Agents have been under scrutiny over the past few months.
Over the past few months agents have been in the spotlight with new guidelines issued by the ACT Government concerning the Mr Fluffy issue, news of disciplinary action taken against a Canberra agent concerning a deposit that had been taken out of the agent’s trust account to pay his mortgage, and an incident where scammers sold a Canberra house without the owner’s knowledge.
In May this year we released an e-brief in relation to the investment of deposits by agents. This is a practice that we think contravenes the Agents Act (2003) (‘Agents Act’) and can potentially result in hefty fines. We had a lot of interest in this article from the industry seeking clarification of this issue. Read article here
These issues highlight the importance of understanding your legal obligations to ensure that you don’t face fines, disciplinary action, lose your licence and, most importantly, recover your commissions!
- You cannot take money out of your trust account unless directed by your client. This should be obvious!
If you take it out, and then quickly pay it back, this may still be an offence.
- Despite interesting fact number 1, you cannot take money out of your trust account to invest a deposit pursuant to a contract even if your client directs you to.
- If your agency agreement does not comply with the Agents Act then you may have trouble recovering your commission. We see lots of agency agreements from reputable companies that miss one or two details. Each jurisdiction in Australia has slightly different requirements so if you are using an agency agreement from an interstate head office, you should ensure that it complies with the law in the ACT. One size doesn’t fit all!
- In certain circumstances you may wish to put a caveat on an ex-client’s property to safeguard the payment of your commission. Your agency agreement needs to be worded appropriately to cover this.
- The ACT Government has issued guidelines which encourage you to have due diligence processes in place to ensure that you are dealing with the real owner of a property.
What do I need to do?
In light of the increased focus on the conduct of agents of late and to avoid criticism, it is worthwhile ensuring that your agency agreements, processes and procedures are up to date and accord with the applicable legislation and guidelines issued by the ACT Government.
For more information contact the Property and Projects Team: