Professional Documents
Culture Documents
Disclaimer
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preparation of this material, recipients:
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should seek independent legal advice with respect to the matters traversed in this material.
The Real Estate Institute of Queensland Limited (REIQ) does not accept or undertake any duty of care relating to this
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CONTENTS
PART 1 - REAL ESTATE AGENCY
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UNIT 2 - PROPERTY
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[2.1] Tenure
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[3.3.2] Covenants
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[3.3.3] Easements
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[3.3.5] Caveats
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[3.3.6] Mortgage
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CPPDSM4008A Part 1
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[4.7.5] Businesses
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[5.7.3] Use of fair, lawful and unobtrusive means to collect personal information
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[5.8.3] Exemptions
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[7.1.3] Tender
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[7.7] Referrals
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[7.16] Neighbours
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[7.19] Clubs
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[7.20] Church
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[7.21] Walk-ins
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[8.4] Databases
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[9.19] The Competition and Consumer Act (CCA) and property pricing
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[12.0] Introduction
[12.1] Learning activity 10
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[13.0] Introduction
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[14.3] Commission
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FORMS
Property Occupations Form 6 with REIQ Residential Sales Schedule and Essential
Terms and Conditions
Property Occupations Form 7 Disclosure of beneficial interest to the seller by a
property agent or auctioneer
Property Occupations Form 8 Disclosure to prospective buyer What we must tell you
before you sign
Realworks form: EF072 Conjunction confirmation by fax or email
Realworks form: EF082 Employment authority
CPPDSM4008A Part 1
Course Objectives
The learning material of this unit is designed to assist the candidate to gain competency in the module,
CPPDSM4008A Identify legal and ethical requirements of property sales to complete agency work,
and to:
Unit descriptor
This unit of competency specifies the outcomes required to meet the core legal and ethical
requirements associated with property sales. This includes awareness of the legislation relating to
property sales, the role and responsibility of agency personnel in property sales, the administration of
sales transactions and the completion of sales documentation.
The unit may form part of the licensing requirements for persons engaged in real estate activities in
those States and Territories where these are regulated activities.
Performance Criteria
1 Develop knowledge
of property sales.
1.1
1.2
1.3
1.4
1.5
1.6
2.1
2.2
2.3
2 Develop knowledge
of sales process.
CPPDSM4008A Part 1
2.4
2.5
2.6
2.7
2.8
2.9
3.1
3.2
3.3
3.4
3.5
Required skills
Ability to communicate with and relate to a range of people from diverse social, economic and
cultural backgrounds and with varying physical and mental abilities
Analytical skills to interpret documents such as legislation, regulations, contracts, contract notes,
sale authority documents and certificates of title
Computing skills to access agency and resource databases, use standard software packages,
send and receive emails, access the internet and web pages, and complete and lodge standard
documents online
Decision making and problem solving skills to analyse situations and make decisions associated
with the sale of property
Literacy skills to access and interpret a variety of texts, including contracts; prepare general
information and papers; prepare formal and informal letters, reports and applications; and
complete prescribed forms
Numeracy skills to calculate and interpret data, such as deposits, entitlements and commissions
CPPDSM4008A Part 1
Planning, organising and scheduling skills to undertake work-related tasks, such as preparing
correspondence, organising deposits and arranging property inspections
Research skills to identify and locate documents and information relating to the sale of property
Risk management skills to identify risks associated with discussing sale and purchase options with
sellers and buyers
Self-management skills to organise own work, deliver quality customer service and effectively
manage competing demands
Teamwork skills to work effectively in and promote communication between sales, property
management and administrative teams in an agency environment
Verbal communication skills required for face-to-face communication with real estate sellers and
buyers.
Contract law in the real estate industry, including agent liability for breach of contract and
negligence
Ethical and conduct standards relevant to licensed real estate agents and real estate
representatives
Relevant federal, and state or territory legislation and local government regulations relating to:
Financial services
OHS
Privacy
Property sales
Roles and responsibilities of estate agency personnel in relation to the sale of property
Sales process, including ways of obtaining listings, methods of selling property, strategies
for marketing property, and the process for settling the sale of property
Range Statement
The range statement relates to the unit of competency as a whole. It allows for different work
environments and situations that may affect performance. Bold italicised wording in the performance
criteria is detailed below.
Land tenure systems may
include:
CPPDSM4008A Part 1
Leasehold.
10
Types of property
ownership may include:
Effective communication
strategies may include:
Financial services
OHS
Privacy
Property sales.
Company ownership
Joint tenants
Sole owner
Tenants in common.
Active listening
Being non-judgmental
Exploring problems
Advertising
After-sales letters
Farming
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Methods of selling
property may include:
Statutory statements
required to be prepared by
sellers may include:
Contractual documents
may include:
CPPDSM4008A Part 1
Recommendations
Telemarketing.
Auction
Conjunctional sales
Sale by tender
Seller sale.
Auction authority
Sellers statement
Contract note
Agreement to sell
Communication
Legal responsibility
Listing
Marketing
Prospecting
Sale settlement.
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Restrictions on agents
purchasing property may
include:
Evidence guide
The evidence guide provides advice on assessment and must be read in conjunction with the
performance criteria, required skills and knowledge, the range statement and the Assessment
Guidelines for this Training Package.
Overview of assessment
This unit of competency could be assessed through case studies, demonstrations, practical exercises
and targeted written (including alternative formats where necessary) or verbal questioning relating to
the legal and ethical requirements of property sales. The case studies, demonstration and questioning
would include collecting evidence of the candidates knowledge and application of ethical standards
and relevant federal, and state or territory legislation and regulations. This assessment may be carried
out in a simulated or workplace environment.
Critical aspects for assessment and evidence required to demonstrate competency in this unit
A person who demonstrates competency in this unit must be able to provide evidence of:
Application and knowledge of ethical and conduct standards and key principles of consumer
protection and privacy in relation to the sale of property
Application and knowledge of the sales process, including ways of obtaining listings, methods of
selling property, strategies for marketing property, and the process for settling the sale of property
Application and knowledge of accurately completing statutory and agency sales documentation,
including authorities and contracts
Application and knowledge of the legislation and regulatory framework relevant to the sale of
property
Application and knowledge of the role and responsibilities of the agent in the sale of property,
including the legislative restrictions on agents purchasing property and the controls and sanctions
associated with secret commissions.
Assessment instruments that may include personal planner and assessment record book
Where applicable, physical resources should include equipment modified for people with disabilities.
Access must be provided to appropriate learning and/or assessment support when required.
Assessment processes and techniques must be culturally appropriate, and appropriate to the
language and literacy capacity of the candidate and the work being performed.
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CPPDSM4008A Part 1
Competency will need to be demonstrated over a period of time reflecting the scope of the role
and the practical requirements of the workplace
Where the assessment is part of a structured learning experience the evidence collected must
relate to a number of performances assessed at different points in time and separated by further
learning and practice with a decision of competence only taken at the point when the assessor has
complete confidence in the persons competence
All assessment that is part of a structured learning experience must include a combination of
direct, indirect and supplementary evidence
Where assessment is for the purpose of recognition (RCC/RPL), the evidence provided will need
to be current and show that it represents competency demonstrated over a period of time
Assessment can be through simulated project-based activity and must include evidence relating to
each of the elements in this unit.
In all cases where practical assessment is used it will be combined with targeted questioning to
assess the underpinning knowledge. Questioning will be undertaken in such a manner as is
appropriate to the language and literacy levels of the candidate and any cultural issues that may affect
responses to the questions, and will reflect the requirements of the competency and the work being
performed.
CPPDSM4008A Part 1
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UNIT CONTENT
The learning material of this unit is designed to help the candidate attain the required awareness of
the legislation and ethical requirements relating to property sales, the role and responsibility of agency
personnel in property sales, the administration of sales transactions and the completion of sales
documentation.
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CPPDSM4008A Part 1
Contractual duties which both parties agree to perform in terms of their contract; and
oblige the agent to perform the contract of agency in accordance with its terms and
conditions.
Fiduciary obligations, which are implied into the agency contract by common and equity
law; and which arises out of a relationship based on confidence and trust, such as the
relationship between an agent and their client.
There are generally three parties in a real estate transaction; the seller, the real estate agent
and the buyer. The agents duties and responsibilities are prescribed by both common law
and legislation. Common law is law derived from custom or judicial precedent such as
decisions handed down previously in cases appearing before a court.
Legislation, which is also referred to as statute law, is written law enacted through a
legislative or statutory body such as a State/Territory or the Commonwealth Government.
CPPDSM4008A Part 1
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The main common law requirements of the agents fiduciary duties are reiterated in statute,
under the Property Occupations Act 2014 (POA).
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CPPDSM4008A Part 1
A road or reserve, including a national park, conservation park, state forest or timber
reserve
Unallocated State land which is all other land not subject to grant, preserve or lease
stated above
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In Queensland, the Torrens System of land tenure is used. This system, which also
incorporates Community Titles Schemes, considers other land tenure systems used by other
Australian States and Territories.
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CPPDSM4008A Part 1
was dependent upon the title of chain of predecessors. Proving the validity of such a chain
was often expensive and never certain.
Registration under the Torrens System has three basic objectives:
1. To provide a register from which persons who propose to deal with land can discover all
the facts relevant to the title
2. To ensure that a person dealing with land which is registered is not adversely affected by
any defects in the sellers title which do not appear on the register
3. To guarantee the conclusiveness of the register and to provide adequate compensation
to any person who suffers loss as a result of this guarantee.
Its main feature is the division of land into lots on a plan that has been deposited with the
Land Titles Office at the Registrar General. The Deposited Plan (DP) is given a number and
the lot is also numbered. In order to be able to identify the huge number of lots, each lot is
given a folio number (folio simply means page) and kept with others in a numbered volume.
The street address of the property may be different to the title details because, generally, the
house numbers and street names are allocated after the DP has been lodged.
[2.3.1] State guarantee of title
Torrens legislation in most states enables persons suffering loss as a result of the operation
of the Torrens system to seek compensation. The rationale underlying the introduction of a
state guarantee of title is to ensure that any unfair or mistaken loss of title is properly
compensated.
In all states except the Northern Territory, a person who is deprived of all or part of his or her
interest in land and who suffers loss or damage may acquire a right to seek compensation
from the state.
In all states, except for Victoria and Queensland, the deprivation must be of actual estate or
interest in the land. In Victoria and Queensland, the deprivation is not expressly confined to
an estate or interest in land and has been interpreted broadly. In all states, the loss will only
be compensable where it fits within one of the express statutory criteria, which vary
according to the legislation in each state.
Queenslands Land Title Act 1994 requires that the Registrar of Titles must keep a register of
all freehold land, which is called the freehold land register.
The registrar must record in the freehold land register the particulars necessary to identify:
The name of the person who holds, and the name of each person who has held, a
registered interest
If the person who holds a registered interest is a minor; the minors date of birth
All instruments registered in the register and when they were lodged and registered.
The registrar must also record in the freehold land register anything else required to be
recorded by this or another Act. By recording the particulars of the lot of land in the freehold
land register, an indefeasible title for the lot is created. This indefeasible title for the lot is
described as the current particulars in the freehold register about the lot.
CPPDSM4008A Part 1
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On payment of the prescribed fee, a person can search and obtain a copy of the indefeasible
title of a lot; or a registered instrument; or an instrument that has been lodged but is not
registered (whether or not it has been cancelled); or information kept under the Land Title Act
1994. A person can also obtain, for a fee, a copy of the indefeasible title of a lot, or a
registered instrument, certified by the registrar to be an accurate copy.
[2.4] Community Title Scheme
The community title concept has been used successfully in New South Wales and
Queensland for some time. Other State Governments recognise the need for a more flexible
type of subdivision that will provide greater opportunities for property development and
growth.
In Queensland, the Body Corporate and Community Management Act 1997 (BCCM Act)
repealed previous legislation and established a new system of management of Community
Titles Schemes. Previously, these were known as building units and group titles.
This legislation sets out the rights and responsibilities of certain persons associated with
bodies corporate, particularly lot owners and tenants.
A community title scheme can only exist over freehold land pursuant to Section 9(2) of the
BCCM Act. The purpose of the legislation is to impose different levels of requirements on
developers and owners depending on the type of development.
A body corporate is the legal entity created when land is subdivided and registered under the
Land Title Act 1994 to establish a community titles scheme. The scheme can be a duplex, a
residential unit block, a high rise accommodation complex, a shopping complex or a
business park. Every owner of a lot in a community titles scheme is automatically a member
of the body corporate. Owners do not have a choice as to whether or not they will be a body
corporate member.
Standard Module Regulation which is intended to be generic, and are suitable for most
residential projects.
Small Schemes Module Regulation which covers smaller buildings (six lots or less) and
allow for informal management by the proprietors.
Commercial Module Regulation which covers retail and office developments, and
business and industrial parks.
