Source: http://evelynolivares.com.au/learning-tools/legislation-update/
Timestamp: 2017-10-23 04:09:59
Document Index: 672864865

Matched Legal Cases: ['art 3', 'art 5', 'art 6', 'art 8', 'art 1', 'art 2', 'art 3']

Legislation Update - Evelyn OlivaresEvelyn Olivares
2017 Reforms – Proposed Changes to Property Industry
Visit NSW Fair Trading website and view changes here FAQ’s
Real Estate Leadership Evolves –
CPP Property Services training package i.e. real estate licensing is changing…
CPP50305– Diploma — CPP40307 Cert IV — CPP30211 Cert III
Plus Changes to the requirements for CPD expected late 2017.
Additional Training & Qualifications required
Certificate holders – entry level: people wanting to enter the real estate industry will be required to apply for a certificate of registration (including additional 3 units) i.e. 7 units from Certificate IV qualification.
A Certificate of Registration holder will need to upgrade to a licence within 4 years
License holders: people wanting to hold a full license in real estate need to complete a Certificate IV level qualification.
In addition, the reforms will also require an applicant (or certificate holder) to have 12 months’ practical industry experience before they being eligible to hold a full license.
Licensee in Charge– Applicants for the new ‘licensee in charge’ category will need to:
complete a diploma and have at least 2 years’ practical experience as an agent under the supervision of a ‘licensee in charge’,
hold a Certificate IV and an equal qualification in business management e.g. Diploma of Leadership & Management
Proposed CPD training for license holders is 6 hours pa and licensee-in-charge are required to do 9 hours pa.
This is made up of 3 hours “compulsory” topics… which will be decided each year by an industry advisory council i.e. legislation and industry trends etc. The remaining CPD hours (i.e. 3 or 6 hours pa) are “elective” but do include upgrading to a Diploma qualification.
It is expected that current certificate and licence holders may be able to continue to work with their existing qualifications as the reforms will include grandfather and transitional arrangements. However, others may need to do additional education and experience over a period of time. What that means is, in order to hold a senior management or licensee-in-charge role in real estate agents will need to complete at least the Cert IV in Property AND update their management skills to Diploma level.
Now is the time to do your research and make a decision on which qualification serves you best!
Real Focus offers a pathway to Diploma in Leadership & Management BSB51915.
You can begin your Leadership & Management journey by joining us at the next scheduled event for Leadership Evolves SYDNEY 29, 30 Nov 1, 7 & 8 Dec OR BALLINA 20, 21, 22, Sept 2017.
More crackdowns on underquoting – 2 more agents fined
Prediction for the 2017 Real Estate Industry
written by Evelyn Olivares
Over the past five plus years the real estate industry has been flourishing here in Australia.
How much more can we take with the highest prices ever?
Will those people wanting to enter into the real estate market ever be able to afford Sydney property?
Who knows… wouldn’t you love to have a crystal ball so you could predict the future.
It’s really tricky to accurately forecast what the market will do, but it’s always a good thing to consider what the future holds for the real estate industry. The experts speculate based on past trends and history of the industry and based on what we know the market has it’s up’s and down’s so 2017 and beyond will unfold as it will.
The Sydney Housing Bubble & Property Forecast
According to an article from the Dividend Investor the housing bubble we have been experiencing fits into similar patterns as previous housing bubbles, and, according to the experts we are likely heading into a recession.
There are many factors that cause the bubble, one of which is overzealous pricing, this occurs when we have buyers in the market place that are prepared to pay whatever price is asked just to get their hands on a property in our beautiful country… it seems people across the globe want to own property in Australia!
The truth is, bubbles eventually burst and the reality in real estate is the original buyer/homeowner starts holding onto their over-valued asset.
The Australian population is made up of the working class, middle class and those with more money than they can spend. Our population of course is multicultural and with that a lot on international wealth spent here in Australia. Real estate is the primary driver for wealth creation in all socio-economic classes because it’s a leveraged asset. Australian property lending is driven by banks and over the past few years has been like a runaway train… but it too must come to an end. 2016 showed a slower credit growth and properties began to slide and it’s anticipated that 2017 and beyond this will continue.
Watch that cliff of Foreign Investment in Australia
Foreign investors make up a huge chunk of buyers in theAustralian property market, in particular,’new construction’ in Sydney and Melbourne. Inflow of foreign funds into Australia is good for the economy, but, is this a good thing? Not necessarily! The inflow of foreign investment can cause distortion to our regulatory constraints… see the Dividend article for more details.
The Australian government have standards for developers for pre-selling property under construction. However foreign entrance in the market means construction can commence with almost no pre sale. Their goal is to sell completed projects in foreign markets where Australia residential apartment contain a “safe haven” premium.
The problem arises when construction supply becomes out of step with apartment demand. The market must then correct itself. Increase upcoming supply coupled with potential settlement risk and pullback in residential investment lending means that Sydney prices will be increasingly coming under pressure.
The Aussie Recession Survival Guide written by Greg Canavan – The Daily Reckoning Australia
What’s in-store for Real Estate Professionals during 2017
For many real estate agents the Sale of property listings make up 60-80% of their commission/income. Many real estate agents are starting to or, can already feel the pinch with less listings coming on to the market.
Take a look at the CoreLogic stats relating to this. New listings across Sydney are down by 20.6% compared to the same period last year. Sydney auctions recorded 18,619 where, 2015 recorded 25,399 auctions. That’s a 26.7% decline. We have been witnessing a clearance rate of around 80%+/-.
If you look at the Parramatta area for June 2016 there were just over 1600 properties listed for sale. July showed a drop of 47% according to local agents. The average commission for selling property is around 2%+/-On average there are 2.5 sales agents in each real estate office and probably earning only around $60,000+/- per annum. That’s not a huge income for the work that goes into listing and selling property. Agents still working or entering the real estate profession must go beyond the ordinary to make it or even stay in the business. Especially when you have organisations such as ‘PurpleBricks” offering vendors a flat rate of $4,500.
It does not need to be doom and gloom for those wanting to stay and thrive in the industry! If you would like to create some positive change and excel in the real estate industry then the next step you take is probably going to be the most important decision of your career.
visit RealFocus.com.au for more info
Purplebricks real estate UK
enters Australia at flat rate fee $4,500 for sale of property
read full article here… PurpleBricksUK
https://www.facebook.com/purplebricksUK/
Legislation changes from 15 Aug 2016
including pre-purchase property reports;
changes related to commercial property;
price offer requirements;
http://www.fairtrading.nsw.gov.au/ftw/About_us/Legislation/Changes_to_legislation/Property_reports_and_commercial_exemption_reforms.page#Exemptions_for_certain_commercial_property_agency_work_
NSW Fair Trading Review Training & Assessment for real estate
click here for details and an update including CPD training
Loose-fill Asbestos Register from 30 May 2016
From 30 May, tenants (and buyers) must be provided with an addendum accompanying the New tenant checklist (contract) to inform them about the new public register (to access the addendum, visit our New tenant checklist page).
https://www.facebook.com/search/top/?q=asbestos
View Loose Fill Asbestos Free Survey check document here => OFT Survey Loose Fill Asbestos valid until 1 August 2016
New Swimming Pool Legislation 29 April 2016
Agents – be aware of your responsibilities when selling property or managing rented property with pools in NSW, including spa pools.
