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Public set to benefit from new real estate agents law

By Richard Smith, Partner and Blair Williams, Senior Solicitor

First published in The Press 28 October 2009

Imminent changes to the Real Estate Agents Act 2008 will be welcome news for consumers, who are likely to be far better protected from careless or unethical agents.

The new Act comes into effect on November 17, replacing its 1976 equivalent.  One of its purposes is to promote public confidence in the performance of real estate agency work. 

Under the new legislation, transgressing agents face a steep increase in fines – from $750 in some instances to up to $100,000.

The cornerstone of this is the establishment of the new Real Estate Agents Authority which will be responsible for:

• Licensing agents
• Developing rules and a set of professional industry standards
• Providing consumer information for disclosure by agents to sellers and purchasers before they sign listing agreements and sale and purchase agreements
• A new complaints and disciplinary system.

These steps are intended to promote independent, transparent and effective processes for the benefit of both buyers and sellers.  For example, under the new Act complaints and disciplinary system anyone can complain to the Authority about the conduct of a real estate agent or former real estate agent.  Complaints are passed onto a newly established Complaints Assessment Committee, or if more serious, then to the Real Estate Agents Disciplinary Tribunal.  Both organisations are independent of real estate agents.                     

The remedies available to the public are more extensive than previously. An individual agent could be fined up to $10,000 and a company up to $20,000, by the Complaints Assessment Committee. Steeper fines of up to $15,000 for an individual and $30,000 for a company can be imposed by the Real Estate Agents Disciplinary Tribunal. In addition, the Tribunal has the power to order a real estate agent to pay compensation of up to $100,000 for actual loss to the complainant.  Under the 1976 Act, the maximum fine for any transgression is $750.   

It will also be possible to make a complaint about a wider range of matters under the new Act than is currently possible.

There can be no doubt that, from the public’s perspective the new system for complaints and discipline is a significant improvement. There are also other consumer benefits prescribed by the new Act. 

With mid- November fast approaching, real estate agents will need to ensure that the way they do business, and in particular their documentation and processes, complies with the 2008 Act.  For example:

• Updated listing agreements including provisions disclosing rebates, discounts and commissions which the agent might receive relating to expenses (such as advertising) a client has paid to an agent.
• Ensuring clients are made aware of how a property is to be marketed and the costs involved with such marketing.
• Providing written appraisals and disclosing actual commissions that will be payable based on appraisal prices.
• Implementing processes to deal with a client’s right to end an agency within a one working day “cooling off” period, or after 90 days (in the case of a residential listing).

Given the new complaints and discipline procedures, and the powers of the new Authority, real estate agents would be best advised to not take a “wait and see approach” from November 17. 

Richard Smith(Partner) and Blair Williams (Senior Solicitor) lead Duncan Cotterill’s real estate law team and are advising a number of real estate agents of their obligations under the new Act. r.smith@DuncanCotterill.com; b.williams@DuncanCotterill.com