Each week, national law firm Simpson Grierson answers commercial property questions which can be emailed and headed "prime asset question". This week's question is answered by senior associate Dan Kelleher and solicitor Brock Colville who can be contacted at daniel.kelleher@simpsongrierson.com and brock.colville@simpsongrierson.com
Q. I have read a number of articles over the last few weeks about the new Real Estate Agents Act. I buy and sell a number of properties each year and come into contact with a large number of real estate agents. One of the articles I read mentioned a new Code of Conduct for real estate agents. What is this code and what does it mean for me in my future dealings with real estate agents?
A. The real estate industry has recently undergone some major changes as legislation from 2008 has come into force. One of these pieces of legislation, the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2009, has introduced a compulsory code of conduct that will be monitored by the newly setup Real Estate Agents Authority (REAA).
The code sets out the standard of professional conduct and client care required of real estate agents, branch managers and salespersons. It applies to all aspects of real estate agency work.
The stated reasons for implementing the code relate to the promotion of public confidence in the real estate industry. There were some concerns that the previous regime was self-regulatory and complaints were not being dealt with in a way that provided a fair outcome. The ability of the REAA to provide independent oversight of the real estate industry is hoped to protect the interests of consumers.
The code covers the following:
Standards of professional competence and conduct.
* Reporting misconduct or unsatisfactory conduct.
*Awareness of duties and obligations under the act.
*Client care and dealings with customers.
*Obligations to provide information about complaints.
Included in the code is the requirement that real estate agents must disclose known defects in the property to a consumer.
The real estate agent is not required to discover hidden or underlying defects in the property but the code does impose a further requirement on real estate agents depending on their knowledge and experience. If an agent, because of their experience, should have known of certain issues they must disclose those to a potential buyer. A real estate agent acting for a vendor must not continue to act for someone who instructs them to keep any knowledge of any defects quiet from potential buyers.
It is not only consumer awareness that is targeted. Real estate agents are encouraged to be aware of their duties and obligations under the code by various different measures. The code must be displayed in a prominent place in every real estate office and be available to anyone on request.
An employer of real estate agents must ensure that their employees are familiar with relevant legislation and the code. The employer must also ensure that their employees are aware of and not prevented from taking any opportunities for further training as required by the REAA.
However, the code is only a set of practice rules and is not an exhaustive statement of the conduct expected of real estate agents. Disciplinary action can be taken by the REAA for any misconduct even though the action resulting in that misconduct is not contemplated by the code. The conduct provided for in the code is the minimum standard expected and can be a reference point for the REAA when disciplining a real estate agent for misconduct.
On this point, an interesting rule in the code is that a real estate agent must not engage in any conduct that would put a client or prospective client under "undue pressure". On a practical level, it will be interesting to see the extent and type of behaviour resulting in a decision by the REAA that a real estate agent has exerted "undue pressure" on a client.
It is apparent that the conduct may not have to be directly with the client to breach this rule. A real estate agent could exert undue pressure on a client through their interaction with a third party.
The information contained in Commercial Property is intended to provide general information in summary form current at the time of printing. The contents do not constitute legal advice and should not be relied on as such. Specialist advice should be sought in particular matters.