Accommodation Module Regulation which is appropriate for holiday lettings, hotels and
similar developments
Two-lot schemes regulation 2011 (the Two-Lot Module) the objective of this module is to
make the day-to-day management of two-lot community titles schemes less complex for
owners
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CPPDSM4008A Part 1
(b)
(c)
A corporation in which, on its last accounting date, a foreign natural person or a foreign
corporation holds a controlling interest; and
(d)
A corporation in which, on its last accounting date, 2 or more persons, each of whom is either a
foreign natural person, or a foreign corporation, hold an aggregate controlling interest.
If the relevant notices, pursuant to sections 17, 18, and 20 of this Act, are not delivered, the
person may be charged with a prescribed offence, resulting in a show cause action that may
prevent the person from obtaining title to the land.
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Register of reserves and trustees of trust land (e.g. reserves and deeds of grant in trust)
Register of easements over unallocated State land (easements over freehold, leasehold
and reserves land are recorded within those registers mentioned above)
Register of deeds (part 18 of the Property Law Act 1974, for dealings affecting any estate
in land)
Title Search
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CPPDSM4008A Part 1
Image of a Title
Dealing Statement
Agents can search the registers and obtain copies of the title of a block of land, and any
dealing lodged or registered in the Registry. Searches can be conducted either electronically
or at the Department of Natural Resources and Mines offices during office hours and pay the
required fee.
[3.2] The title search
A title search is considered the most reliable of all searches, because it provides critical
information essential for a contract that cannot always be revealed in a general ownership
search.
A title search for instance will reveal:
The full and correct names of the owners The Property occupations (PO) Form 6
(appointment of an agent form) must be signed by all registered owners for it to be valid.
The correct Real Property Description (RPD) A Real Property Description is the manner
a property is described on a plan of subdivision
An RPD will provide a lot number and a plan number. For instance, Lot 2 on RP 456
stands for Lot 2 on registered plan number 456
An RPD also describes the type of subdivision. For instance, Lot 2 on BUP stands for Lot
2 in a Building Units Plan. Lot 2 on GTP stands for Lot 2 in a Group Titles Plan. More
modern subdivisions use the terminology SP that stands for Subdivision Plan.
If the RPD is incorrect the appointment may be invalid, or the agent could be sued for
negligence for failing to provide the customer with correct information
Registered Dealings over the land e.g., demolition notices, heritage listings,
contamination etc.
Whether the land is Freehold or Leasehold. If the search reads Fee Simple, this is the
common term for Freehold
Title Reference number. This is the number that must be inserted on all listing and sales
documentation. It is usually found on the top right hand corner of a title certificate.
CPPDSM4008A Part 1
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A plan of subdivision for the area, including dimensions and measurements of the land.
Agents should conduct a title search to establish whether there are any matters relating to
the property that will have a negative impact on price or the desirability of a property.
Basically, if there is a matter that makes the property less attractive to a customer, or poses
a health or safety risk, then it should be identified.
Title Search, Department of Natural Resources and Mines, Queensland
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CPPDSM4008A Part 1
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Agents need to make sure that they know if there is a restrictive covenant on the property
because the covenant runs with the title of the property. The covenant is usually included in
the certificate of title as noted in section 97A of the Land Title Act 1994, however some
restrictive covenants (such as those relating to certain housing estates) may be contained in
other documentation. Along with conducting the certificate of title search, agents should
confirm with any seller whether they are obligation under any other restrictive covenants not
listed on the title. Agents must ensure to declare any restrictive covenants on contracts that
they prepare and make full disclosure to a prospective buyer.
[3.3.3] Easements
An easement is a right, owned by a landowner, to use the land of a neighbour in a defined
manner. A common situation in which an easement would be required is when land is
subdivided in such a manner that the allotment is landlocked, or has no access to the
street. In this situation the landowner would need the right to cross a neighbours land to gain
access to the street.
Easements are an encumbrance on a property and belong to the land irrespective of its
ownership. Easements running through a property are regarded as a defect on the title of the
property. In some instances an easement can materially disadvantage the property. In these
circumstances, where a buyer is unaware of the existence of an easement, the buyer may
seek to terminate a contract and receive a refund of their deposit.
It is essential that a real estate agent ask the property owner, at the point of listing a
property, if they are aware of any easements. If this information is not disclosed, it could
jeopardise the completion of any sale of their land.
Easements can create:
Rights of access
Rights of support of adjoining building, such as when two building share a party wall
Rights to air
Rights to light
Some common easements are sewerage, drainage, and power lines. It is now common in
new subdivisions for the local authority to hold easement rights over the property. The local
authority in turn can give authorisation to other entities such as utility companies to use these
easements. The relevant authorities may require the easement to prevent landowners from
erecting buildings or pipes or underground cables. Such an easement is likely to be created
pursuant to a statutory power; known as statutory easements.
Easements may be classified as positive, when they allow a person to do a particular act on
the land of another. Easements may also be termed negative when they give a person the
right to prevent a landowner from doing something on the landowners land.
[3.3.4] Creation of an easement
An easement must be created by grant. In the case of registered land, section 82(2) of the
Land Title Act 1994 requires that the instrument must state the nature of the easement and
its terms; and the land to be benefited, and the land to be burdened by the easement.
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CPPDSM4008A Part 1
Section 83 of the Land Title Act 1994 also requires the instrument creating the easement to
be signed by the grantor and grantee. The interest is noted on the certificates of title of both
the grantor and grantee.
Agents should make inquiries about easements with the sellers. Unusual easements have
been recognised by the courts. Not all easements are obvious so agents need to exercise
care if they suspect an unregistered easement exists. If this is the case, the agents full
disclosure obligations to the prospective buyer would dictate the buyer be referred to a
qualified lawyer for the appropriate legal advice.
[3.3.5] Caveats
The term caveat literally means beware. In real estate a caveat warns a person, such as
prospective buyers or mortgagees, that another party already has an interest registered in
the land. No further transactions can be registered until the matter has been dealt with first.
A person claiming an interest in a property may lodge a caveat forbidding the registration of
any dealing affecting the land. This gives notice to not only those who already have a
registered interest in the land but to the world at large that the register is frozen and there
can be no dealings on the land until the caveat is removed, either by agreement or by court
action.
To lodge a caveat, the caveator (a person who enters a caveat) must have a recognised
interest in the land. For instance, a person, who is owed money by the landowner, does not
have an interest in the land and cannot lodge a caveat. For example, a real estate agent who
is owed commission does not have the right to lodge a caveat. The agent has a right of
action for damages, but not an interest in the land.
Examples of situations where caveats may be applied include:
Interests of a buyer after signing a valid and binding contract of sale. This could be
particularly applicable if it is a long-term contract such as commercial or industrial sales
Interests in an instalment contract. In this situation the buyer cannot have clear title to the
property until they have paid the equivalent of one third of the price of the property. To
protect their interest, they will lodge a caveat to prevent the owner from mortgaging the
property or selling to someone else
Caveats are lodged through a legal process. If the owner of the property disputes the caveat,
the matter will be heard in court. If a caveat is removed after being lodged without
reasonable cause, then the person who was adversely affected or who may have suffered
any loss because of the caveat can claim compensation for the damage.
[3.3.6] Mortgage
A mortgage created under the Land Title Act operates as a charge and not as a transfer of
the estate of the mortgagor (the borrower) and is created for the securing of the repayment of
the loan. Upon registration of a mortgage, under the Land Title Act, the interest created is
said to be a legal interest. The nature of the interest acquired by the mortgagee is called a
CPPDSM4008A Part 1
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charge. While this is not equivalent to ownership of the land, the chargee can have the land
sold or take possession if the mortgagor defaults on the loan.
Even though a title search will reveal a mortgage registered on a property, a mortgage is not
considered an encumbrance because it can be lifted at settlement so that the property can
be transferred with a clear title.
Upon the sale of any mortgaged property, the mortgagee (finance lender) would execute an
appropriate discharge of the mortgage, and produce the discharge together with the
certificate of title (which is held by the mortgagee) at the settlement of the transaction. The
buyer will lodge the discharge of mortgage documentation, preceding the title transfer, in the
Land Titles Office. This will ensure the buyers title will be issued free of that encumbrance
and transfer will registered.
Check whether the property has an environmental or vegetation protection order lodged
over it. (Department of Natural Resources and Mines special information search)
Check whether it has been Heritage listed with a state or local authority. (Local Council
and Department of Environment and Heritage Protection)
Does the property have a registered notice over it for structural unsoundness or a
demolition order? (council search)
What is the zoning or legal use of the land? (Council search, ownership search)
It is strongly recommended that agents carry out title searches at the time of listing the
property. Some agents in the past have only carried out ownership searches (using a
property data base such as CoreLogic RP Data) however prudent agents today conduct
title searches to ensure that the appropriate verification of ownership is made.
Commercial search providers such as CoreLogic RP Data play an invaluable role in modern
real estate practice. Agents can access a vast range of information about properties that they
are listing. For instance, an ownership search will reveal:
REIQ v16.1 December 2014
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CPPDSM4008A Part 1
The names and addresses of the current owners (be cautious with this information as
there are delays in ownership information by as much as 3-4 months)
Whether the property has services such as sewerage and water connected
Its unimproved capital value (the vacant land value for rating purposes)
A wide range of research data including average and median selling prices of property in
an area
CPPDSM4008A Part 1
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CPPDSM4008A Part 1
Question 2: There are a number of issues will impact negatively on a real estate transaction.
Name four matters that may affect a persons land title registration.
1. ________________________________________________________________________
2. ________________________________________________________________________
3. ________________________________________________________________________
4. ________________________________________________________________________
Real property includes land and everything affixed to the land; sometimes referred to as
immovables. This includes physical things such as trees, ponds and soil, and intangibles
such as easements
Personal property is also known as chattels and describes all property other than land.
Chattels are movable objects. Examples of chattels may include fixed floor covering,
curtains and blinds, and light fittings.
Real property is a term used to describe interests in land other than leases. Personal
property is a term used to describe all property other than interests in land.
Personal property is divided into two classifications:
1. Choses in possession (the legal term meaning tangibles), which means items with
physical substance. This covers property because it is tangible, which may be under
physical control, such as a car
2. Choses in action, which means that is it intangible and cannot be under physical control,
for example, the copyright of literature.
[4.2] Real property rights
Property rights describe the rights people have in respect to land. Real property rights can be
conceptualised as having a bundle of rights, privileges, powers and control. The right to land
can have the following attributes:
The right to live on the land and use it to harvest and sell produce
CPPDSM4008A Part 1
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The right to grant a license to use the land or to lease the land to another person
Proprietary interests do not always allow all the rights listed above. The specific nature of the
rights will depend on the nature of proprietary interest and will be subject to the areas
zoning, planning, and environmental restrictions.
It is important to note that land may revert back to the Crown or Crown instrumentality
exercising its power as a public authority to resume for public purposes any freehold land or
land being purchased as a freeholding lease under the Land Act 1994.
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CPPDSM4008A Part 1
different types of interest in land when selling property by private treaty and be able to
recognise where there are other interests such as mortgage, covenants and easements.
[4.5.1] Co-ownership of land
Land can have more than one owner. There are two common types of co-ownership of land:
1. joint tenancy
2. tenancy in common
The legal meaning of the word tenant is quite precise: a tenant is a person who has an
interest in real property. In common or non-professional usage the word means the occupant
of the premises.
[4.5.2] Joint tenants or proprietors
Joint tenancy occurs when two or more persons hold the rights to the whole of the property,
meaning each owns the whole rather than a share of the whole property. Having an interest
in title, whether legal or equitable, should be distinguished from having the right of
possession. In the case of joint tenancy, the parties each have the rights of ownership of the
whole and each has the right to possession of the whole.
A common example of joint tenancy is when two owners are a married couple, or domestic
partners. The rule of survivorship, from old English law, states where a joint tenant dies, the
other joint tenant is automatically entitled to the deceased persons share of the land.
[4.5.3] Creation of joint tenancy
There are four requirements for joint tenancy, known as the four unities:
1. unity of title which is the interest of each joint tenancy must be created by the same deed
or instrument (or the same will)
2. unity of time which is the interests of the tenants must be acquired simultaneously
3. unity of possession which is each co-owner must have an equal right to possession of the
whole
4. unity of interest which is each co-owner must have the same type of interest, for
example, both must have a fee simple interest
Joint tenancy is created when land is transferred (or conveyed where there is general law
title) and certain words are not used. These words are called words of severance and say
that the intention of the parties is that there is shared ownership and not joint ownership.
Examples of the words used are equally, in equal shares, or between. When such words
are not included, it is assumed there is joint tenancy.
A joint tenancy can be changed to a tenancy in common in certain circumstances, including
alienation, partition, or by committing a crime. A joint tenancy can be changed to a tenancy in
common:
by mutual agreement, if one co-owner sells an interest (note that it is not necessary for
the other co-owner to agree to sever the joint tenancy)
the tenants all agree to sever the joint tenancy (there are no required formalities, but the
most prudent method is by the execution of a deed)
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commercial
industrial
urban
residential
rural
With each category there will be a number of options which refer to the available density of
development usually categorised as:
Single unit
Low density
Medium density
High density.
Home offices and small businesses being run legally, or otherwise, from a residential
property. The use is not defined as residential only if the use of the premises is
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Mixed use complexes with a residential and business component being sold on the one
title
Bulk project and land sales (certain projects and subdivisions could previously be treated
as a commercial transaction)
Boarding houses and flats on one parcel of land are considered a residential transaction.