Approximate costs of obtaining a pool compliance inspection certificate is around $199
Real Estate Agent found Guilty of FRAUD –
formerly Wiseberry Kellyville
Underquoting Laws & what it means to agents
New (2016) Underquoting Guidelines HERE
New (2016) Agency Agreement Fact Sheet HERE
“From 1 January 2016 agents will be required to provide their reasonable evidence-based estimated selling price to the vendor, update their estimate if it is no longer reasonable and to not advertise or make representations to buyers that is less than this estimate.
“If found to have breached the new underquoting laws, agents will face stronger penalties, including fines of up to $22,000 and risk losing their commission.
Tenancy Databases– Important rules applying to Listings
Rental bonds now online
read more from NSW Fair Trading here
Strata Laws – 8 Changes that will most affect apartment residents and owners
Article – Domain 17 July 2015
NSW Fair Trading Price Substantiation Guidelines
Underquoting Guidelines May 2015
Fair Trading Contact regarding guidelines Matt Dawson
NSW Fair Trading prosecutes Sydney leading agent for under quoting!
read the full story here 15 March 2015
NSW Fair Trading update on underquoting
Legislation Update 2015…
Click HERE for Fair Trading update 27 Feb 2015
The responsibilities of NSW Property agents have changed and were made known in September 2014 by Fair Trading. Changes include:-
warning sellers if a commission is payable even if they pull out of the sale
introducing unique identifying numbers to help Fair Trading monitor agents’ trust accounts and safeguard consumer funds
accommodating modern technology for records and communication
allowing a body corporate or association to obtain information about its invested money when the managing agent has not complied with their obligations
The new 2014 Regulations continues to outline the ethical and professional conduct of agents and a summary of the changes follows:
Fair Trading – Changes to PS&BA Act 1st September 2014
PS&BA Regulations 2014 –
Effective changes from 1 January 2015
Warning to seller – if agreement includes a term that a commission is payable
Schedule 8 (3) 10 (3) and 11 (3)
From 1 January 2015 if an agency agreement includes a term “commissions payable even if the sale of the property is not completed.
Warning: A commission is payable under this agreement even if the sale of the property is not completed
The reason for this change is to warn the seller of residential property, rural land or a business that the sales agreement contains a term that commission is payable even if they pullout.
That is to say… its been added to allow agents to include a charge in the agency agreement if the property does not sell because of the vendors actions after the agent has done all the work and got a buyer to the table. The agency agreement only needs the clause if the agent intends to charge for work done even if the property does not sell so if agents do not intend making such a charge they do not need the clause in their agreements.
Unique numbering Agent Trust account
Agents are required to use a unique identifying number issued by NSW Fair Trading for all general trust accounts.
From 1 January 2015, all licensees opening a trust account must apply to the Office of Finance & Services for a unique identifying number. Licensees must then provide that number to the bank at the time of making the application to open the account.
The reason for the introduction of the number is to ensure that banks are accountable for interest paid into the Statutory Interest Account and to safeguard consumer funds.
Accommodation of technology in real estate
Finally provisions have been included in the 2014 Regulation to enable agency agreements to be served electronically on a person and a body corporate if an email address is provided for service.
In addition, clause 5 of the 2014 Regulation (formerly, clause 9, 2003 Regulation) was amended to allow an itemised account to be requested and served electronically via email address specified in correspondence or otherwise (for instance, in the agency agreement).
These changes (although a little tarde parhaps), are now in place to account for the modern use of technology as a means of communication.
Also included in “modern technology-based clauses” of the 2014 Regulation, is clarification around backing-up and storing files.
“If the licensee is holding trust account information on a computer system, the licensee must ensure that either all records are backed-up as previously required or that records are backed up using cloud technology no less than once a month.”
Clause 31, 2014 Regulation deals with the signing of cheques and effecting electronic funds transfers for trust accounts (formerly, clause 33, 2003 Regulation). This clause allows the licensee-in-charge, who has authority to sign trust cheques or effect trust EFTs, to delegate that authority.
The reason for this clause; Delegation can now be made if the licensee-in-charge cannot sign the cheque or effect the transfer for any reason. Previously, it could only be made if the licensee-in-charge was sick, injured or absent for good reason.
Clause 36, 2014 Regulation (formerly, clause 38, 2003 Regulation) has been extended to apply to both body corporates and associations so that the Regulation deals with associations serving managing agents with a notice of resolution requiring them to provide specific information.
Managing agent to permit executive to inspect records.
This change ensures that a corporation or association can obtain information about the investment of its money invested.
For more information on update go to Fair Trading – Changes to PS&BA Act 1st September 2014
Well its now 2015 and the swimming pool compliance deadline is effective 29 April 2015. Are you and your staff aware of what is required of you as an agent? Yes? No? Ask yourself these few questions.
What is the compliance certificate?
If a property being sold or leased has a swimming pool or spa pool then effective from 29 April 2015 it must have a valid certificate of compliance or relevant occupation certificate. This includes any property with a swimming pool that is on the market before the deadline because the certificate must be annexed to the Contract for Sale and Purchase of Land. Properties cannot be advertised for sale or lease if a valid certificate is not in place.
Go to your local council or accredited private certifiers (holding category A1, category A2 or category A3 accreditation under the Building Professional Act 2005 or as prescribed by Swimming Pool Regulation 2008) registered with the Building Professionals Board can carry out an inspection and issue a certificate of compliance if the swimming pool or spa pool meets all the safety requirements.
“Swimming pools and spa pools” includes in ground, above-ground, indoor, portable and other types of pools and spa pools that are capable of being filled to a depth of 300mm or more of water. Bathroom spas that are used as baths and emptied after use are not included.
How can one check if a swimming pool already has a certificate of compliance?
The NSW Swimming Pool Register provides information on registered pools and whether a certificate of compliance has been issued. You can search the register by the property address. Go to www.swimmingpoolregister.nsw.gov.au
Is an Occupation Certificate adequate?
An Occupation Certificate that is less than three years old and that authorises the use of the swimming pool can take the place of a certificate of compliance. If such an Occupation Certificate is annexed to the Contract for Sale, the swimming pool registration certificate (created when the pool was registered on the NSW Swimming Pool Register) should also be provided.
How long does the certificate of compliance remain valid?
A swimming pool certificate of compliance is valid for a period of three years from the date of its issue.
