw.com.au>.

Australian Property Institute

The Australian Property Institute is another industry association for agents; more commonly for agents that specialise in commercial real estate. It provides guidance notes, practice standards, information papers, education and conferences at: <www.api.org.au>.

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Employment related associations In NSW the registered industrial organisations are:

The Real Estate Employers Federation (REEF)

The Real Estate Employers Federation (REEF), representing employers at: <www.reef.org.au>.

The Real Estate Association of NSW (REANSW)

The Real Estate Association of NSW (REANSW), representing employees at: <www.reinsw.com.au>. REANSW is state-registered to represent the interests of employees (except clerical) in the real estate industry within NSW.

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References The Australian Property Institute (API) n.d., viewed 12 May 2020, <http://www.api.org.au>.

LawAccess NSW 2020, Communities and Justice, Legal Dictionary, NSW Government, viewed 12 May 2020, <http://www.lawaccess.nsw.gov.au/Pages/representing/lawassist_legalwords.aspx>.

NSW Fair Trading n.d., NSW Government, viewed 12 May 2020, <https://www.fairtrading.nsw.gov.au>.

NSW Fair Trading n.d., Misrepresentation, NSW Government, viewed 12 May 2020, <https://www.fairtrading.nsw.gov.au/housing-and-property/property- professionals/running-a-property-agency/misrepresentation-guidelines>.

NSW Fair Trading n.d., Property services forms, Section 47 form, NSW Government, viewed 12 May 2020, <http://www.fairtrading.nsw.gov.au/help-centre/forms/property- services-forms>.

NSW Fair Trading n.d., Property services forms, Section 49 Form, NSW Government, viewed 12 May 2020, <https://www.fairtrading.nsw.gov.au/help- centre/forms/property-services-forms>.

NSW Fair Trading 2016, Underquoting guidelines for residential property, January, NSW Government, viewed 12 May 2020, <https://www.fairtrading.nsw.gov.au/__data/assets/pdf_file/0010/367975/Underquoti ng_guidelines_for_residential_property.pdf>.

NSW Land Registry Services n.d., Land titles, viewed 12 May 2020, <https://www.nswlrs.com.au>.

NSW legislation n.d., NSW Government, viewed 12 May 2020, <http://www.legislation.nsw.gov.au>.

NSW legislation 2002, Property and Stock Agents Act 2002 No 66, NSW Government, viewed 12 May 2020, <https://www.legislation.nsw.gov.au/#/view/act/2002/66>.

NSW legislation 2014, Property and Stock Agents Regulation 2014, NSW Government, viewed 12 May 2020, <https://www.legislation.nsw.gov.au/#/view/regulation/2014/563>.

NSW Legislation 2018, Gazumping, 12 June, viewed 12 May 2020, <https://www.fairtrading.nsw.gov.au/housing-and-property/buying-and-selling- property/buying-a-property/gazumping>.

The Real Estate Association of NSW (REANSW) n.d., viewed 12 May 2020, <http://www.reansw.asn.au>.

The Real Estate Employers Federation (REEF) n.d., viewed 12 May 2020, <https://www.reef.org.au>.

The Real Estate Institute of NSW (REINSW) n.d., viewed 12 May 2020, <https://www.reinsw.com.au>.

SafeWork NSW n.d., viewed 12 May 2020, <https://www.safework.nsw.gov.au>.

Tenants’ union of New South Wales 2019, Factsheet 17: Discrimination, April, viewed 12 May 2020, <https://www.tenants.org.au/factsheet-17-discrimination>.