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business (e.g. a delicatessen) on the business premises in the same way the seller of the
business has previously operated. The seller of the business typically assigns the lease on
the premises (building) to the buyer. This usually requires the agreement of the owner of the
premises.
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Gives a person a list, prepared by or for the real estate agent, of premises available for
rent
Does something of an administrative nature in relation to a thing the real estate agent
does as a real estate agent.
Section 26 of the POA states that a real estate agents licence authorises an agent to
undertake the following activities for others for reward:
Property Occupations Act 2014
Part 2 Licensing
Section 26 What a real estate agent licence authorises
(1) A real estate agent licence authorises the holder of the licence to perform the following activities as an
agent for others for reward
(a) to buy, sell (other than by auction), exchange or let real property or interests in real property;
(b) to buy, sell (other than by auction), exchange, or let businesses or interests in businesses;
(c) to negotiate for the buying, selling, exchanging, or letting of something mentioned in paragraph (a)
or (b);
(d) to collect rents.
(2) A real estate agent may perform the activities mentioned in subsection (1) in the carrying on of a
business, either alone or with others, or as an employee of someone else.
Section 115(1) of the POA authorises the holder of a real estate salesperson certificate to
perform any activity that may be performed by the real estate agent who employs the holder.
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Authorisation to receive and bank monies on behalf of the agency and its clients
A salesperson should ensure that they always seek advice from their licensee on matters
that they may be uncertain about, matters that further guidance may be required or matters
that they feel that the licensee should be made aware of. Some matters are urgent which
must be brought to the licensees attention immediately; these include if the salesperson
becomes aware that the seller does not hold public liability insurance, or if a customer (or
client) makes allegations against the salesperson that could result in the agency being sued.
Other matters that are not as urgent, but are still important include ideas on how to improve
the business, any concerns within the business that the salesperson feels should be brought
to the licensees attention and any concerns about alleged or known unethical practice form
fellow colleagues. These issues are studied in detail in other subjects.
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Agents are required by legislation, and by the REIQ Standards of Business Practice, to take
all reasonable steps to be informed regarding the essential facts which affect current market
conditions in order to be in a position to advise their clients and, or, to assist customers in a
responsible manner. It is recommended that in specialised areas, which fall outside the
scope of the duty of a real estate agent, that agents advise the client or customer to seek
more specialised advice. (Best practice suggests that this recommendation be provided in
writing to the seller.)
If agents provide appraisals or market forecasts in a volatile market, they should identify the
volatility to the relevant consumer and warn the consumer to keep that volatility in mind when
evaluating their appraisals or market forecasts.
Agents must make accurate representations about properties, including the reasonable
values of those properties, the features of those properties or any other matter that is
material to the sale, purchase or lease of the property by a consumer.
As per section 209 of the POA, a licensee or registered employee must not, in connection
with the sale, or the possible sale, of an interest in land or in connection with the promotion in
any way of the sale of an interest in land, represent in any way to someone else anything
that is false or misleading in relation to the value of the land at the date of sale; or the
potential income from the leasing of the land; or if the land has been previously sold, the date
of the sale and the consideration for the sale; or how the purchase of the land may affect the
incidence of income taxation on the buyer.
Property Occupations Act 2014
Part 11 General contraventions and evidentiary maters
Section 209 False representations and other misleading conduct relating to residential property
(1) A marketeer must not, in connection with the sale, or for promoting the sale, or for providing a service
in connection with the sale, of residential property in Queensland, represent in any way to someone
else anything that is false or misleading.
Note
For remedies for a contravention, see part 9 (QCAT proceedings).
(2) Without limiting subsection (1), a marketeer must not, in connection with the sale, or for promoting
the sale, or for providing a service in connection with the sale, of residential property, or the possible
sale of residential property, in Queensland
(a) represent that the person has a sponsorship, approval or affiliation the person does not have; or
(b) make a false or misleading representation about the following
(i)
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(v) the use to which the property is capable of being put or may lawfully be put;
(vi) the existence or availability of facilities associated with the property;
(vii) the value of the property at the date of the sale;
(viii) the potential income from the leasing of the property;
(ix) if the property has been previously sold, the date of the sale and the consideration for the sale;
(x) how the purchase of the property may affect the incidence of income taxation on the buyer; or
(c) offer gifts, prizes or other free items with the intention of not providing them or of not providing
them as offered.
Note
For remedies for a contravention, see part 9 (Proceedings).
(3) Without limiting subsection (1) or (2), a representation is taken, for the subsection, to be false or
misleading if it would reasonably tend to lead to a belief in the existence of a state of affairs that does
not in fact exist, whether or not the representation indicates that state of affairs does exist.
(4) Also, if a person makes a representation relating to a matter and the person does not have reasonable
grounds for making the representation, the representation is taken to be misleading.
(5) The onus of establishing the person had reasonable grounds for making the representation is on the
person.
(6) It is not a defence to a proceeding for a contravention of subsection (1) or (2) for the marketeer to
prove that an agreement with the person was terminated or that the person did not enter into an
agreement because of the representation.
(7) In this section
false or misleading, for a representation, includes the wilful concealment of a material fact in the
representation.
Note
A person may make a claim, under the Administration Act, against the fund if the person suffers financial loss
because of a contravention of this section.
Leads a consumer into believing a fact regardless of whether the agent intended to
mislead them or not (innocent or negligent misrepresentation)
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Agents should also bear in mind that it is generally no defence to an action for misleading or
deceptive conduct for a real estate agent to claim that the consumer concerned should have
checked the information provided by the agent or for the agent to claim that the consumer
has failed to make reasonable enquiries.
The use to which the land is capable of being put or may lawfully be put
The Fair Trading Act imposes civil and criminal penalties and can also enforce the payment
of fines.
[5.6] Commonwealth legislation
[5.6.1] Competition and Consumer Act (Australian Consumer Law) 2010
The Competition and Consumer Act applies throughout Australia to protect consumers
against misleading or deceptive conduct in trade and commerce generally. The Act is
primarily directed towards the activities of companies (corporations). However, specific
sections draw into the net any person who aided and abetted, counselled or procured the
contravention or have been in any way directly or indirectly concerned in, or party to, the
contravention.
The Competition and Consumer Act encourages a fair and competitive environment and
applies to almost every aspect of business. The sections relating to Australian Consumer
Law can be found in Volume 3 Schedule 2 of the CCA.
When listing a property the agent should ensure agreements conform to the requirements of
the POA and are written in plain English and use terms that are standard throughout
Australia. The appointment authority includes the following:
Fee structure
Period of agreement
The CCA prohibits unconscionable conduct in both consumer and commercial contracts.
Unconscionable conduct includes:
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Stronger party unfairly exploiting the weaker partys disadvantage, such as:
The weaker party does not have the ability to understands the effects of a transaction
Section 21 of the CCA applies to all commercial situations where unconscionable conduct
may arise. It states:
A corporation must not, in trade or commerce, engage in conduct that is
unconscionable within the meaning of the written law.
Section 22 of the CCA prohibits one business dealing unconscionably with another when
negotiating the purchase or sale of goods and services. It applies to any transaction with a
private company valued under $3 million.
The CCA contains provisions that protect consumers and other businesses when they enter
contracts to purchase goods or services; such as:
Section 18 of the CCA prohibits misleading and deceptive conduct and sections 30 and 152
of the Act prohibit making false and misleading representations. Agents can breach these
sections if they over-appraise a property. When appraising properties, it is important for
agents to be realistic and base appraisals on a sound understanding of the market.
If the purpose for suggesting an unachievable price to get the property listed with the agency,
it will be deemed to be misleading and deceptive.
Section 30 and Section 152 of the CCA focuses on the activities of any company involved in
real estate transaction, regardless of whether the company is a real estate agency, seller, or
landlord.
It covers sales and property management transaction, and makes it an offence to make false
and misleading statements about:
Agents should take care in designing and writing property sale advertisements. The
advertisements may be read by potential customers from interstate or even overseas,
especially if the agent advertises on the Internet. These potential customers may not wish to
inspect the property.
An agents standards of diligence and integrity are always regarded as high. The
advertisements must make only valid statements and contain no information which cannot
stand up to the rigours of scrutiny. The statements made must be able to be substantiated by
the physical search of the property or by other legitimate inquiries made prior to the
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purchase. The real estate industry and the regulators place great emphasis upon proper
disclosures during the negotiation of the property sale.
Examples of how section 35 and section 157 of the CCA apply to real estate advertising
include:
Advertisements providing information on the location of the land or distance from facilities
are less likely to mislead if they are factual; for example, shops approximately 1.5kms
rather than the subjective walking distance to shops. Care should be taken to ensure
that any factual statements about the characteristics of a property are correct.
Real estate agents should bear in mind that the application of the misleading or deceptive
conduct provisions of the CCA to specific instances of conduct can be complex. If agents
have any doubts regarding any issues under this legislation they should immediately seek
legal advice. Nevertheless, some general principles regarding the application of the
misleading and deceptive conduct provisions of the CCA can be stipulated when:
Determining liability for misleading or deceptive conduct, the intent of a person is usually
not relevant. The issue is whether conduct, tested objectively, has been misleading or
deceptive. It is not necessary for a person to have intended to mislead or deceive in order
for liability to arise under the CCA.
Real estate agents may be liable in civil actions for passing on false information even if
they have received that information from others and reasonably believe the information to
be true, particularly if they appear to have adopted that information.
Assessing whether conduct is misleading or deceptive, a Court will have regard to the
overall impression created by the conduct. Consequently, for example, the Courts will
often look at what has been implied by particular conduct in determining liability. This can
be particularly relevant when considering whether advertisements and other forms of
marketing are misleading or deceptive.
Silence may constitute misleading or deceptive conduct where there is a duty to reveal
relevant facts. Whilst the Courts have stated that there is no general duty of disclosure in
commercial dealings, the failure to disclose a fact may be regarded as being misleading
or deceptive, particularly where the recipient of a representation is entitled to believe that
a relevant matter affecting him or her would be communicated.
The stating of predictions or opinions can give rise to a liability for misleading or
deceptive conduct, particularly when those predictions or opinions are not based on
reasonable grounds.
The ability of intermediaries, such as real estate agents, to avoid liability when they have
merely passed on information without adopting it is unclear, agents maximise their
chances of avoiding liability for representations that have not originated from them when
they make that fact clear to the recipient of the information.
The High Court has suggested that a person who does no more than pass on information
supplied to him or her, making it clear that he or she is merely passing it on for what it is
worth and disclaiming its truth or falsity, may not have engaged in misleading conduct if
the information proves to be incorrect. However a real estate agent is unlikely to escape
liability if they are aware or have cause to believe the representations are false or
misleading.
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The CCA imposes civil and criminal penalties and can also enforce the payment of fines.
[5.6.2] Two-tier marketing
The Australian Competition and Consumer Commission (ACCC) have publicly expressed
concern about the practice of misleading two-tier pricing, or two-tier marketing. Two-tier
marketing refers to the practice of having two prices or tiers in a real estate market, one for
the locals who know the market values in that area and one price for other buyers, often from
interstate, who are not aware of the local market prices. The ACCC believes the practice is a
form of misleading or deceptive conduct.
Real estate agents should not engage in two-tier marketing, which is the practice of setting
different tiers of pricing, with higher prices being charged to consumers who are, for
example, resident outside the particular area of the property or who are otherwise unaware
of material facts such that they are prepared to pay prices for the property that are higher
than the prices that those who are aware of those facts would be prepared to pay.
Potential buyers of property must not be induced to believe that the stated price of a property
is a fair market value when the price has been inflated by matters irrelevant to the value of
the property, such as marketing fees, commissions and profits. Also, consumers should not
be provided with estimates of market values of properties that are misleading or deceptive.
False or misleading representations about investment properties include the reasonable
values of those properties, the features of those properties, the likely rental returns, the
nature or effect of long term management contracts, or any other matter that is material to
the sale, purchase or lease of the property by the consumer concerned.
Valuations and market appraisals provided by real estate agents must be realistic and based
on a sound understanding of the relevant market. By providing valuations, appraisals or
market forecasts in a volatile market, agents shall identify that volatility to the relevant
consumer and shall warn the consumer to keep that volatility in mind when evaluating the
agents valuations, appraisals or market forecasts.
Agents shall ensure that they do not participate in any harsh or unconscionable conduct with
respect to the marketing or sale of properties.
Real estate agents must advise consumers of any significant beneficial relationships that
they have with any service providers to whom the consumer is referred by the agent and any
commissions, money or other benefits that the agent may receive as a result of that referral.
The offering of gifts or items as being free when the true costs are disguised in the selling
price of the property is prohibited.
The offering properties at discounted prices in a land development when the properties have
in fact not been discounted at all or where the properties will not be available at that
discounted price in reasonable quantities or for a reasonable time is considered to be bait
advertising. If the purpose of the advertising properties at discounted prices is to in fact lure
potential buyers to purchase more expensive properties, the conduct of the agent may
amount to bait-advertising.