Gain access to checklists here; http://www.swimmingpoolregister.nsw.gov.au/checklists
Fair Trading – Free help to negotiate tenancy problems (1 August 2014)
NSW Civil & Administrative Tribunal replaces the CTTT from 1 January 2014 http://www.ncat.nsw.gov.au
NSW Fair Trading – FRAUD Prevention Guidelines – PROOF OF IDENTITY CHECKLIST
http://www.fairtrading.nsw.gov.au/pdfs/Property_agents_and_managers/Real_estate_fraud_prevention_guidelines.pdf
NSW Fair Trading – Mandatory PERSONAL INDEMNITY INSURANCE (PI Insurance) Information sheet for licensed real estate agents
http://fairtrading.nsw.gov.au/pdfs/Property_agents_and_managers/Professional_indemnity_insurance_information_sheet.pdf
Family & Community Services – Boarding House Act 2012 Fact Sheet
http://www.adhc.nsw.gov.au/__data/assets/file/0003/262587/Boarding_Houses_Reform_Fact_Sheet.pdf
“Real Estate National License has been Discontinued”
Property Industry News from NSW Fair Trading
COAG made this decision following extensive State-based consultation and significant negotiations, which identified a number of concerns with the proposed NOLS model that could not be resolved without imposing significant additional costs for governments and affected occupations. A lack of stakeholder consensus on the benefits of the proposed model was also a significant factor in COAG’s considerations.
View the full article at www.coag.gov.au
The Letterbox Update from The NSW Office of Fair Trading dated 17 August 2011
Answers to your water efficiency questions AND new tenant checklist… click the link below to gain access to the OFT newlsetter
http://node1.enews.fairtrading.nsw.gov.au/online/18205028-19.html
Legislation – Residential Tenancies Regulation 2010 & Australian Common Law (TPA)
Residential Tenancy Act and Regulations 2010 (RTA2010 & RTR2010)
The Residential Tenancies Act (RTA) and related Residential Tenancies Regulation (RTR) was passed by Parliament on 10 June 2010. The Act and its associated Regulation commences 31 January 2011. (last updated by Real Focus on 18th January 2011)
There are more than 100 areas of reform in the new Act. The main changes include:
tenants will have least one fee-free way to pay their rent
the time to evict a tenant who has stopped paying rent will be cut by up to 18 days
red tape will be cut for landlords dealing with goods left behind
tenants will be able to make reasonable requests to make minor changes to premises or to sub-lease a spare room
landlords will be required to make premises ‘water efficient’ if they wish to charge tenants for water usage
landlords will gain the right to show premises to prospective tenants or buyers at least twice a week
landlords and their agents will be prohibited from knowingly concealing certain important information from tenants’
tenants will no longer be forced to have carpets professionally steam-cleaned when vacating premises.
For more details go to www.fairtrading.nsw.gov.au or , visit www.REINSW.com.au
Follow the link below to gain access to an electronic copy of the RESIDENTIAL TENANCIES ACT 2010
– fairly balance the rights and obligations of tenants and landlords
– modernise and update the law in line with current practices
– reduce the level of disputes, by providing greater clarity and certainty in the legislation.
KEY AREAS – Summary
Part 3 – Rights and Obligations of Landlords and Tenants
A Pre-Tenancy Holding Fee – cannot exceed one weeks rent
S. 24 of the Act permitsholding fees to be charged only after an application for tenancy has been approved.
Once it has been accepted, the holding fee will permit the agent to
hold the property off-the-market for up to 7 days
once held, there is no provision for refund to the applicant should they change their mind and not proceed with the agreement .
The current Act (1987); provides that the landlord may retain a reservation fee equivalent to the amount of rent that would have been paid for the period reserved … then if any refund the remainder to the applicant.
S.39 of the Act requires rented premises to be water efficient if tenants of separately metered premises are to pay for water. The standards for water efficiency will be determined when the regulations are made later this year. Landlords have 12 months in which to carry out any required work if they wish to continueto directly recover the cost of water usage from tenants.
S. 35 of the Act requires all tenants be given at least one free and easy option to pay their rent. Tenants will be required to pay the landlord’s costs for any dishonour fees.
Material Fact and information to be provided
S.27 (1) compels a landlord to provide their tenant with their telephone number or other contact details even if they have an agent.
S. 26 requires a disclosure of Material facts to the tenant; such as landlord has drawn up a contract for the selling of the property or, if a mortgagee has taken court action to recover possession
When selling of the property, the landlord must give a minimum of 14 days written notice prior to commencement of marketing.
The Act obliges the selling agent to make reasonable efforts to agree with the tenant on the days and times the premises will be available for inspection. A limit of two inspections per week is provided in the Act, and this can be negotiated by the two parties if more access is required.
Should the landlord and tenant fail to agree, S. 55 of the Act provides that the landlord can access twice per week without consentprovided 48 hours notice is given to the tenant on each occasion.
Determination of excessive rent
Under S.44 (4 ) and (5)[h] the income of the tenant or their ability to afford a rent increase are not relevantfactors for the Tribunal to consider in deciding whether a rental increase is excessive.
S62 Definitions of Urgent work and repairs now includes the addition of cooling
S. 66 of the Act gives a tenant greater flexibility to add fixtures or make minor alterations at their own expense, provided they obtain the landlord’s written consent. Where conflict arises or the parties fail to agree, S.68 provides the tribunal may adjudicate. Landlords will be able to reasonably refuse requests involving internal (painting) or external (structural) changes or work not reasonably capable of rectification, repair or removal later. The Act also clarifies the rights of the landlords to seek compensation where the work is not done to a satisfactory standard or will impact on the ability of the premises to be rentedin the future.
S. 75 of the Act gives tenants greater flexibility to sub-let part of the premises or bring in extra co-tenant, provided they obtain the landlord’s written consent. Landlords will be able to reasonably refuse such requests, on the grounds of the person is listed on a tenancy database; the number of occupants will exceed the number permitted in the agreement or lead to overcrowding. Other potential grounds, such as lack of references; income; history of violence, that could influence the landlords consent have not been defined in the Act.
Part 5 – Termination of Residential Tenancy Agreements
S. 100 The Act enables tenants to break a lease early without penalty in certain conditions, such as:-
– tenant accepts an offer of public housing
– tenant needs to move into a nursing home
– non disclosure of the landlord intention to sell the property
– occupant (previous or current) is prohibited by AVO from having access to property
The Act also introduces the concept of an optional ‘break fee’ of 6 weeks, fixing the penalty payable in other cases where the tenant breaks a lease early.
Where there is no break fee term in the lease, the tenant would be liable to compensate the landlord any loss.
The break fee for a fixed term agreement for a term not more than 3 years is an amount equal to 6 weeks rentif less than half of the fixed term had expired or an amount equal to 4 weeks rent in any other case.
Currently; Where there is no break fee term in the agreement the defaulting tenant is liable for compensation to the landlord for any loss (including rent) to the end of the fixed term and the landlord has an obligation to mitigate the tenant’s loss.
S. 85 of the Act increases the “no grounds” notice given to tenants who are no longer in a fixed term lease
i.e. increase from 60 days to 90 daysnotice. A tenantmay give21 daysnotice.
