Victorian Bills Explanatory Memoranda Victorian Bills Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
Estate Agents and Sale of Land Acts
(Amendment) Bill
Circulation Print
EXPLANATORY MEMORANDUM
General
This Bill amends the Estate Agents Act 1980 and the Sale of Land Act
1962 to curb dishonest bidding practices by vendors and disruptive conduct
by buyers' advocates at real estate auctions, to improve consumer protection
in relation to advertising rebates and other benefits paid to agents, and to
meet the Government's National Competition Policy commitments.
In particular, the Bill will amend the Sale of Land Act 1962 to prohibit any
person other than the auctioneer bidding on behalf of the vendor and to
require the auctioneer to announce that a bid made on behalf of the vendor is
a "vendor's bid". The Bill also removes the $250,000 cap in relation to the
right of a purchaser to cool-off under section 31 of the Sale of Land Act
1962. The right to cool-off will still not apply to auction sales and non-
auction sales of commercial, industrial or farming properties or where the
purchaser is a body corporate, a real estate agent or has obtained prior legal
advice.
The Bill will amend the Estate Agents Act 1980 to prohibit estate agents
from retaining monetary or non-monetary rebates, commissions or benefits
paid in relation to outgoings purchased by the agent on behalf of a client.
The amendments will require the benefit of these rebates to be passed on to
the consumers of estate agency services.
The Bill will also create new offences in relation to underquoting and
overquoting the value of real estate and will require estate agents to record
their estimated selling price on the authority or appointment form.
The Bill removes the uncompetitive practices identified by the National
Competition Policy review of the Act, including removing the restriction on
commission sharing, removing the restriction on agents' representatives being
employed by more that one estate agent and removing the requirement that at
least 50% of the directors of a corporation applying for an estate agent's
licence be licensed.
1
541290 BILL LA CIRCULATION 11/10/2002
The Bill inserts provisions that will require estate agents to give potential
clients specified consumer protection information and to undertake certain
additional training or professional development activities.
Clause Notes
PART 1--PRELIMINARY
Clause 1 sets out the purposes of the Bill.
Clause 2 provides for the commencement of the Bill.
PART 2--AMENDMENT OF SALE OF LAND ACT 1962
Clause 3 inserts a new Division 4 which applies to public auctions.
Section 36A states that for the purposes of Division 4 an auction
is a public auction if it has been publicly advertised.
Section 36B prohibits a vendor making a bid at a public auction
of land and prohibits a person making a bid on behalf of a person
knowing that person is the vendor.
Section 36C prohibits an auctioneer from accepting a bid if he or
she knows the bid was made by, or on behalf of, the vendor or
from acknowledging a bid when he or she knows that no bid was
made.
Section 36D prohibits a person procuring another person to make
a bid at a public auction that is contrary to section 36B.
Section 36E(1) allows an auctioneer, despite section 36B, to
make a bid on behalf of the vendor in specified circumstances.
Section 36F prohibits a person from falsely claiming to have
made a bid or falsely acknowledging that he or she has made a
bid.
Section 36G requires the auctioneer to make a copy of the
conditions under which the auction is to be conducted available
for inspection at the location where the auction is to be held by
any person attending the auction.
Section 36H requires the auctioneer as soon as possible after
becoming aware that the bidding has reached the vendor's reserve
price to announce that that price has been reached.
Section 36I enables a purchaser of land at a public auction to
make an application to the Victorian Civil and Administrative
Tribunal for compensation from any person who fails to comply
with the provisions relating to public auctions in Division 4,
2
except section 36L. An application for compensation must be
made within 2 years of the auction. The Tribunal may order a
purchaser to pay compensation to the vendor where the Tribunal
considers the purchaser's application to be frivolous, vexatious or
without substance.
Section 36J states that any auction conditions that are contrary to,
or that purport to restrict or modify, any requirement imposed by
Division 4 are void.
Section 36K applies where land has been passed in at auction and
the last bid was a bid made on behalf of the vendor. It requires
that any statement of the final price bid be accompanied by a
statement that that bid was made on behalf of the vendor.
Section 36L applies to a person intending to make a bid at an
auction or a person acting on behalf of a person intending to
make a bid at an auction of land. It prohibits the person from
hindering or harassing rival bidders or inducing rival bidders
from participating in the auction. It also prohibits the person
from doing anything with the intention of preventing, causing a
major disruption to, or to cause the cancellation of, the auction.
Section 36M enables the Governor in Council to make
regulations relating to public auctions of land.
Section 36N is a technical provision designed to overcome
possible legal difficulties resulting from the fact that some of the
provisions of this Division have both penalties and examples (or
notes) at the foot of the provision.
Clause 4 removes the $250,000 cap on a purchaser's right to cool-off at
any time within 3 business days of the auction. The removal of
this cap means that the right to cool-off will be extended to
purchases of land by private treaty with a purchase price
exceeding $250,000.
Clause 5 makes a minor amendment to take into account recent changes
concerning domestic building insurance.