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Have a readily available privacy policy which must contain the following information;
1. The kinds of information that the business collects and holds
2. How the business collects and holds personal information. This includes data storage
and cloud computing
3. The purposes for which the business collects, holds, uses and discloses personal
information
4. How an individual may access their personal information
5. How an individual may seek the correction of their personal information
6. How an individual may complain about a breach of the APPs or an applicable APP
Code, and how the business will deal with the complaint
7. Whether the business is likely to disclose personal information to overseas recipients,
and if so, the countries in which such recipients are located
Ensure all personal information is stored securely and destroyed or de-identified once it
is no longer required. security systems are adequate
Review the types of solicited and unsolicited personal information gathered during the
course of their business and if it is really necessary
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Understand when solicited and unsolicited personal information should not be disclosed
Under the Privacy Act Commonwealth and private sector organisations should have
measures in place to comply with the thirteen Australian Privacy Principles when processing
personal information in, or for inclusion in, a record. The Privacy Act deals with privacy
information, which relates to what real estate agents do with information and how they
process and store information.
Real estate agents must be very careful about how they collect information and what they
use it for. For instance, the information that an agent includes on the PO Form 6 may appear
innocent when a listing is first processed; but if that information is later inserted in a Tenancy
Agreement or Contract of Sale, this information could unwittingly be used by another party.
When listing properties for sale or rent, it is recommended all agents provide the client with a
privacy statement, informing them how the information being gathered shall be stored and
who may have access to details such as sales and rental prices, telephone numbers etc.
[5.7.2] Rules of collecting information relevant to real estate transactions
Agents should only collect information necessary for their function or activities. However,
agents need to collect a large amount of data when completing sale and property
management transactions, such as:
Drivers licence
Financial details
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[5.7.3] Use of fair, lawful and unobtrusive means to collect personal information
An agent should at all times be open and honest with the consumer and make clear that any
information being given to them is being recorded. The agent should always source the
information directly from the party concerned where possible and not rely on hearsay or third
party information. Always verify information first hand before storing it on a database, and
obtain consent before storing a persons information on a database.
[5.8] Do Not Call Register Act 2006
[5.8.1] Do Not Call Register
The Do Not Call Register Act 2006 is Commonwealth legislation that came into effect on 31
May 2007. The legislation applies to anyone making a telemarketing call to a private
Australian phone number (including private mobile phones) regardless of where the call is
being made from, and any organisation commissioning such calls to be made on their behalf.
[5.8.2] Telemarketing calls
Telemarketing calls are defined as a voice call which is made for the purpose to offer, supply,
provide, advertise or promote:
Goods or services
Solicitation of donations.
[5.8.3] Exemptions
While it is generally unlawful for telemarketing calls to be made to numbers listed on the
register, there are some exemptions. Certain public interest entities are allowed to make
specific types of calls to numbers on the register. These include:
Charities
Electoral candidates
Government bodies.
Market and social researchers conducting opinion polling and standard questionnaire-based
research calls are also permitted to call. However, these calls will be subject to the industry
standard for telemarketing and research calls
Telemarketing calls can only be made between 9 am and 5 pm on Saturdays and not at
any time on Sundays or public holidays which are gazetted
Anyone making a telemarketing call must provide specific information to the consumer.
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The contact details and the purpose of the phone call (this is defined as the callers
business phone number and either mail, street or email address)
The caller must terminate the call by either direct or inferred request or when it is
determined that the call contravenes the minimum standards described above.
Telemarketers must ensure that they have caller id displayed and cannot use a private or
withheld number to make a telemarketing call.
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Add in a statement providing express consent for the agency to make contact on all
relevant documentation such as the open for inspection registers, auction bidding
registration forms, tenancy applications, etc.
Insert a timeframe for making contact e.g. indefinite period (the agent should have a
mechanism for the person to remove their consent).
The agency may wish to add the following clause to appropriate agency paperwork to obtain
express consent for telephone marketing calls to ensure compliance with the Do Not Call
Register Act:
I agree that I am the telephone account holder or a person nominated by the account
holder, and understand that (INSERT YOUR AGENCY NAME) may use the phone
details provided here to contact me for marketing purposes until I advise otherwise.
If the clause is provided at the top of a form, it should be amended as follows, and a box
included for the client to tick:
By ticking the box marked marketing consent next to my name below, I agree that I
am the telephone account holder or a person nominated by the account holder and
understand that (INSERT YOUR AGENCY NAME) may use the phone details provided
here to contact me for marketing purposes until I advise otherwise.
These clauses should be used in addition to collection notices already being used for the
Privacy Act. It is very important to understand that to establish express consent of
telemarketing calls, it must be clear the consent is for that purpose, and not for other
purposes such as security reasons or complying with the Privacy Act. The best practice
recommendation when it comes to making telemarketing calls (and for direct marketing
purposes as well), is to always be cautious, ethical, respect peoples privacy and only contact
people when the agent has their consent.
Refer to the websites www.acma.gov.au or www.donotcall.gov.au for additional information
and fact sheets.
[5.9] Learning activity 5
Question 1: Name four circumstances where it is an offence against section 40a(1) of the
Fair Trading Act 1989 to make false and misleading statements
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Question 2: What are some of the risks involved in providing specialist advice to clients?
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Question 3: What agency systems and processes should be in place to ensure compliance
with the Privacy Act?
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Register?
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questioning techniques
negotiation skills
Message Written, oral and nonverbal communications are effected by your tone,
method of organisation, what is communicated and what is left out, as well as your
individual style of communicating. If your message is too lengthy, disorganised, or
contains errors, you can expect the message to be misunderstood and misinterpreted.
Use of poor verbal and body language can also confuse the message.
Channel Messages are sent through channels, using verbal including face-to-face
meetings and telephone; and written including letters, emails, memos and reports.
Receiver Your receiver is your client. Your client also enters into the communication
process with ideas and feelings that will undoubtedly influence their understanding of
your message and their response.
Feedback Your client will provide you with feedback, e.g. verbal and nonverbal
reactions to what you say. This feedback will help you check that what you are saying is
understood.
Context The context for your message is real estate and in this situation, securing a
listing of the property.
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Open questions are designed to draw out more complex explanations or opinions.
They allow for a variety of answers and allow the client to explain something in more
detail. They usually start with What, Where, When, Why, How. For example, "How do you
think the presentation of your property compares with other properties in the area?"
Structured questions all clients are asked the same questions for agents to gather the
same information. For example you will need to know:
the names of the owners and if they are the same as those on the Certificate of Title
Unstructured questions these are general questions that are used during the
interview to gain more information. They may not be asked of all clients.
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[7.1.3] Tender
The tender process involves properties and land being sold without the seller disclosing a
price. Owners of these properties (generally commercial) or land will engage a
salesperson to offer the property for sale by tender. This enables interested buyers to
submit a tender for a nominated amount for the property by a specified closing date.
not suited to private treaty, or auction - this can be decided by the limitations of the
seller, such as a government agency, or by the unusual nature of the property
highly priced
difficult to price e.g. The first property in a brand new block may be put out to for
tender just to see what people are willing to offer.
What are the current levels of results for each method of sale?
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(d) Effectiveness
Knowing the market conditions helps agents to determine the effectiveness of each method
of sale.
Research
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This may not get an immediate appointment to list, but possibly in a week or two the sellers
may begin to realise that they may be better off in the hands of a good agent. This is why it is
necessary to keep a record of private classified advertisements over time.
[7.5] Private For Sale signs
Stop and visit the owner when sighting a private For Sale sign in the farming area. If there
happens to be a buyer in the car at this time a representative should simply note the address
and phone number and be sure to return or ring on the same day.
[7.6] Buyers
People who already own a property and wish to upgrade or make a change, often enquire
about other property for sale. Generally, they first want to see what their money can buy
before they make a move to sell. Sellers usually have some firm motivation to move, such as
the need for a larger lounge, a fourth bedroom or a better location or retirement, etc.
Whilst it is important to assist sellers, who have a house to sell, with finding another property
so that they don't purchase and ultimately list with another agent, this must be balanced
against always offering the correct advice. After the sellers have had an initial look for a
property and are better informed as to what they can expect to find or afford, it is the agent's
responsibility to provide advice that provides them with the best net outcome. Unless they
are in a position to obtain bridging finance when making a subject sale offer, they will usually
be paying more than a cash or finance buyer would be.
It is important to offer unbiased assistance and sincerely demonstrate that the agent will only
act in their best interests.
[7.7] Referrals
Whether listing, selling or appraising property, an agent should ask "Of all the people you
know, who do you think is likely to be making a move in the near future?" It is important to
remember that people often associate with others in a similar financial position to themselves
and are therefore quite often considering, or making real estate plans, at the same time.
salespersons name, agency name, address and telephone number and an afterhours or
mobile phone number
a message that states listings are being sought, such as: "We are in urgent need of
properties for genuine cash buyers. If considering selling, please call ..." Letterbox cards
can also include a calendar, recipe or useful information that will make people want to
keep it. Fridge magnets included on the flyer are very popular.
Ensure that you have an ethical statement on all letters and marketing such as If your
property is currently listed solely or exclusively with another agent, please disregard this
notice.
If employing a letterbox dropper' the agent should consider that pamphlets will probably be
lost among other catalogues and letter drops. The response will be greater if the agent
personally delivered them, giving the agent an opportunity to learn more about their area.
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Ring doorbell for only 2 - 3 seconds. Longer could annoy the occupant. If chimes sound,
ring only one full course of the chimes.
If knocking, do so gently. If confronted with a heavy, soundproofed front door, tap gently
on the window.
Listen for sounds that indicate a knock or ring is heard. If nothing is heard, wait a minute
or so before ringing or knocking again.
Take three steps back. Don't stand right in the doorway. This often intimidates the person
opening the door and will put them on the defensive rather than leaning forward - a better
body position for a conversation.
Give personal Identification and that of the office distinctly. Offer a business card, and
state the reason for the call. For example: "Good afternoon, my name is Edward Guthrie
of Edward Guthrie Real Estate in Beenleigh. I have a buyer interested in buying a house
such as yours in this area. Would you be interested in selling?"
Prospecting like this often brings good results. It is a case of being in the right place at the
right time, and it is surprising how often a homeowner will be encountered who is considering
selling.
[7.11] Buildings under construction
Watch for houses, blocks of units or commercial or industrial buildings under construction.
The name and address of the owner can usually be obtained from the site supervisor or
council records. Contact the owners by phone or by letter and attempt to obtain a listing. If it
is for lease, then it is a potential management opportunity for the agency or it may be a future
investment sale. (Remember, it is unethical to try to solicit a listing on properties displaying
another agent's 'For Sale' or 'To Let' signboard).
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'Bank Officer, finance arranged, seeks four bedroom brick home in Holland Park, up to
$280,000.'
'Young working couple seek 2-3 bedroom cottage within walking distance to Coorparoo
railway Station, up to $365,000.'
Agents should not advertise in this way unless the buyers are genuine and qualified. It is
unethical to do otherwise and is a Competition and Consumer Act (Australian Consumer
Law) offence.
neglected properties
[7.16] Neighbours
Representatives must ensure that the neighbours are aware that they are in real estate and
be as friendly as possible.
Often neighbours are good source of referrals. To enhance your real estate standing
amongst neighbours, become the real estate expert in the neighbourhood.
[7.17] Relatives and friends
Relatives and friends can be difficult because they may expect preferred treatment, and
sometimes fail to appreciate a representative's experience. However, they can be good
sources of listings and referrals. If relatives and friends live outside the farming area, try to
ensure that they know their real estate interests can still be looked after by you.
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[7.18] Schools
If you have children at school, ensure that other parents at the children's school, along with
their friends and teachers know that you are in real estate. The school's Parent/Teacher
Association is another good source of business. It is surprising just how much business can
come from these sources.
[7.19] Clubs
Many real estate salespersons are members of civic, social or business clubs, such as Apex,
Jaycees, Lions, Rotary, a businessmen's or veterans' club. When the opportunity arises, club
members should be advised of their involvement in real estate. They are often a good source
of listings and referrals. Business from fellow members can make a big difference to a
Representative's income.
[7.20] Church
Buyers and sellers like to work with people they know and trust. A representative should not
hide their occupation from fellow church members. Be aware of their buying and selling
needs and be of service to them.
[7.21] Walk-ins
Once a salesperson is established in an area, potential clients will walk in off the street to ask
about selling. Handle this type of enquiry immediately. Go with the seller to view and list the
property. Otherwise, he or she may find a more interested salesperson in a competitor's
office.
[7.22] Telephone enquiries
Be prepared to receive telephone enquiries about property sales in the area. Do not give
unconsidered opinions over the phone - offer to complete an appraisal and make an
appointment to view the property immediately, before the seller phones another agent.
Without an appointment an opportunity has been lost to view the property, meet the seller
and obtain a listing. A market sales opinion over the phone is soon forgotten, but a written
appraisal is a permanent record and is the first step to getting the listing.
Remember you must give a written sales opinion when providing a seller or prospective
seller an opinion about a sales price.
There are many other sources of listings, limited only by the salesperson's imagination.