Currently; Agent must give 60 days notice. There is NO change from current position for tenant.
S. 84 of the Act states a landlord may end a fixed term agreement at any time before the end of the fixed term to take effect not earlier than 30 daysafter the day on which the notice is given. S. 96 provides the tenant may end a fixed term by giving 14 daysnotice
Current; the position for landlord is 14 days. There is NO change from current position for the tenant
Where the landlord/agent has given proper notice, the tribunals’ discretion has been removed whether to end the lease “without grounds”. There is now a greater certainty and clarity of possession through the tribunal where a tenant does not move out in accordance with a ‘no grounds notice.
However, S114 (1) provides that the Tribunal may suspend the operation of an order for possession of the premises for a specified period if it is satisfied that it is desirable to do so, having regard to the relative hardship likely to be caused to the parties by the suspension.
The Act will shorten the time it takes for a landlord to get their application heard by the Tribunalwhen thetenant is behind in rent.
S88 (4) provides that a landlord may apply to the tribunal for a termination order before the termination date specified in a non-payment termination notice. However, the Tribunal must not consider such application until after the termination date.
The Act also gives a guarantee to tenants that their tenancy can contribute if their rent arrears are paid or if they follow an agreed repayment plan. However, this guarantee may not apply if the landlord makes an application to the Tribunal for a termination order and Tribunal is satisfied that the tenant has frequently failed to pay their rent on time.
The notice must inform the tenant that the agreement is NOT required to vacate the premises if the tenant pays all the rent owing, or enters into, and fully complies with a repayment plan agreed with the landlord. Any warrant for possession issued as a result of an order for possession, ceases to have effect if the tenant pays all the rent owing or enters into and fully complies with a repayment plan agreed with the landlord and the tenant has not vacated the premises.
If a tenant repays all the rent or enters into and fully complies with a repayment plan, the landlord must notify the Tribunal if the landlord has applied for a termination order and the application has not been finally dealt with or the Sheriff if a termination order has been made and a warrant for possession has been issued but not enforced.
Part 6 – Recovery of Possession of Premises
S. 74 & S. 75 of the Act introduces new measures to resolve disputes between co-tenants or shared households, including domestic violence situations Victims of domestic violence (see S. 79). living in a rented property will have the right to change the locks and seek to take over tenancy if their name is not already on the agreement.
Tenant may vacate before the end of termination notice period.
Part 8 – Rental Bonds
S159 of the Act states that bonds are limited to the equivalent of 4 weeks rent for both furnished and unfurnished premises .
Currently; rental bond for furnished premises is the equivalent of 6 weeks rent & unfurnished 4 weeks rent
Service of notices or other documents
S. 223 permits landlords to serve notices directly to the tenants mail boxwhere the envelope is personally addresses to the tenant. This saves the additional 4 working days required when sent by mail.
End of RTA 2010 Summary… more detailed information follows below
FORMATION OF TENANCIES
Premises included – Section 6
The RTA 2010 applies to residential tenancy agreements in respect of residential premises whether made before or after commencement of the Act (S6 RTA 2010).
Premises not included in the RTA, includes certain leases relating to:-
Refuge & crisis accommodation | heritage items | St Patrick’s Estate Manly | Residential Parks Act | excluded life tenancies from the RTA 2010 | residential colleges associated with educational institutions (unless funded under Commonwealth National rental Scheme Act 2008 or the college & tenant agree it will be subject to RTA 2010
There is NO general exemption from the RTA 2010 for holiday homes. (The old exemption has gone!!!)
The agreement however, is not subject to RTA if it is made for the purpose of giving a person the right to occupy residential premises for a period of not more than 3 months for the purpose of a holiday.
If there is no general exemption for ‘short term’ rentals (i.e. short term executive rentals) to be excluded at all. What that means is… if there isn’t a purpose of a holiday, there must be a tenancy agreement.
New forms for tenancy agreement and condition report have been prescribed and are in draft format. The new forms can be purchased form your normal supplier (ie. REINSW, EAC etc).
Tenancy agreements may be express, or implied, be oral or in writing. However, the RTA 2010 2010 provides that a landlord under residential tenancy agreement must ensure the agreement is in writing at the commencement of the agreement. Where there is no agreement in writing at teh commencement of the tenancy then:-
rent must not be increased during the first 6 months if tenancy
the landlord is not entitled to terminate the agreement under S85 (termination of periodic agreement by 90 days no grounds notice) during the first 6 months of the tenancy.
Monies that can be taken
The only money a tenant is required to pay for before or when the agreement is made includes:-
1. Holding Fee 2. Rent 3. Bond (only taken when agreement is signed) 4.Registration Fee
A person must not require or receive from a tenant an amount for the costs of preparation of residential tenancies agreement S23(2). This is to say, agents can no longer charge the tenants a lease fee ($15)
Holding Fee vs Reservation Fees
A holding fee (RTA 2010) is not the same as a reservation fee (RTA 1987).
The RTA 1987 reservation fee, had the effect of preventing the landlord from letting the premises to someone whilst the tenants application was under consideration. If the application was refused, the tenant got the fee back. If the tenant was approved, but did not elect to proceed, they lost a portion of the fee. There is NO provision requiring proportional refunds in the RTA 2010.
The RTA 2010 holding fee can only be required or receive from a tenant whose application has been approved by the landlord. In effect, there is a slight loss of power on the part of the tenant as because the new provision means the property is on the market until lease is signed.
A holding fee must not exceed one weeks rent. Once a tenancy application has been approved and a holding fee is taken, a landlord must not enter into another agreement within 7 days (can be extended by consent) unless the tenant advises they do not wish to proceed.
Accepting a holding fee takes the property off the market as you now have an approved tenant. When the tenant pays the holding fee is must be paid toward the rent.
As with RTA 1987, the outgoing condition report is required to be completed in the presence of the tenant. However, it is not a breach of this section (RTA 2010, S29, Clause 19) if the agent has provided a ‘reasonable opportunity’ and the tenant is not present.
Note: it is recommended the agent document all appointment times and make notes in relation to all appointment or scheduled appointments. Agent must make every attempt to have the tenant present.
Prohibited terms in tenancy agreements
RTA 2010 now provides that tenancy agreements mist not contain certain terms.
That is to say, It is prohibitedthat thelandlord or agentadd any of the following terms to the agreement:-
have carpets professionally cleaned or pay cost of cleaning (except where the tenant has a pet)
take out specified or any form of insurance
exempting landlord from liability for act or omission by the landlord or their agent
breaching the agreement, the tenant is liable to pay rent (all or part). However there is in provision S107(2) RTA2010 regarding abandonment and S187 RTA2010 regarding orders that can be made under the CTTT following breach; for instance for the payment of money order or order as compensation
providing that if the tenant does not breach the agreement, the rent is or may be reduced or the tenant is to or may be paid a rebate of rent or other benefit.
Material Fact and Disclosure
NOTE: Material Fact as handled under PS&BA Act 2002 and RTA2010 are NOT the same.
S26 RTA2010 deals with:-
not making false, misleading or deceptive representations or promises;
not knowingly concealing a material fact;
requiring the disclosure of proposals to sell premises;
disclosing possession proceedings by mortgagees.
A landlord or agent must not “knowingly conceal” a material fact prescribed by RTR 2010. An agent must have knowledge of the material fact in order to be liable (S26 RTA2010). Penalty of breach $2,200 (200 penalty units).
Material facts under the RTA2010 are limited to those listed in Clause 7 of the RTR 2010.
The RTR 2010 prescribes the following material facts in relation to residential property:-
premises that have been subject to flooding or bush fire in the preceding 5 years
(if an event has not occurred – no disclosure is required)
premises subject to significant health or safety risks that are not apparent to a reasonable person on inspection of property (OFT example cases include asbestos or lead paint)
(if the risk is readily apparent to a reasonable person on inspection, disclose is not required)
premises has been the scene of a serious violent crime within the preceding 5 years
tenant is required to pay for council waste bins or domestic waste services
tenant will not be able to obtain a free residential parking permit
(areas where only paid parking provided)
Note on Holding Fee/Material Fact – An order to refund a holding fee can be made following a misrepresentation or failure to disclose a material fact. A tenant may also seek compensation for failure to disclose a material fact by making general application to the Tribunal under S187 RTA2010.
tenant must be provided with at least one easy means to pay rent which does not incur bank fees or other fees
tenant cannot be required to pay more than 2 weeks rent in advance. Tenant can if they wish to pay more than two weeks (e.g. tenant cannot be required to pay rent monthly)
landlord cannot knowingly appropriate rent paid by the tenant for the purpose of rent on other expenditure (e.g. rent can’t be used to pay water usage). Penalties apply.
Landlord must accept payment of unpaid rent even if they have tendered a non-payment of rent termination notice. Penalties apply.
Payment of rent by cheque, post no longer attracts the obligation to issue a receipt under RTA2010. Note however that any trust account requirements of PS&BA Act 2002 still applies.
Rent receipts must also now include “date up to which the rent is paid” S36(3)(d) RTA2010
Agent must keep in any form a rent record of rent received. Agent must with 7 days of a written request, provide a written statement setting out the rent record for a specified period.
Sale of tenanted property – S53
Sales agents must advise property manager and/or tenants the property is going on the market. This must be disclosed to tenants in writing 14 day prior to any form of advertising and the first scheduled open for inspection.
Failure to give 14 days notice might enable the tenant to obtain an order from CTTT restraining agent from conducting the OFI. Failure to disclose the pending sale 14 days prior also gives the right to the tenant to break the lease / vacate without penalty.
Once advised correctly, the tenant may not reasonable refuse access to the agent for open for inspections. Agents are within their rights to access the property up to twice per week once appropriate notice has been given. S43(3) RTA2010 also provides that rent can be reduced to offset the inconvcenience to tenants, but this is NOT mandatory.
If agreement cannot be reached under S53 RTA2010, then S55(2) enables the agent to gain access to the premises to show the premises to prospective purchasers “not more than twice per week, if the tenant is given not less than 48 hours notice”
Note: Access to rental property during tenancy … S55(2)(e) RTA2010 provides that after giving notice, the agent can “show the premises to prospective tenants, a reasonable number of times during the period of 14 days preceding the termination of the agreement, if the tenant has been given reasonable notice each time.
Water usage charges payable by tenant – S39
Premises must be compliant
In order for the landlord to recover water usage charges from a tenant:-
Premises must be separately metered, or water must be delivered to the premises that aren’t connected to a water supply S39(1)(a) RTA2010
Premises must contain the water efficiency measures prescribed by RTR2010 S39(1)(b) RTA2010
Clause 10 of RTR2010 prescribes the following standards regard water usage charges:-
All showerheads, internal cold water taps and single mixer taps on the premises (other than bathtub & appliances) must have a maximum flow rate of 9 litres per minute.
There must be no leaking taps on the premises at the commencement of residential tenancy agreement
Toilets are unaffected by these provisions. Garden taps are excluded. Installation and maintenance costs are at the expense of the landlord.
Recovery of water usage charges – provision of bills
In order to recover water bill costs:-
A copy of the water bill setting out usage charge must be provided to tenant
Tenant is given 21 days to pay the bill
If the landlord does not provide and request payment for the bill with 3 months from the date os issue of the bill, the usage is unrecoverable by the landlord i.e. landlord cannot hold onto then request a number of bills to be paid at once
As long as the landlord has sought payment within the 3 month period, the amount of the usage will continue to be recoverable if not paid by the tenant on time
Any rebate received by the landlord with respect to the tenants water usage or equivalent amount, must be passed on to the tenant.
Minor works without landlords consent
The RTA2010 retains the familiar obligation for the tenant to leave the premises in as near as possible the same condition, fair wear and tear excepted (where condition report has been completed).
The general rule in S66 RTA2010 is that there is no installation of fixtures & fittings and no making of renovations, alterations by the tenant without the landlord’s consent.
The major exception to the rule is S66(2) where it provides a landlord must not reasonably withhold consent to a fixture or to an alteration, addition or renovation that is of a minor nature.
If the landlord unreasonably withholds consent, the tenant can go to CTTT and seek remedy under S68 TRTA2010.
Reasonable refusal can include work :-
Involving structural change
Involving work that would not be reasonably capable of rectification, repair, removal
Internal or external painting
under any other law e.g. electrical, plumbing is illegal unless done by a licensed person
Upon receiving a request by the tenant, the property manager should consider:-
is the work minor?
If the work is minor, would the landlord consent?
If the landlord would not consent – is the proposed work excluded by the listed examples in S68(3) RTA2010
At the end of the tenancy there is still the obligation in RTA2010 for tenants to “undo” any minor works they might have received approval for (landlords can seek an order on the trenant for compensation where damage is present)
Tenancy and Sub Letting – S74 & S75
Transfer of tenancy or sub-letting generally
To transfer means to assign or transfer an interest in a tenancy from one person to another
At common law, a person who assigns or transfers a lease is still liable to the landlord, despite the transfer may still be liable, the agent may still pursue the original tenant
Sublet means to transfer part of interest in lease or premises. In a subletting situation, the original tenant retains an interest in the lease and stands between the landlord and the sub-tenant.
A tenant can transfer or sublet with the landlords consent.
Limitations on transfer and subletting – S75 (1) & (2) RTA2010
Tenants cannot transfer or sublease the entire tenancy and leave.
Landlords can reasonably withhold consent to transfer for a legal reason
Reasons to withhold consent include, occupants exceed number permitted; proposed tenant on tenancy database; landlord reasonably believes the premises would be overcrowded.
Do tenants have a say in any rearrangements of a tenancy?