Remain alert for any potential listing and act on it immediately. Look for subtle hints. A seller
may think a person is too successful or too busy to be interested in his small property. A
remark such as: "What's the market like today?" could well indicate a desire to list and should
be followed up in conversation.
[7.23] Database usage
An agent will often add potential sellers to their database so that they can keep in touch with
them on a regular basis about current market trends and conditions. Keeping in regular
contact with people on your database and using your database to its full potential is a great
way of keeping your name and profile at the forefront of a potential sellers mind. Whilst they
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may not be ready to list straight away, regular and consistent updates about current market
trends help educate someone who is preparing to sell their property.
An agent must always ensure that there is a record of the consumers permission to add their
details to a database or mailing list. This can often be through records kept of attendees of
open homes or emails sent to an agency asking for information about the market or industry.
Strict guidelines apply in relation to using personal information on a database that agents
need to be mindful of; including the requirements if asked by a consumer to remove their
personal details from a database or mailing list. An agent must, within 30 days, if requested,
remove a persons details from their database or mailing list.
[7.24] Learning activity 6:
Question 1: Your client asks you for advice concerning the best method of selling the
clients property. List six criteria you should consider before preparing a response as to the
most appropriate selling method.
1. ________________________________________________________________________
2. ________________________________________________________________________
3. ________________________________________________________________________
4. ________________________________________________________________________
5. ________________________________________________________________________
6. ________________________________________________________________________
commercial properties
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market summary, including a National Roundup of median house prices and vacancy
rates
median sale price of established house sales for capital city suburbs and State Regional
areas
This information is useful for the market appraisal presentation to clients as it provides
information on market conditions.
[8.2] Inspecting the property
A physical inspection must be conducted to identify possible building defects and their
remedies. Agents should take note of:
details of the land, contours, the style and condition and age of the home
floor plan
soft furnishings
Information should be physically checked during the inspection and results confirmed with
the client to ensure that it is a correct record. Advise the client to consult specialist advice
when necessary. Also ensure you always remain within the boundaries of your qualifications
and proceed with caution so as to not be seen to cross the line of giving inappropriate
advice.
[8.3] Where to obtain additional information
Additional information may be gained from the following areas to help the agent to complete
an appraisal:
agent's property management and sales reports, and proprietary database will provide
sales evidence in the area
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newspapers can provide current information concerning properties for sale and
comments on recent sales
[8.4] Databases
The REIQ Property Search website at reiq.com contains pertinent information which will
assist in analysing current market trends when conducting a property appraisal. Information
includes:
commercial properties
rural properties
Real estate agencies commonly have their own client and customer database. It is an
extremely important and vital part of any agency. Proprietary commercial databases are also
available by subscription and may provide detailed information which was obtained, under
license, from the Department of Natural Resources and Mines, on properties in all areas.
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the price that a valuer working for the financier thinks the property is worth
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To summarise the market price of a property is a value that is subject to change. It is not
constant, nor is it necessarily predictable.
A valuer is qualified to provide valuations. A real estate agent or salesperson is not qualified
to value. An agent provides estimated selling prices.
[8.8] Legal definition of market value
The concept of market value was ruled on by the High Court of Australia in 1907 in a
landmark hearing that is now known as the Spencer Case. (Spencer v Commonwealth of
Australia, 5 CLR at 418). Chief Justice Griffiths ruled:
In my judgment the test of the value of land is to be determined, not by enquiring what
price a man desiring to sell could actually have obtained for it on a given day, but
whether by enquiring what would a man desiring to buy the land would have had to pay
for it on that day to a seller willing to sell it for a fair price but not desirous to sell.
The High Court of Australia today recognises market value as:
The price which a property could be expected to realise if sold by a willing but
not anxious seller to a willing but not anxious buyer at the date at which the
value is required to be ascertained.
This definition has been interpreted to include the following provisions:
There is only one value for all purposes. That is, the price at which a property will sell at
any given time is determined between a willing buyer and a willing seller. It is assumed
that these parties are aware of all the facts relevant to the current marketplace, and
therefore capable of making a rational decision as to a fair market price.
The market value of a property for sale or for rent should always indicate a price that the
property would achieve if it was offered for sale or for rent in the open market, allowing a
reasonable time for a customer to become fully informed of the attributes of the property
and the prevailing market conditions.
For this reason, market value is often referred to as the price at which a willing client would
sell or rent and a willing customer would buy or rent neither party being subject to any
abnormal pressure or circumstances.
Other more recent court decisions have ruled that the market price of a property is a price
expected if a reasonable time is allowed to find a customer. In addition, the customer and the
client must also be fully informed of all pertinent facts regarding the property and the current
market.
It becomes apparent that when we look at the strict legal definition of market value, auction is
deemed one of the most reliable means of determining the true worth of a property at a given
time and place. When a property is offered for sale by auction, there is a reasonable amount
of lead-up time (for residential sales, usually 30 days) before the property is put to bidding. In
that time it can be assumed that the buyers and sellers have become conversant with current
market conditions. Buyers in particular will, in the 30 days, have had the opportunity to fully
investigate the property (including arranging finance and conducting building and pest
inspections) to ensure that the price they bid reflects an informed market decision.
For this reason a court of law will usually nominate auction as the fairest method of sale for
determining the worth of real property in matters concerning the distribution of proceeds of a
sale of property under dispute. This is especially important in matters relating to deceased
estates, divorce, receivership, insolvency and the winding up of companies.
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a rental where an agent finds a tenant for the client and collects rent on behalf of that
client
All activities that are normally associated with a transaction are paid for, upon completion of
the service, by way of commission. Therefore, if the agent is pricing a property for a
transaction, they are not permitted to charge an additional professional fee. This is because
professional fees only apply to the provision of a service that is not a transaction.
Therefore, if an agent is providing a market price for a client that does not relate to a
transaction (e.g. a market appraisal for a client who is not selling or renting, but needs to
know what price their property might attract in the current market), then a professional fee
may be charged. (It is important to note that this is not common.)
However, if an agent charges a fee for conducting an appraisal, they may be considered
accountable by law and may carry the same legal responsibility for their actions as a valuer.
Under such circumstances, they would be required to carry adequate professional indemnity
insurance. Agents should also seek their own legal and professional advice before
undertaking such duties.
On the occasions where agents are required to undertake a written assessment of the worth
of a property they are advised to use a form similar to the REIQ Estimate of selling price and
to have a separate indemnity notice signed by the party requesting the Opinion of Price
before completing the appraisal.
Occasions where an agent may be required to give a written opinion of price include:
Insurance appraisals - these are particularly important for property managers who need
to ensure that adequate insurance cover is kept on properties in their care
If an agent is asked to supply a written appraisal on a property for any of the parties or
purposes of the following list, it would be best to advise them to refer the matter to a
registered valuer.
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Tax purposes especially matters pertaining to Capital Gains and Goods and Services
Tax
Exchange of properties
Mortgage purposes
Resumption of land
Legal or court proceedings, including those involving the Land Court, a valuation or
general property dispute
an estimate of price
the price can be achieved by offering the property to an open, competitive market
the customer enters into an agreement in the full knowledge of the propertys market
potential and liabilities (such as zoning and legal use)
the client is educated to current market conditions and is not under any undue pressure
to sell
There are however, some circumstances when an agent, or valuer, must disregard market
facts even though they represent a current sale or rental transaction. Special circumstances
surrounding a sales transaction can affect the sale price. It is therefore important that the
agent or valuer ascertains what the specific circumstances are for each sale.
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Sometimes a property has a special appeal to a particular buyer who, in turn, is willing to pay
a premium for it. Under these circumstances, the selling price may not be a true indication of
market value. Prices above current market levels may be paid in the following circumstances:
Tenant purchasing the freehold of premises where they currently carry on the business in
order to preserve the goodwill of the business
Uneducated buyers, particularly interstate or overseas buyers not familiar with local
values. However, if a trend emerges where over a period of time a high volume of
property continues to be sold to interstate or overseas buyers, especially in a preferred
location such as gold coast beach or canal front land, then a recognisable trend emerges
and this becomes an undeniable market fact which must be considered when pricing real
estate
Sales that are leaseback. In this situation the owner sells the property subject to the
buyer granting the owner favourable leaseback arrangements over the property. Usually
a higher selling price is offset by lower rental rates that are more favourable to raising
capital, thus helping cash flow.
other psychological factors of significance to the buyer (e.g. the rumoured presence of
ghosts)
Stigmas may be current and persistent; however, most stigmas will eventually dissipate over
time. The important thing to remember about stigmas is that they are subjective and may be
dependent upon the particular cultural or religious background of the beholder, including any
particular beliefs, superstitions, experiences or idiosyncrasies they may have.
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Property owners are generally not subject to the CCA, FTA or POA as they are neither a
corporation, nor engaged in trade or commerce, per se.
The sale, or letting, of stigmatised property is an emerging issue in Australia that has not yet
been fully dealt with; thus, common sense needs to prevail. At present, it appears that caveat
emptor (buyer beware) generally applies and there is no specific obligation for an agent to
disclose the presence of a stigma to a consumer. However, in circumstances where a stigma
is considered to be a material fact, non-disclosure would be considered misleading under the
CCA, FTA or POA.
Agents may not simply reply on having no knowledge of a particular stigma and it is therefore
prudent that agents ask the property owner about the possible existence of any stigmas
affecting the property - so as to determine whether or not these are likely to constitute a
material fact for the purposes of the relevant legislation. To facilitate this process, agents
should include a clause in selling or letting agreements requiring the property owner to
disclose all material facts, including those relating to potential stigmas. If the property owner
has any doubt about the presence of a stigma, they should seek their own legal advice.
Agents are not obliged to conduct their own research into the existence or otherwise of
stigmas but may be aware of potential stigmas through local knowledge or media reports.
Agents should inform the property owner if the presence of a stigma is suspected. The
property owner and agent may subsequently come to an arrangement on any role the agent
may play in verifying the presence or otherwise of the stigma.
Does the stigma relate directly to the property itself (as opposed to the surrounding
area)? Note: while some stigmas may relate the surrounding area, they may also relate
directly to the property itself; e.g. an unpleasant industrial odour.
Does the stigma currently impact on the market value of the property?
Is it likely that knowledge of the stigma would affect a consumers decision to proceed
with the transaction?
Could consumers reasonably expect that disclosure ought to have been made
(particularly in circumstances where it is unlikely that the consumer could become aware
of the stigma of their own accord)?
If the stigma relates directly to the property itself and the answer to any of the remaining
questions is yes, then the agent is obliged to make a full disclosure on an up-front basis. In
other circumstances, caveat emptor is likely to apply and disclosure will only be required in
response to a direct consumer enquiry.
When dealing with stigmas that relate to race, religion, disability, gender or political
viewpoint, agents should have regard for Commonwealth and State and Territory antidiscrimination laws that may be applicable. Generally speaking, agents should avoid
perpetuating stigmas relating to these matters.
If any doubt remains as to whether or not disclosure is required in a particular circumstance,
the agent should err on the side of caution and make a disclosure (subject to the
considerations contained in the sections to follow).
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(b) if a comparative market analysis can not be prepared for the offered property, a written
explanation showing how the real estate agent decided the market value of the property.
Maximum penalty540 penalty units.
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if the seller does not set a reserve pricethat the seller understands that the offered
property will be sold for the highest of any bids made when the offered property is
auctioned
An auctioneer must not help a seller decide the reserve price for offered property unless,
before the seller decides the price, the auctioneer gives the seller a copy of a comparative
market analysis for the offered property; or if a comparative market analysis cannot be
prepared for the offered property, a written explanation showing how the auctioneer decided
the market value of the property.
Section 214 of the POA requires an auctioneer not to indicate reserve or other price to bidder
if a person (the bidder) wanting to bid for residential property that is to be, or may be, offered
for sale by auction (offered property) asks an auctioneer for information about the price at
which the offered property is likely to be sold when it is auctioned.
The auctioneer must not in any way disclose to the bidder:
the reserve price set under section 213 for the offered property
However, the auctioneer does not commit an offence if, on the sellers written instructions,
the auctioneer gives the bidder the comparative market analysis for the offered property; or
the written explanation showing how the auctioneer decided the market value of the property,
which the auctioneer had given the seller.
Section 215 of the Property Occupations Act refers to the representation of the price of
property by a real estate agent if a person wanting to sell residential property asks a real
estate agent for information about the price at which residential property that is to be, or may
be, offered for sale, whether or not by auction, (offered property) is likely to be sold. If the
real estate agent decides to give the person the information, the real estate agent must,
when giving the person the information, give the person a copy of a comparative market
analysis for the offered property; or if a comparative market analysis cannot be prepared for
the offered property, a written explanation showing how the real estate agent decided the
market value of the property.
Section 216 of the POA requires a real estate agent not to indicate reserve price to potential
buyer if a person wanting to buy residential property (potential buyer) asks a real estate
agent for information about the price at which residential property that is to be, or may be,
offered for sale, whether or not by auction, (offered property) is likely to be sold or is, or is
likely to be, offered for sale.