Let’s say Jill and Jane 2 female flatmates lease a property. Jill wants to remain in the property but Jane wants to transfer her rights of the lease over to a man named John … the proposed new tenant /flatmate.
If Jill objects to the new proposed tenant John on the basis she wants another girl as a flatmate, does she have grounds? No, it appears the that Jill has no grounds upon which to object to the landlords choice of a new tenant. Jill’s best option is to make application at the CTTT on the matter.
Similar to the RTA1987 there is no general prohibition in RTA2010 to increasing rent during the fixed term, but the amount of the increase or method of calculating the increase must be set out in the agreement
Rent payable under a fixed term tenancy agreement exceeding 2 years, must not be increased more than once in any 12 month period
60 days written notice of the new rent and the date from which it will become payable is still required regardless of the length of the term and regardless of whether a rent increase clause is contained in the agreement
Notice must be given even if details of the rent increase are set out in the residential tenancy agreement
Notices of rent increase may be cancelled or varied so as to reduce the increase by a subsequent written notice to the tenant, taking effect from the date on which the earlier notice was to take effect
A new provision in the RTA2010 is that notice is of increase in rent is not required if the ‘increase’ is due to the fact a temporary reduction was in place i.e. rent reduction to compensate for inconvenience caused by inspections by potential property purchasers has ended and the rent return to the previous level
RTR2010 prescribes that tenants must with 30 days after notice of increase has been received make application for an order that the rent is excessive
Goods left behind – S126 – 135
After vacant possession given or abandonment
Perishable goods and rubbish can be disposed of immediately
Landlord must give the former tenant notice in writing, by post to the last forwarding address, or orally
(in person or over the phone)
Notice must provide that the goods left behind will be disposed of after 14 days (for goods) or 90 days (for personal documents) unless they are claimed by the tenant from notice was given.
If notice cannot be given by one of the above methods then a notice can be posted on the residential premises in a prominent position
If the quantity of goods left behind is sufficient to prevent the landlord from renting the premises, the landlord can charge an occupation fee for each day the goods are unclaimed
The occupation fee cannot be charged for a period of more than 14 days, and cannot exceed the rent which would otherwise have been payable.
Goods can be moved to storage, but storage costs are not expressly permitted to be claimed, but they may be part of the reasonable costs of sales if the goods are sold later
If goods are not claimed within 14 days, they can be disposed of by selling them or by disposing of them in another lawful manner. A record of goods sold must be kept.
Reasonable costs of sale of goods and any occupation fee can be deducted from the proceeds of sale, but the landlord/agent must then account to tenant for the balance
Personal documents can be disposed of by returning them to the issuing authority (returning drivers license to RTA). Personal documents must NOT be disposed of in a way which results in personal information about tenant becoming publically available.
Landlords/agents can seek directions from CTTT about goods left behind and should strongly consider doing so.
There is no longer any requirement to place newspaper advertisements.
Part 1 – TERMINATION BY LANDLORD
New methods of termination notices for individuals include:-
Addressed in an envelope and leaving it in the mail box at the persons residential or business address
Delivering it in person to anyone apparently above the age of 16 years at the persons residential or business address
Sending it by post addressed specifically to the person
Sending it by facsimile
If there is more than one landlord or tenant under the residential tenancies agreement a notice is considered served when it is served on all tenants of landlords
Service on companies is essentially personal service, service by post, or by fax. It is recommend that multiple methods of serving be used e.g. fax, letter etc. If notices are posted, then the normal 4 day rule for delivery applies. Always maintain evidence of you serving of notices.
End of fixed term – S84
A notice period which must be given by the Landlord has increased from 14 days to 30 days.
There is however greater certainty of repossession if the tenant does not vacate. CTTT must take a termination order (and an order for possession) where a valid termination notice has been given and the tenant has not vacated. Applications for termination orders must be made within 30 days of the date specified in the termination notice
Termination of periodic agreement – S85
The notice period under RTA 1987 for “no grounds” was 60 days. The RTA2010 period is now 90 days.
Landlord needs to give 90 days ‘no ground’ notice
If tenant does not vacate, the landlord can make application (within 30 days of the termination date specified) to the CTTT for termination and possession
If notice was given and is valid and the tenant has not vacated, the CTTT must make a termination order and an order for possession
As with RTA 1987 the RTA2010 prescribes:-
The contract must provide vacant possession
The contract must be entered into
30 days notice must be given, and notice can’t be given during a fixed term
The important thing to remember here is that if the premises is tenanted, you must give the tenant 14 days notice in writing before advertising the property for sale or taking prospective buyers through the property. Otherwise the tenant can break the lease without penalty and you may be held liable for compensation to the owner/landlord.
If the cooling of period is to be extended by consent make sure you discuss with your vendor/landlord a sufficient settlement period enabling the termination notice to be issued in good time.
A landlord can give a termination notice following the breach if the agreement. Not earlier than 14 days after the day in which the notice was given.
Notice can be given during a fixed term or during periodic term. The landlord can enforce the notice by application to the CTTT within 3 months of the termination date in the notice.
Where the tenant pays up the rent before or on the day of the hearing, the CTTT may refuse to make the termination order
Termination notice for non payment of rent – S88 & S89
A termination notice solely based on failure to pay rent is now called a ‘non-payment termination notice’.
Tenants still must be 14 days in arrears before a notice can be issued. Maintain records and evidence if tenant is frequently behind in their rent, this may be an important factor when seeking termination.
A formal demand for rent does not have to be given bedfore giving a non-payment termination notice.
If the tenant pays all rent owing, or enters into and complies with a repayment plan agreed to the then CTTT must not make a termination order. However, after lobbying by the REINSW a new section 89(5) was inserted into RTA2010 allowing the CTTT to make a termination order despite the tenant’s payment of arrears, if it is satisfied that the tenant has frequently failed to pay rent owing, on or before the day set out in the residential tenancies agreement.
Serious damage or injury by tenant or other occupant – S90
Still requires an application to the CTTT. No termination notice is required.
Can be damage caused by occupant or other tenant
Includes common property and damage to neighbouring properties
Class or persons that can be injured has been increased to include landlord, their agent, their employees or contractors, or occupiers or person on neighbouring properties
Termination notice is not now necessarily immediate, but can be
Use of property for illegal purposes – S91
Defines illegal uses in greater detail (mainly in relation to drugs)
For any other unlawful purpose can also justify the termination
Termination of residential tenancy agreement for threat, abuse intimidation or harassment
S92 is directed specifically at conduct by tenants towards landlords their agents, employees and contractors
The conduct required is that the tenant must have “seriously or persistently threatened or abused” or caused or “permitted any such threats, abuse or conduct” or
They intentionally engaged or intentionally caused or permitted another person to engage in conduct in relation to any such person that would reasonably likely to cause the person to be intimidated or harassed
Termination can be immediate. No termination notice is required. Can be during fixed term.
Hardship to landlord – S93
As with RTA 1987 if the landlord would be in specific circumstances suffering undue hardship if the residential tenancy agreement were not terminated, then the agreement could be terminated.