If the offered property is to be offered for sale by auction, the real estate agent must not
disclose to the potential buyer:
an amount the real estate agent considers is a price likely to result in a successful or
acceptable bid for the offered property
If the property is not to be offered for sale by auction and the seller has instructed the real
estate agent not to disclose the price at which the seller is willing to sell the offered property,
the real estate agent must not disclose to the potential buyer the price at which the seller is
willing to sell the offered property.
However, the real estate agent does not commit an offence if, on the sellers written
instructions, the real estate agent gives the potential buyer a copy of the comparative market
analysis for the offered property, or the written explanation showing how the real estate
agent decided the market value of the property, which was given to the seller.
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three or more recent sales of comparable property as per ownership database research
any recent sales which the agent knows are not yet recorded in databases
For agents to be able to competently prepare a CMA they need to have good quality records
of all the real estate activity in their area. They need to drive the area at least once a week to
check out any new listings with other agents, read the local and regional newspapers and
constantly check the real estate websites and proprietary databases.
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The Competition and Consumer Act requires adequate and appropriate disclosure at all
times of all relevant price information, so that prospective buyers and the general public
can make informed pricing decisions.
Advertising or quoting a property at a price significantly less than the agents estimated
selling price, the reasonable market appraisal or the prices that the seller has indicated
he or she is likely to accept constitutes misleading or deceptive conduct.
Agents must ensure that the use of price range marketing does not mislead or deceive
consumers as to the price at which the sellers of the property are actually prepared to sell
the property; the price at which the sellers of the property have instructed the agent to
sell the property; or the price which the agent believes the property will be sold for or the
estimated market price of the property.
When an agent markets a property using a price range, the agent should obtain written
confirmation from the seller before the property is advertised that the seller will seriously
consider all prices within the advertising range, including the price at the lower end of the
range.
Price ranges advertised by an agent should not include any price that is less than a
price used in a previously rejected offer unless evidence exists that the seller has now
changed his or her mind and would accept that lower price.
Over-quoting by a real estate agent of the estimated market price of a property in order to
obtain a listing from a seller amounts to misleading or deceptive conduct. Further,
underquoting the potential selling price of a property so as to attract the interest of buyers
also amounts to misleading or deceptive conduct.
And consequently:
A real estate agent must only express an opinion about the estimated market price of
freehold or leasehold property based on reasonable grounds.
A real estate agent must tell his or her client immediately if the agent considers that the
freehold or leasehold estimated market price of the property has substantially altered
from any estimated market price that the agent has previously placed upon that property.
A real estate agent may only advertise or market a property at price that the agent has
been instructed by the seller in writing to so advertise or market that property.
A real estate agent must not mislead or deceive potential buyer as to the amount or
terms of offers that a seller may consider accepting.
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landscaping. By the time they have finished the property owes them around $580,000. Now
the couple decide they want to return interstate for family reasons and decide to sell the
house just 8 months after they bought it.
If the property comes on the market at what the property actually cost it would be considered
by the buyers to be overpriced compared to others in the area. Buyers are usually very
reluctant to buy the most expensive house in an area. If a buyer has $500,000 to $600,000
they prefer to be surrounded with other houses of the same or higher value.
It is the client who ultimately determines the price the property is listed for. Likewise the
buyer is free to make an offer to purchase at the price they believe the property is worth. It
is the agents role to negotiate between the seller and the buyer and guide them to a mutual
agreement in the form of a contract.
for following up private sales remember a good CMA can arouse the curiosity of even
the most difficult private seller
used in curb side appraisals for bank managers, valuers, finance companies etc.
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$500,000
Example of a CMA
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the features of the land including area, frontage, aspect and general topography and
zoning
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By objectively isolating all this information from the sales or rentals of other properties in the
area, an agent is able to more accurately determine market price.
The best transactions to use for a direct comparison are:
recent transactions
Legislation in July 2003 made it illegal for real estate agents in Queensland to use
information obtained from the Department of Natural Resources and Mines in directmarketing (telemarketing, mass-mailing of unsolicited letters etc.) When an agency signs a
contract with a commercial search company, they agree not to use the information for directmarketing purposes.
[9.12] Consequences of incorrect pricing
Property Occupations Act (sections 213, 214, 215 and 216) which was studied earlier were
introduced in an attempt to stop agents from misleading sellers by overpricing their property
in order to win the business. It is an agents legal duty to act according to the POA and to
behave in a professional manner. The public rely on real estate agents to provide them with
research and to tell them the truth which will enable them to make informed decisions when
selling their properties.
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providing an opinion of price; the agent is providing research that will enable the seller to
make an informed decision about the price of their property.
If the sellers do not want to make their pricing decision based on the research provided, they
can instruct the agent to market the property at whatever price they choose. If the agent
agrees with the seller and lists the property at the inflated price then the agent is compelled
to market the property at that price. The price will be entered into the PO Form 6 and that will
be the only price the agent can advertise the property at otherwise they would be breaking
the law.
[9.14] Agents duty to inform seller
If the agent knows that the price the sellers are asking for their property is unrealistically
inflated or (on some very rare occasions) under-priced, then the agent has an obligation to
inform them.
If the agent has complied with the law and done all that is possible to inform the seller
regarding the market value of the property and the seller remains unrealistic about price,
then the agent must make the decision as to whether or not they want the listing. The agent
must decide whether they want to spend the next few weeks (or months), putting a lot of
effort into a property that is not likely to sell.
An agent should also advise a client of any occurrences or circumstance that could impact
on the price of a property while it is on the market. If for instance, a similar property sells for
considerably more or less than the asking price of the subject property the client must be
informed.
When appraising a property an agent also has a duty to find out or verify facts material to the
sale, before pricing the property and afterwards as the occasion arises.
Property Occupations Regulation 2014
Part 5 Conduct standards
Section 20 Finding out or verifying facts material to the sale of property
(1) An auctioneer appointed to sell property must take reasonable steps to find out or verify the facts
material to the sale that a prudent auctioneer would have found out or verified to avoid error,
omission, exaggeration or misrepresentation.
(2) The steps must be taken before the auctioneer auctions the property and afterwards as the occasion
arises.
(3) A real estate agent appointed to sell, purchase, exchange or lease property must take reasonable steps
to find out or verify the facts material to the sale, purchase, exchange or lease that a prudent real estate
agent would have found out or verified to avoid error, omission, exaggeration or misrepresentation.
(4) The steps mentioned in subsection (3) must be taken before the agent lists the property and afterwards
as the occasion arises.
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accordingly and the client loses money due to the agents negligence, a court of law is
unlikely to accept as a defence that the agent did not know that the local authority had
changed the zoning. The agent cannot claim to be ignorant of the change of zoning and not
being in a position to assess the impact of these changes on the value of a property.
It is an agents duty to be well informed about real estate, and events and circumstances that
could impact on the value of the real estate, in the agents area of expertise.
It is therefore essential that an agent should not complete an appraisal and give a seller
advice on the price of their property until they have conducted all the necessary research,
and discovered all the pertinent facts relating to the property, in order to provide the seller
with the information they need to make an informed decision.
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[9.19] The Competition and Consumer Act (CCA) and property pricing
The CCA provides strict guidelines on an agents duty of care when pricing property. The
areas of the CCA that impact most strongly on an agent are summarised as follows:
The CCA states clearly that an agent may be liable for a false statement even if the
statement was made innocently and with no intention to mislead the property owner
An agent must be able to prove that they had a reasonable basis for making a prediction
or opinion of price
Experts, such as agents, will be taken to have verified information that they provide to a
seller. This means that an agent must have up-to-date information when considering the
price of a property. This includes the current zoning and future development potential,
legal use and its capacity to be put to a higher and better use, and whether or not it
complies with the law
Agents have a legal duty to be an expert (agents are deemed to be experts when called
upon to price property), then the agent must also ensure they do not create a false
impression by what has been left unsaid. For instance, if an agent knows that a
comparable property sold for $40,000 less than the subject property and does not reveal
that fact to the seller and the seller subsequently suffers a loss, then the agent may be
liable. A loss in this case could be income lost due to time on the market or losses
incurred as a result of missing out on another opportunity while waiting for the property to
sell.
An agent is considered to be an expert in their field and the law stipulates that a seller should
be able to rely on the agent to provide research, advice, and information to assist them to
make the right pricing decisions and to achieve the maximum price for their property.
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open listing
An open listing is a written agreement entered into between a person (seller) and a real
estate agent (selling agent) under which the seller appoints the selling agent, in accordance
with the terms of the agreement, to sell stated property. Under the agreement, the seller
retains a right to sell the sellers property during the term of the agreement; or to appoint
additional real estate agents and pastoral houses as selling agents to sell the property on
terms similar to those under the agreement; and the appointed selling agent is entitled to
remuneration only if he or she is the effective cause of sale. The appointment of the selling
agent can be ended by either the seller or the selling agent at any time.
Basically, an open listing can be anyones listing.
The only difference between an exclusive agency and a sole agency is the extent of the
entitlement of a selling agent to receive an agreed commission or other reward on the sale of
particular property. Under an exclusive agency, a selling agent is entitled, on the sale of
particular property and in accordance with the terms of an agreement with the seller of the
property (the Property occupations Form 6), to receive an agreed commission or other
reward, whether or not the selling agent is the effective cause of the sale. An exclusive listing
means the listing is exclusively listed with one real estate agent. However, if the sale were
subject to a sole agency listing, the selling agent would not themselves be entitled to the
commission or other reward if the seller were the effective cause of the sale. A sole listing is
still exclusively with one real estate agent however, the seller can sell the property privately
without paying the agent commission.
Prior to the appointment to sell residential property, where such appointment is either an
exclusive or sole agency listing, the agent is required to clearly bring to the attention of the
client the differences between an open, sole or exclusive agency listing before the
appointment of agent is signed. If the agent fails to bring the explicit differences of the three
types of agency listings to the client, the agent commits an offence for failing to do so; and
will result in the loss of all commission pursuant to the provisions of the Property
Occupations Act.
It is prudent for the agent to obtain written acknowledgement, of the agents pre-appointment
advice concerning the differences between the open, sole and exclusive agency listings,
from the client at the same time as signing the appointment. Best practice would dictate to, at
a minimum, have the client initial and date next to the agency provisions to indicate that the
agent has brought this to the clients attention when discussing the appointment. The REIQ
Schedules and essential terms and conditions to be attached to the Property occupations
Form 6, include specific provisions relating to sellers acknowledgements in this regard.
It is important to note that before the client signs the Property occupations Form 6, the agent
must give the client a genuine opportunity to obtain independent professional advice of the
appointment. The main issue raised is that the opportunity to seek advice must be genuine
and withstand the test of scrutiny. Similarly, the agent has an obligation to both the seller and
the prospective buyer of a property, before requiring them to sign any contract for the sale or
purchase of that property.
A sole or exclusive appointment can be no more than 90 days, as per section 103 of the
POA. However, the 90 day limit does not apply if the appointment is for the sale of 3 or more
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residential properties; or is for the sale of a lot in a community titles scheme as part of the
sale of management rights to the person who is to become the letting agent for the
community titles scheme. Should the client (or agent) wish to terminate an appointment of
agent (for sole agency or exclusive agency listings), a minimum of 30 days notice must be
given unless both parties agree to an earlier day for the appointment to end.
However the appointment must be for at least 60 days, unless both parties agree, in writing,
to an earlier day for the appointment to end.
For example, if a client wishes to terminate an appointment in the first week of a sole or
exclusive agency appointment, they may give 30 days notice to the seller, but will be
required to wait until at least 60 days after the appointment commenced before the
appointment will terminate.
An agent can be reappointed for a further term if the property hasnt sold during the original
appointment time frame. Meaning that a maximum time frame for a sole or exclusive is 90
days in length, that is 90 calendar days and starts from the time the client has a copy of the
PO Form 6 (it is then the agent can legally begin working for the client). If the client receives
a copy of the PO Form 6 at 10 pm on the day they signed the document, day one is that day
and there are now 59 days left of the exclusive or sole appointment. It is important to note
that although an exclusive or sole appointment has a maximum time frame of 90 days, the
client may choose to reappoint the agent for a further 14, 30 or 45 days or any other time
frame agreed providing it does not exceed 90 days. It doesnt have to be the maximum 90
day time frame.
If the property doesnt sell during the listing time frame, the client can reappoint the agent for
a further sole or exclusive term. The PO Form 6 can be used. A reappointment can only be
made if:
the reappointment of the agent is made on the approved form (Part 10 of the PO Form 6)
the reappointment is not made earlier than 14 days before the current appointment ends
(it is crucial that agents comply with this measure as significant penalties apply if an agent
seeks reappointment prior to 14 days before the then current appointment expires).
the original appointment has not expired
there are no changes to the terms of the original appointment
If the original appointment has expired, or the parties wish to make changes to an existing
appointment, a new Property Occupations Form 6 must be completed.
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Notes:
When Members are contacted by the client of another real estate agent regarding the
creation of an exclusive relationship to provide the same type of service, and Members
have not directly or indirectly initiated such discussions, they may discuss the terms upon
which they might enter into a future agreement or, alternatively, may enter into an
agreement which becomes effective upon or after expiration of any existing exclusive
agreement.
The fact that an exclusive agreement has been entered into with another real estate agent
shall not preclude or inhibit any Member from entering into a similar agreement to become
effective after the expiration of the prior agreement.
Article 10 - Interfering with another agents appointment
Members shall not engage in any practice or take any action inconsistent with the agency or
other exclusive relationship recognised by law that other real estate agents have with clients.
Notes:
This Article is not intended to prohibit aggressive or innovative business practices which
are otherwise ethical and does not prohibit disagreements with other real estate agents
involving commission, fees, compensation or other forms of payment or expenses.
This Article does not preclude Members from making general announcements to
prospective clients describing their services and the terms of their availability even though
some recipients may have entered into agency agreements or other exclusive
relationships with another real estate agent. A general telephone canvass, general mailing
or distribution addressed to all prospective clients in a given geographical area or in a
given profession, business, club, or organisation, or other classification or group is
deemed general for purposes of this standard.
This Article is intended to recognise as unethical two basic types of solicitations:
First, telephone or personal solicitations of property owners who have been identified
by a real estate sign or information service as having exclusively listed their property
with another real estate agent and
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location
method of sale
The listing form is not the same as the listing (or selling) authority (the PO Form 6). It is the
internal documentation the agent uses when preparing advertisements and when trying to
match properties to prospective buyers.
One of the essential facts to obtain is the reason why the property owner wants to sell. The
sellers motivation for selling will influence their eagerness to sell and their consideration of
offers.
If they have a genuine and important reason for selling, they will probably be more likely to
set a reasonable price for the property, making the sales process easier for the agent.
Some of the reasons people may have for selling include:
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executing a will
family settlements
starting a family
There are many more reasons for people wishing to sell their property and finding out the
dominant motive for selling can greatly influence many factors involved in the selling process.
a family relationship
a fiduciary relationship
The agent must also disclose whether the agent derives or expects to derive any benefit from
a person to whom the agent has referred the buyer and, if so, the amount or value of the
benefit; the amount, value or nature of any benefit any person has received, receives, or
expects to receive in connection with the sale, or for promoting the sale, or for providing a
service in connection with the sale, of the property.
Examples of persons who may receive a benefit may be:
finance broker
financial adviser
financier
property valuer
seller
solicitor
The disclosure is effective only if it is given to the prospective buyer in the approved form
Property Occupations Form 8; and acknowledged by the prospective buyer in writing on the
approved form; and given and acknowledged before a contract for the sale of the residential
property is entered into.
The Property Occupations (PO) Form 8 Disclosure to prospective buyer applies only to
residential property sales. The PO Form 8 is a statutory form and the agent must only
provide it in the approved format. The agent must sign the disclosure and provide it to the
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buyer; and have it signed by the buyer, before a contract can be entered into. The detailed
instructions at the end of the form will help to determine what must be disclosed and what
does not have to be disclosed to buyers.
The PO Form 8 must be completed in relation to any benefit the agent or any other person
derives or expects to derive from the sale, promotion of the sale or service in connection with
the sale.
However, disclosure about relationships only needs to be given if the agent has referred a
buyer to a service provider for professional or other services and the agent has a business or
personal relationship with the service provider or the agent has or will benefit from the
referral. If an agent refers a buyer to a person for professional services and the agent does
not have any business or personal relationship with the service provider and is not receiving
any benefit then that part of the disclosure form does not need to be completed.
This disclosure has a major impact on agency practice. The agent is required to declare if
they have, or will be referring the buyer to persons for professional services. The term
professional service is broad and agents are advised to disclose any business relationship
that is the subject of a referral (e.g. lawyers, valuers, and financial advisers).
This provision also includes many of the services an agent has traditionally referred people
(e.g. pest and building inspectors). If the agent is receiving any benefit from the service
provider, or feels obliged to refer business through a professional arrangement, then this
relationship should be disclosed.
An agent should be cautious when making any referrals and if in doubt, disclose. Some
agents may take the attitude that it is prudent not to make referrals. However, consumers do
expect this as part of the service. Modern real estate practice has become accustomed to
delivering a high level of integrated service to consumers. This includes assisting consumers
to explore a range of products and services relating to finance, conveyancing solicitors,
architects, decorators, designers, building inspectors and property maintenance providers.
The important issue is how this service is provided. If an agent is genuinely assisting a
consumer and making the appropriate disclosures, then all parties benefit.
One final warning comes about an agents legal liability when making referrals, namely,
caution must be exercised when making any form of business or personal referral.
Consumers should be advised to make their own investigations and to seek quotes from a
range of advisers or specialists to satisfy themselves a fair and competitively priced product
or service is being received. If the agent refers a buyer to a person for professional services
and the agent does not have any business or personal relationship with the service provider
and/or is not receiving any benefit, then that part of the PO Form 8 does not need to be
completed.
The buyer must acknowledge and sign the PO Form 8 before a contract can be entered into.
We will study the PO Form 8 in detail later in this unit.
In the sale of a business, it is likely that the seller will be required to produce financial
statements for the business to satisfy the buyer that trade figures are as originally stated.
Buyers are sometimes allowed to attend and operate the business for a certain number of
days before settlement as a method of satisfying themselves that the stated trade figures are
as claimed by the seller and the agent. Such requirement will be a special condition of the
contract, but it is not a statutory requirement of disclosure. It is also quite possible for buyers
of businesses to settle without financials if they are suitably satisfied. Disclosures of this type
are normally satisfied in a period of due diligence and this will be a special condition of the
contract.
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Did the prospective buyer disclose their intended use for a property?
Did the prospective buyer inquire about the physical condition of the property?
Did the prospective buyer inquire about conditions other than the physical condition of the
property, such as zoning laws or utility access?
Did the agent provide additional information that could be important in evaluating the
future value of the property or costs to develop or improve it?
If the answer to any of these questions is yes, document these conversations in the clients
files. Using a standard format helps ensure that important facts are documented.
Documentation should consistently include:
the date, time and location of the conversation (note if discussion was via telephone)
the response provided, noting specifically the agents recommendations for further follow
up by the prospect (e.g. investigate zoning laws, obtain estimates to install utilities)
Professional judgment should be used in determining whether or not this information should
be included in a follow up letter or email to the prospect. If it is agency custom and practice to
follow up with sales prospects by letter or email, it is advantageous to use this
communication to recap what the agent discussed when meeting with the buyer.
When selling property that has a body corporate or common property (community title
schemes) the seller is required to provide to the buyer a Section 206 Disclosure Statement.
This statement is a statutory requirement under the Body Corporate and Community
Management Act (BCCM Act) The disclosure statement must be provided to the buyer by the
seller (or the seller's agent) and signed by the buyer prior to the buyer entering into a
contract. The Section 206 Disclosure Statement will be studied in detail later in this unit.
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The terms 'contract' and 'agreement' are often used with the same meaning. While they may
not always be exactly the same, a real estate contract involves elements of agreement.
Section 59 of the Property Law Act 1974 states that no action may be brought upon any
contract for the sale of land, or any interest in land unless the contract is in writing and
signed by the party to be charged, which means the person who is being sued.
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up in the account and this should be taken in to consideration when nominating the date that
the deposit is to be paid by. A deposit can also be paid by way of a deposit bond or a bank
guarantee.
Certain finance companies that are underwritten by insurance companies will guarantee a
10% deposit in return for a set fee paid by the buyer. This bond represents deposit until
settlement.
[11.9] Release of deposit money
An agent must be careful when paying out a deposit to a buyer or seller. The agent should
ensure written notification is received from both parties that the deposit is to be paid out. On
receipt of such notification the agent should pay the deposit as directed.
If a deposit is paid by way of cheque, the deposit cannot be refunded until the financial
lending institution has cleared the cheque.
When a property settles, agents must not release (disburse) the deposit or any monies to
any party, until written instructions have been received from both the buyer and sellers
solicitors (or if self-representing, from the buyers or sellers themselves)
[11.10] Agents entitlements
Money paid into any trust account must be retained in the trust account until disbursed (paid
out) in accordance with the AFAA. The licensee is authorised to draw an amount from the
transaction fund to pay a transaction expense when the expense becomes payable; and
when the transaction is finalised, to draw an amount from the transaction fund that is equal to
the difference between:
the total of the licensees transaction fee and any outstanding transaction expense; to
pay the person entitled to the amount or in accordance with the persons written direction
to draw the licensees transaction fee from the transaction fund when the amount, if any,
has been paid and when the transaction is finalised
An example of when a transaction is finalised is the settlement of a contract for the sale of
property or the termination of the contract.
However, restrictions can apply in respect to drawing of commission in relation to the sale,
particularly where there is a dispute between the parties to the contract.
[11.11] Payments to the seller
The agent or auctioneer is required to pay to the seller within 14 days of a demand in writing
from the seller, or in any event within 42 days of entitlement by the seller, the balance of the
deposit to the seller or as directed in writing by the seller or the sellers solicitor. The agent
must also give a detailed account of all deposit and any other money (e.g. advertising
money) received and payments made from that money.
[11.12] Disputes over deposit money
If the agent receives a notice disputing entitlement to deposit then the agent must continue to
hold the deposit in trust. The agent should then notify both parties that the money will be held
in trust for 30 days pending notification of the commencement of legal proceedings. If no
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notification is received within the 30 days, then the deposit may be paid to the nominated
party.
If the agent receives notification of court proceedings then the money should be paid into the
court.
[11.13] Learning activity 9
Question 1: Before performing a service for a client an agent must have a valid
appointment to act. In a residential sale the agent uses the PO Form 6. Considering the
provisions of section 104 of the POA, what must this appointment form specify?
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
Question 2: When must an agent provide the buyer a PO Form 8 Disclosure to prospective
buyer? Name the section and the Act which refers to this disclosure.
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
Question 3: Under the Agents Financial Administration Act who is entitled to hold deposit
monies and in what type of account?
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
Question 4: What are the procedures a real estate agent must follow when deposit money
is received?
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
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Question 5: Explain the circumstances in which deposit money may be withdrawn by a real
estate agent.
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
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The purchase of the property is made for the licensee or an associate of the licensee.
The purchase of the property is made for a corporation (having not more than 100
members) of which the licensee or an associate of the licensee is a member.
An option to purchase the property is held by a corporation (having not more than 100
members) of which the licensee or an associate of the licensee is a member.
The purchase of the property is made for a corporation of which the licensee or an
associate of the licensee is an executive officer.
The purchase of the property is made for a member of a firm or partnership of which
the licensee or an associate of the licensee is also a member.
The purchase of the property is made for a person carrying on a business for profit or
gain and the licensee or an associate of the licensee has, directly or indirectly, a right
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to participate in the income or profits of the persons business or the purchase of the
property.
Also, a registered employee of a licensee, other than a property developer, is taken to have a
beneficial interest in property in each of the following cases:
The purchase of the property is made for the registered employee or an associate of
the employee.
The purchase of the property is made for a corporation (having not more than 100
members) of which the registered employee or an associate of the employee is a
member.
An option to purchase the property is held by a corporation (having not more than100
members) of which the registered employee or an associate of the employee is a
member.
The purchase of the property is made for a corporation of which the registered
employee or an associate of the employee is an executive officer.
The purchase of the property is made for a member of a firm or partnership of which
the registered employee or an associate of the employee is also a member.
The purchase of the property is made for a person carrying on a business for profit or
gain and the registered employee or an associate of the employee has, directly or
indirectly, a right to participate in the income or profits of the persons business or the
purchase of the property.
the licensee who is a corporation and the purchase of property (or option to purchase) is
made for an executive officer of a corporation
when the purchase of property (or option to purchase) is made for an executive officer of
a corporation of which the registered employee or their associate is an executive officer
[13.2] Associate
The Property Occupations Act defines the term associate as a property agent, who acts, for
a sale of property, in conjunction with a property agent appointed to sell the property; or a
spouse, parent, brother, sister or child of the person; or a child of the persons spouse.
Section 32DA of the Acts Interpretation Act defines de facto as outlined below
Section 32DA Meaning of de facto partner
(1) In an Act, a reference to a de facto partner is a reference to either 1 of 2 persons who are living
together as a couple on a genuine domestic basis but who are not married to each other or related by
family.
(2) In deciding whether 2 persons are living together as a couple on a genuine domestic basis, any of their
circumstances may be taken into account, including, for example, any of the following
circumstances
(a) the nature and extent of their common residence;
(b) the length of their relationship;
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supervising and inspecting major repairs and renovations, lodging building plans, and
overseeing building applications
providing written reports that do not involve the sale, management or rental of a property
Agents are not permitted to charge a consumer a fee relating to the preparation of
documents relating to a real estate transaction. This includes tenancy applications, lease
agreements, management agreements, sales contracts, written market appraisals (relating to
the sale or rental of a property) or listing documentation fees. Section 219 of the POA states;
agents cannot charge a fee for a document that they are legally required and obligated to
produce.