The landlord may be required to pay compensation to the tenant if the tenancy is terminated . The tenant must take all reasonable steps to mitigate their loss.
No termination notice is required. Termination can be in fixed term
Termination of long term tenancies – S94 (new concepts)
Where a tenant has been in continual tenancy for more than 20 years and the foxed term has expired, the Tribunal may take a termination order following an application by the landlord. A landlord just needs to make application
The Tribunal must be satisfied that it is appropriate, in the circumstances of the case to make the order.
Termination must not be before the end of foxed term.
An order for vacant possession must not be earlier than 90 days after termination order is made
Note: this section is new so it is recommended that property manager s bring to the attention of the principals any tenancies that are approaching 20 years as regaining possession may become more difficult after 20 years.
Occupants remaining in residential premises – S95
This section applies where occupants remain on premises after the tenant/s depart
When regaining possession, notice must be given 14 days prior to vacate date. If the occupants do not vacate, landlords can apply for possession order from CTTT.
Occupants cannot be locked out in such circumstances
Where it appears the tenant has abandoned the premises, property managers may need to formally apply for an order under S106 RTA2010 that a tenant has abandoned the premises at the same time as seeking to evict the occupants to ensure full compliance with this section
Occupants can also apply for an order under S77 RTA2010 to be recognised and a tenant and seek to remain in the premises
Part 2 – TERMINATION BY TENANTS
End of fixed term agreement – S96
Remains the same as S60 RTA 1987
Must give not less than 14 days notice
Must be given by the tenant up to or including the last day of the fixed term
Note: If a tenant receives an end of fixed term termination notice from the landlord, the tenant is not able to give vacant possession at any time prior to the end of the tenancy, and pay rent only up until the date of vacant possession pursuant to S110(2) RTA2010. Clause 11 of the RTR2010 provides an exception to S110(2) RTA2010. This means the landlord can enforce payment of rent for the entire fixed term regardless of when the tenant gives vacant possession. Clause 11 was an REINSW amendment.
Termination of periodic agreement by tenant – S97
As with S59 of RTA 1987 the tenant is still only required to give 21 days ‘no grounds’ notice.
(the Landlord must give 90 days notice)
If a tenant receives a 90 days ‘no grounds’ notice from the landlord, the tenant is not required to give a
21 days notice in reply. They can simply give vacant possession at any time prior to the end of the 90 days and pay rent only up until the date of vacant possession
Breach of agreement – termination notice by tenant – S98
A tenant can give a termination notice for an alleged breach of the tenancy agreement by the landlord. However the tenant can also apply for a termination order, without giving a termination notice, by applying directly to the CTTT under S103 RTA2010.
The termination date must not be earlier than 14 days after the notice is given
Notice can be given during a fixed or periodic term
A landlord’s right to challenge the tenants termination notice for breach, by applying to the CTTT is now much clearer. The period prescribed by the RTR2010 for the making of an application by a landlord for the revocation of a termination notice given by a tenant is within 7 days after being served with the termination notice.
Rent increases during long-term fixed term leases – termination notice by tenant – S99
A long term, fixed lease is one with fixed term of more than 2 years
If the rent is increased, the tenant may give a termination notice, without penalty – even though the method of rent increase or amounts may have been included in the residential tenancies agreement
The tenant must give not less than 21 days notice and must give notice before the increase takes effect
The tenant may terminate during the fixed term
Early termination without compensation to landlord – S100
This section contains new concepts. A tenant can break a fixed term agreement, without penalty in the following circumstances:-
tenant accepts an offer of accommodation in public housing
tenant has accepted a place and is moving into an aged care facility or nursing home
landlord has placed the property of the market for sale, or is intending to sell and this is not disclosed by the landlord/agent to the tenant (see S26(2) RTA2010
the co-tenant or occupant (previous or current) is prohibited by an AVO from having access to property
The tenant must give a termination notice to the landlord and must give 14 days notice
Termination by co-tenant of own tenancy – S 101 (new concepts)
a co-tenant can now terminate a periodic agreement
they must serve a termination notice on the landlord and any other co-tenants
not less than 21 days must be given
provided a valid notice has been given, the so tenancy will end when the vacant possession is given
if one co-tenant gives notice, a remaining co-tenant can apply to the CTTT dor an order terminating the tenancy. Alternatively, they could give notice themselves (21 days no-grounds notice)
Termination of agreement or co-tenancies Tribunal – S102 (new concepts)
co –tenancy can apply to CTTT for orders terminating each other’s tenancies or the entire tenancy itself
an application can be made during the fixed term
a co-tenant could have their tenancy terminated following an application by another co-tenant and could also potentially be liable to pay the break free fee if the tenancy is terminated during a fixed term
S174 RTA2010 also provides that remaining tenants may be required to pay out the departing co-tenants share of the bond, unless an AVO is involved, in which case the person subject of the AVO has no right to repayment of their share of the rental bond
A landlord must be given notice by CTTT of any application by a co-tenant under the section and the landlord has a right of appearance in the CTTT
Breach of agreement – termination by Tribunal – S103
Similar to the old S70 RTA 1987
In the previous Act, the test was whether the termination should be made given the special circumstances of the case e.g. exceptional circumstances. Thsi section requires the CTTT to just consider the ‘circumstances of the case’ which is a lower test.
To terminate the tenancy agreement, the CTTT must be satisfied that the landlord has breached the tenancy agreement and the breach is, in circumstances of the case, sufficient to justify termination of the agreement. It can be made during fixed term.
Some factors the CTTT can (but not limited to) take into account includes:-
Steps taken by the landlord to remedy breach
Steps taken by tenant about the breach
Previous history of the tenancy
The CTTT can refuse to make an order if the landlord has remedied the breach.
No termination notice is required – the tenant can go straight to the CTTT
The CTTT can make a variety of orders under S178 RTA2010
‘specific performance orders’ can still be made by the CTTT
Orders as to payment of compensation can be made by the CTTT
Orders to restrain a breach can be made by the CTTT
Orders to remedy a breach can be made by the CTTT
Orders to require rent to be paid to the CTTT, instead of the landlord, to be paid remedying a breach or towards compensation can be made
Tenants cal also seek termination by a different method without involving the CTTT (see S198)
Hardship to tenant – fixed term agreements – S104
The process is essentially the same under S69 RTA 1987
The section now expressly applies to fixed term agreements
The test is “that the tenant would, in the special circumstances of the case, suffer undue hardship if the residential tenancies agreement were not terminated”
A tenant may be required to pay compensation to the landlord if the tenancy is terminated and the landlord must take all reasonable steps to mitigate their loss
The amount a tenant may be required to pay to the landlord is capped and must not exceed the amount of a break fee under S107 RTA2010. This is contrasted with S93 where the tenant’s loss is not capped
Termination by Tribunal on landlords application after termination notice given by tenant S105
Where a tenant gives a termination notice, does not revoke it before the termination date and does not subsequently give vacant possession, a Landlord can apply to the CTTT to make a termination order.