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An expense is when agents incur a financial liability on behalf of their clients and could
include:
promotional fees
searches (such as a Title search from Queensland Department of Natural Resources and
Mines
A fee, charge or expense cannot be charged or recovered unless the client has given
authorisation in writing in the PO Form 6, or otherwise approved in writing. All fees, charges
and expenses must be quoted on the Appointment of agent as GST inclusive. When claiming
from the client the agent must be able to clearly and correctly justify the charge for the
expense undertaken. For example, if the agent undertakes a title search the original receipt
must be produced to justify the invoice or trust account disbursement, as the case may be.
An agent cannot claim for expenses unless authorised in writing from the client and actually
expended by the agent. This has repercussions for agents who may be charging a general
marketing fee without proof of itemised expenditure on behalf of the client.
Section 89 of the Property Occupations Act refers to the restriction on recovery of reward or
expense without proper authorisation. An agent is not entitled to sue for, or recover or retain,
a reward or expense for the performance of an activity as an agent unless, at the time the
activity was performed, the agent held an agents licence; and was authorised under the
persons licence to perform the activity; and had been properly appointed by the client to be
charged with the reward or expense.
An agent should disclose to any consumer (e.g. client or customer) to whom any rebate,
commission, benefit, or discount from an advertiser, relate the source and amount of that
rebate, commission, benefit or discount. If, at the time that the agent makes this disclosure,
the agent is unable to provide the advice of the precise amount of the rebate, commission,
benefit or discount, the agent should advise a reasonable estimate of that amount. The most
common rebates available to agents are from print and electronic media advertising.
Agents should fully disclose in writing to each party to a transaction, the scope of service that
their agency will be providing to them and seek a written acknowledgment from each party.
Agents should also disclose their role to other agents involved in the transaction.
Agents may use the term free and similar terms in their advertising and in other
representations provided that at the same time all terms, governing availability of the offered
product or service, are clearly disclosed or stated to be available. When the true costs are
disguised in the selling price of the property you shall not offer gifts or items as being free.
Agents may also represent their services as free or without cost, even if they expect to
receive compensation from a source other than their client provided that the potential for
them to obtain a benefit from a third party is clearly disclosed at the same time.
[14.3] Commission
Commission can be defined as the amount paid by the person who appointed the agent
(most commonly the seller), normally when the property is sold. It may either be a
presentation of the actual selling price (or rental amount if a property management
appointment), or a set amount agreed by the parties. The commission is negotiable between
agent and the seller. The amount of commission an agent may charge is not regulated in
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Queensland, and agents may charge whatever commission the agent wishes (and the seller
accepts).
The PO Form 6 provide for the agent to be paid commission by the client. The commission
payable is subject to GST where applicable. An agent should always ensure their client is
fully informed of the amount of commission being charged and have this clearly documented
in the PO Form 6.
The POA also has strict guidelines forbidding an agent to charge more for a service than
permitted. However, there is nothing to stop the agent from negotiating a commission on a
sliding scale, provided this is correctly specified in the PO Form 6, e.g. if the property is sold
within 14 days commission payable will be $xxxx.
In summary, the payment of commission depends upon all the following factors:
the agent being licensed for the entire period of the appointment
an appointment, in the proper form (the PO Form 6), signed by the client, being in force
for the period of the services, for which the commission is to be paid, are to be performed
Is there a third party offering the agent a gift, money or other form of consideration in
the transaction?
If the agent accepts this payment will the agents clients rights be adversely affected in
the transaction?
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If the answer is yes to any of these questions, the agent may be in breach of the law and
committing an offence. By law, a secret commission is any fee or other benefit that an agent
receives from a third party whilst acting for a client who is not aware of the arrangement. Any
monies received by an agent from a third party whilst during the period of the appointment
should be passed on to the client.
The agents disclosure, in PO Form 8 should be acknowledged, in writing, prior by the buyer
to any agreement being entered into with a third party. On this form, the agent must tell
buyers what kind, if any, relationship the agent has with anyone the agent refers the buyer to
for professional services, and whether the agent expects to receive any benefits from the
service provider as a result of the referral and how much you expect it to be. Agents, who are
property developers, must additionally disclose if the agent owns at least 15% interest in the
property the agent is selling.
a lot included in a community titles scheme or proposed community titles scheme. This
includes home units, villas, townhouses and group title house and land subdivisions
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properties used substantially for the purpose of primary production. However, any sale of
land used for primary production shall be considered residential and have commissions
capped as per the residential schedule of fees and commissions
home offices and small businesses being run legally or otherwise from a residential
property. The definition makes no reference to whether the use is legal for existing
residences
land where primary production is still occurring at the time of sale. If an application is
made to rezone the land to commercial or industrial, the sale must still be considered
residential
mixed-use complexes with a residential and business component being sold on the one
title
bulk project and land sales. More than three sales must be treated as a residential
transaction (certain projects and subdivisions could previously be treated as a
commercial transaction)
properties that are used for residential purposes but subject to rezoning or development
applications
Before a contract of sale is entered into, they obtain the clients written acknowledgement
in the approved form that the client:
Is aware that property agent or real estate salesperson is interested in obtaining a
beneficial interest in the property; and
Consents to the property agent or real estate salesperson obtaining the interest; and
Acts fairly and honestly in relation to the sale and the client is in substantially as
good a position as the client would be if the property were sold at a fair market value
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a family relationship
a fiduciary relationship
a relationship in which 1 person is accustomed, or obliged, to act under the directions, instructions, or
wishes of the other
(b) whether the agent derives or expects to derive a benefit from a referred entity and, if so, the
amount or value of the benefit;
(c) if the agent derives or expects to derive a benefit from a referred entity
(i) for a referred entity who is an individualthe individuals full name; or
(ii) for a referred entity that has a registered business namethe registered business name;
(d) the amount, value or nature of a benefit an entity has received, receives, or expects to receive in
connection with the sale, or for promoting the sale, or for providing a service in connection with
the sale, of the property;
(e) if an entity has received, receives, or expects to receive a benefit in connection with the sale, or for
promoting the sale, or for providing a service in connection with the sale, of the property
(i) for an entity that is an individualthe individuals full name; or
(ii) for an entity that has a registered business namethe registered business name.
Examples for paragraph (c) of persons who may receive a benefit
accountant
finance broker
financial adviser
financier
property valuer
residential property agent
residential property agent
seller
solicitor
Maximum penalty200 penalty units.
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(2) However, subsection (1)(c) does not apply if the benefit is the amount the residential property agent
has received, receives, or expects to receive by way of commission from the seller for the sale.
(3) The disclosure is effective for subsection (1) only if it is
(a) given to the prospective buyer in the approved form before a contract of sale for the property is
entered into; and
(b) acknowledged by the prospective buyer in writing on the approved form before a contract for the
sale of the property is entered into.
(4) In this section
benefit means monetary or other benefit.
residential property includes a proposed home that
(a) is to be erected or constructed under a domestic building contract; and
(b) is being marketed in connection with marketing land.
residential property agent means
(a) a property agent; or
(b) a real estate salesperson acting for a real estate agent; or
(c) a person performing an activity in contravention of section 97(1); or
(d) a person acting as a property agent in contravention of section 97(2); or
(e) a person acting as a real estate salesperson in contravention of section 151(1).
The agent for the sale of residential property must disclose the following to any prospective
buyer of the property of any relationship, and the nature of the relationship (whether personal
or commercial), the agent has with anyone to whom the agent refers the buyer for
professional services associated with the sale; such as:
a family relationship
a fiduciary relationship
The agent must also disclose whether the agent derives or expects to derive any benefit from
a person to whom the agent has referred the buyer and, if so, the amount or value of the
benefit; the amount, value or nature of any benefit any person has received, receives, or
expects to receive in connection with the sale, or for promoting the sale, or for providing a
service in connection with the sale of the property. Examples of persons who may receive a
benefit may be:
finance broker
financial adviser
financier
property valuer
seller
solicitor
An agent should be cautious when making any referrals and, if in doubt, disclose. Some
agents may take the attitude that it is prudent not to make referrals but consumers expect
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this as part of the service. Modern real estate practice has become accustomed to delivering
a high level of integrated service to consumers. This includes assisting consumers to explore
a range of products and services relating to finance, conveyancing solicitors, architects,
decorators, designers, building inspectors and property maintenance providers.
The important issue is how this service is provided. If an agent is genuinely assisting a
consumer and making the appropriate disclosures, then all parties benefit.
Consumers should be advised to make their own investigations and to seek quotes from a
range of advisers or specialists to satisfy themselves a fair and competitively priced product
or service is being received. If the agent refers a buyer to a person for professional services
and the agent does not have any business or personal relationship with the service provider
and/or is not receiving any benefit, then that part of the PO Form 8 does not need to be
completed.
Any disclosure document should always be signed by an agent prior to disclosing information
to a consumer.
[15.8] Benefits received by any party associated with the transaction
The intent of the legislation is to reveal to a buyer, details of all parties involved in the
transaction, and to clarify exactly who may benefit directly or indirectly from the transaction.
The agent is required to disclose any benefit that will be received by a person or entity where
the benefit received does not relate to a referral. This includes a benefit received by any
person or company associated with the promotion or sale of the property, or who provides a
service in connection with the sale.
These benefits, persons and companies include:
Financial advisors. If a financial advisor works directly for the seller (usually a marketeer
or developer involved in an investment package), their fees and commissions must also
be disclosed. If the finance is packaged on sellers terms such as developers finance, the
name of the financier must be disclosed, and the amount of remuneration from the
transaction fully revealed to the customer on the PO Form 8 disclosure.
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It is a requirement under Section 165 of the Property Occupations Act that a seller must
ensure the proposed relevant contract includes the following conspicuously written words
to like effect;
The contract may be subject to a 5 business day cooling off period. A termination
penalty of 0.25% of the purchase price applies if the buyer terminates the contract during
the statutory cooling off period. It is recommended the buyer obtain an independent
property valuation and independent legal advice about the contract and his or her cooling
off rights, before signing
The seller must ensure the words are written in the contract once, immediately above,
and on the same page as the place in the contract where the buyer signs to indicate the
buyers intention to be bound by the contract.
This cooling off period applies to all residential property transactions other than those
sold under auction terms. A cooling off period will not apply to a contract formed within 2
business days after an auction, if the buyer was registered as a bidder for the auction.
[15.10] Coolingoff period for residential sales
The cooling-off period for residential sales lasts for five business days and ends at 5:00pm
on the fifth business day.
When calculating the five business day cooling off period the agent must ensure to include
the day, if it is a business day, on which the signed contract was given to the buyer, as day
one. For example, if a contract is signed, dated and given to the buyer at 9 pm on Monday,
then the first day of the cooling off period shall be that Monday and it will expire at 5 pm
Friday. If the contract is signed, dated and given to the buyer at 9 pm on Wednesday, the
cooling off period will expire at 5 pm on the following Tuesday (provided there are no public
holidays in the period).
The cooling off period will commence as soon as the seller, or their appointed agent or
solicitor, gives the buyer a copy of the signed and dated residential property contract if that
day is a business day.
The Property Occupations Act recognises that the date of notification, or withdrawal, shall be
the date and time that a faxed transmission has been forwarded, as per the provisions of
Sections 11 and 14 of the Electronic Transactions Act 2001(Qld).
Section 11 Requirement to give information in writing
(1) If, under a State law, a person is required to give information in writing, the requirement is taken to have
been met if the person gives the information by an electronic communication in the circumstances stated
in subsection (2).
(2) The circumstances are that
(a) at the time the information was given, it was reasonable to expect the information would be readily
accessible so as to be useable for subsequent reference; and
(b) the person to whom the information is required to be given consents to the information being given
by an electronic communication.
A buyer, under a relevant contract, who has not waived the cooling-off period for the relevant
contract may terminate the relevant contract at any time before the cooling-off period ends by
giving written notice to the seller indicating that the buyer terminates the relevant contract. If
notice of termination is given the relevant contract is at an end. The seller must, within 14
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days after the relevant contract is terminated, refund any deposit paid under the relevant
contract to the buyer less the amount of the termination penalty. An amount payable to the
buyer is recoverable as a debt.
Termination penalty, in relation to a relevant contract, is defined as an amount equal to
0.25% of the purchase price under the relevant contract. This penalty is intended to
discourage buyers from entering into simultaneous multiple contracts.
It is essential that the agent delivers a copy of the signed and dated contract to the buyer, or
their nominated representative or solicitor, as soon as the contract has been finalised. When
preparing contracts for the sale of residential properties, it is imperative that the date is not
inserted at the top of page one of the contract until all the parties have concluded
negotiations, and signed the contract. The agent then immediately conveys acceptance and
dates the contract.
[15.11] Buyers may waive or shorten the cooling-off period
A buyer who proposes to enter into a relevant contract may waive the cooling-off period for
the relevant contract by giving the seller under the proposed relevant contract written notice.
[15.12] Shortening the cooling-off period
Legislation makes provision for a buyer, under a relevant contract, to shorten the five day
cooling off period for a residential contract by giving the seller, under the contract, written
notice.
The circumstances whereby a buyer may wish to do this are:
where a high demand property may need to be secured by the buyer before another
buyer goes to contract
where a buyer just wants a certain sale and quick finalisation of the sale
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a. Encumbrance
b. Easement
c. Covenant
d. Caveat
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