Abandoned Premises – S106 & S107
Similar to the same section in RTA 1987 the tribunal can make an order that premises have been abandoned on a specific day.
Possession may be immediate where unoccupied or where tenants remain they must be given 14 days.
What was to be a compulsory fee is now voluntary thanks to REINSW lobbying. This enables Landlords and tenants who, by agreement, wish to be bound by a break fee regime following abandonment to ‘opt-in’ to such a regime rather than be compulsory.
The break fee is 6 weeks rent for abandonment in the first half of the fixed term and 4 weeks rent for abandonment in the second half of the fixed term.
The regulations are able to cap the break fee for residential agreements over 3 years, but no maximum amount is currently prescribed. Accordingly the break fee for tenancies over 3 years is as above, or the amount agreed by the parties in the agreement.
Part 3 TERMINATION BY EVENTS
Death of Tenant – S108 (new provision)
Following the death of a sole tenant, either landlord of the legal person representative of the tenant may give notice to terminate tenancy
Termination may be given during fixed term
If the landlord serves a termination notice, the estate of the deceased tenant is not liable for rent after the legal personal representative delivers up vacant possession of the premises to the landlord.
Property manager must sight the authority of anyone purporting to be the legal representative of the tenant
Agreement frustrated – destruction of, uninhabitable premises – S109
Much the same as in RTA 1987 the termination notice can be given during the fixed or periodic term
Termination may be immediate
There is no express right within the section to allow a landlord or Tenant to apply to the Tribunal to enforce the termination notice
Tenant’s liable for rent after service of termination notice – S 110 (new provision)
Once served with a termination notice, or once the tenant has received a termination notice to the landlord, a tenant can give vacant possession prior to the termination date specified in the notice.
A tenant is only liable for rent up until they give vacant possession
This applies to all termination notices, including termination notices for termination or periodic tenancies for
‘no grounds’ – tenant is no longer required to give 21 days’ notice after being served a ‘no grounds’ notice. They can just give vacant possession and pay to that date. A landlord is therefore not guaranteed a minimum of 21 days rent during a ‘no grounds’ notice period as is currently the case.
30 days notice – 30 days free rent – when the mortgagee is taking possession of the property
END of Residential Tenancies Act 2010 update – this information is posted for clients and visitors to our website and should be used as a guide only. For more details on the Residential Tenancies Act 2010 and other legislation noted here on this webpage you must undertake your own research at www.fairtrading.nsw.gov.au. and other goverment related websites.
Business and the ACL – One law for all Australian businesses
From 1 January 2011, Australian businesses – wherever trading in Australia – will operate under a single, national consumer law: the Australian Consumer Law (ACL). The ACL replaces different national, state and territory laws that set out consumer rights and business obligations when selling goods and services.
Legislation – The Australian Consumer Law
The full text of the Australian Consumer Law (ACL) is set out in Schedule 1 of the Trade Practices Amendment (Australian Consumer Law) Act (No.2) 2010 .
TPA Trade Practices Amendment (Australian Consumer Law) Act (No. 2) 2010
Following the assent on 13 July 2010 of the Trade Practice Amendment (Australian Consumer Law) Bill (No.2) 2010 (the Bill), the TPA has undergone more than just a name change.
The provision under the TPA prohibiting misleading and deceptive conduct is maintained but now applies to a person rather than a corporation. This reflects the current wording of the Fair Trading Act 1987 (NSW) and demonstrates the harmonisation objective of the new ACL.
The ACL retains the current TPA prohibition of unconscionable conduct. Although the concept of unconscionable conduct is not defined in the new law, the Bill provides a non-exhaustive list of the types of conduct that would fit this category for B2C as well as B2B dealings. Unconscionable conduct now applies to a wider class of persons.
Amendments to the Trade Practices Act are now in place and the fines of up to and including
$1.1 million for companies and up to $220,000 for individual agents
that underquote, use dummy bidders at auctions and airbrush photos of properties.
If there is suspicion that there is a problem in relation to a particular auction or in relation to a particular agent, agents can be issued with a substantiation notice. “That is a notice to the agent to say ‘please substantiate your claim that this property was for sale’ for example at $500,000 when we may have reason to believe in fact the reserve price was $600,000.”
If you influence a client under misleading conduct deliberately or inadvertently there is a major risk attached to the end result… eg a commercial agent must ensure that measurements for letting floor area, floor loading capacities for industrial, loading door heights etc are accurately represented… for residential the major risk factor is overpricing and underquoting LSP to buyers for example whatever business you are in you have a legal obligation of a
Duty of Care is owed to anyone who is likely to be affected by your acts or omissions in relation to your professional services. A breach can lead to action under law of negligence (law of tort)… you are liable in common law if someone suffers as a result of your breach of professional duty.
P&P and Risk: You must have on place a greater standard of care then the seriousness of an injury or financial loss… therefore you need in place policies and procedures … strategies to lessen the likelihood of the risk or event happening… Remember Murphy’s Law”!
Some of the likely risks a real estate should consider include:-
everything you say and do in professional transactions
fraud, theft, public liability, OH&S – Accounting … Trust accounting
legal risks, professional risks, personal risks… MA & Valuations
When selling businesses be careful to check turnover, figures and potential of the business… Be sure you warn the prospective purchaser to seek their own independent advice, options and financial records.
In commercial Leases you should know exactly what the net lettable area is. You will need the lessor’s consent for any alterations or improvements the lessee may want to make to the property. Commercial leases should be drawn up by a solicitor.
Only registered valuers can give a valuation (should be within 10%). Real estate agents can only give an opinion of market worth as a MA or MO
AFS (Aust Financial Services) license – The Corporations Act 2001 requires people providing financial services to hold an AFS license (unless exempted or working under supervision of a licensed AFS license). You need an AFS license if you:-
deal in financial product
products such as super, insurance, mortgage or investment strategies (financial planning). ASIC is responsible for administering the Corp Act so application is made through ASIC.
Secret Commissions – an agent can only accept a fee, benefit or gain from the client who employed them. Anything else must be disclosed to the client and approved by them before the contracts are entered into.
Conflict of Interest – working for gain on both sides of the deal.
S47 Must disclose the nature of relationship the agent has with vendor and whether they derive any consideration (money) or benefit they would receive. eg. family, business relationship, fiduciary relationship, employee etc. Examples of people who may receive benefits include, seller, finance broker, property valuer, solicitor real estate agent and disclosure is only effective if given to the person in the form of OFT approved form and acknowledged before the contract of sale is entered into
The Solution If someone threatens to sue, Stay calm, do not get defensive, do not admit liability, document the complaint and all pertinent details noting them in the complaints register, notify employer, notify your PI insurance company. Have excellent P&P systems and checklists in place; Continually train your staff and keep them aware of risk principles; Instill a culture of “knowledge is power” within your business; strive to exceed customers expectations; be enthusiastic about what you do