PART 2--AMENDMENT OF ESTATE AGENTS ACT 1980
Clause 6 inserts new sections 47A to 47D.
Section 47A requires that, before obtaining a person's signature
on an engagement to sell real estate, an estate agent must ensure
that the engagement states the agent's estimated selling price.
This price must be a single figure and be the amount the estate
agent believes that a willing but not anxious buyer would pay for
the property.
3
Section 47B prohibits an estate agent or agent's representative
making a false representation to a seller or prospective seller as to
the estimated selling price.
Section 47C prohibits an estate agent or agent's representative
from stating, while marketing the property, an estimated selling
price that is less than the estimated selling price stated in the
engagement. The prohibition applies to marketing in an
advertisement or in relation to a written or oral statement to a
prospective purchaser.
Section 47D enables the Director, by notice in writing, to require
an estate agent to provide evidence of the reasonableness of the
estimated selling price recorded in the engagement.
Clause 7 inserts a definition of "rebate" in section 4.
Clause 8 inserts new sections 48A to 48E.
Section 48A prohibits an estate agent from retaining any rebate
received from another person in respect of any outgoings,
prepayments, or any payments made by the client to another
person, in respect of the estate agency work to be performed by
the estate agent on the client's behalf.
Section 48B(1) prohibits an estate agent from seeking to obtain
from a client an amount for expenses that is more than the
amount the agent paid, or will pay, for those expenses.
Section 48C makes provision for non-monetary rebates.
Section 48D provides for an increased penalty of 240 penalty
units where a person commits an offence against section 48A or
section 48B on 3 separate occasions within a 12-month period.
Section 48E entitles a person, where an estate agent fails to pay a
rebate, to recover, as a debt due, the amount of the rebate to
which he or she is entitled.
Clause 9 inserts in section 49A(1)(c)(iii) a requirement that a written
engagement or appointment of an agent to do estate agency work
must set out details of the rebates that the agent will, or may,
receive in the course of doing that work.
Clause 10 inserts new sections 95A to 95E. These sections will enable
infringement notices to be issued in respect of offences under the
Estate Agents Act 1980 that are specified by the regulations.
Clause 11 amends the regulation-making powers of that Act to enable the
making of those regulations.
4
Clause 12 substitutes, in the definition of "approved industry association",
the "Stock and Station Agents' Association Limited ACN 096
142 880" for its previous name "Victorian Stock Agents'
Association Inc". The clause also removes from the definition of
"estate agent" a person who compiles information or prepares
reports in relation to real estate transactions. The clause also
repeals the definition of "practising public accountant" in section
4 and inserts a definition of "approved auditor". The clause also
inserts definitions of "CPA Australia", "publish" to include
publish on the Internet and "registered education and training
organisation".
Clause 13 substitutes, in section 5(2), a new subsection (f) which takes into
account the repeal of the definition of practising public
accountant.
Clause 14 substitutes, in section 6(2)(d), the "Australian Society of Certified
Practising Accountants" with its new name "CPA Australia".
Clause 15 repeals section 6B(2)(f).
Clause 16 inserts new sections 10A, 10B and 10C.
Section 10A allows the Director to approve, by notice published
in the Government Gazette, a registered education and training
organisation to conduct prescribed courses of education for the
purposes of section 14 and section 16.
Section 10B allows the Director to prescribe, by notice published
in the Government Gazette, courses of education to be conducted
by a person wishing to audit an estate agent's trust account or to
be employed to assist in an audit.
Section 10C requires the notices to be laid before both Houses of
Parliament and to be published on the Internet.
Clause 17 inserts new sections 12A, 12B and 12C
Section 12A allows the Director to apply to the Magistrates'
Court for an order that an unlicensed person stop conducting
estate agency business or from disposing of property relating to
such a business.
Section 12B allows the Court to make a temporary order under
section 12A in specified circumstances.
Section 12C prevents the Court, in any application made under
section 12A, from requiring an undertaking as to costs from the
Director or any other person.
5
Clause 18 amends section 13(2) to make it clear that an agent's
representative cannot manage the day-to-day operations of an
estate agency office.
Clause 19 substitutes, in section 14(1)(c), the requirement that a person
applying for an estate agent's licence satisfy any requirements
establishing competency required by the Council with a
requirement that a person satisfy any requirements set out in the
regulations.
Clause 20 makes changes concerning the directors of corporations holding
an estate agent's licence. Sub-clause (1) replaces the
requirement, in section 15(1)(a), that not less than half of the
directors of a corporation applying for an estate agents licence
are licensed agents with a requirement that at least one director
be a licensed agent.
Sub-clause (2) removes the prohibition on an agent's
representative holding shares in the licensed corporation of which
he or she is an employee and makes other changes concerning
directors.
Clause 21 substitutes, for the requirement inserted by new section 15(1)(a)
that at least one of the directors of a licensed corporation be a
licensed agent, the requirement that a corporation is not eligible
to be licensed unless the officer in effective control of the estate
agency business is licensed. This provision will not come into
operation until 1 July 2005.
Clause 22 provides for a 30 day delay on the happening of an event that
would otherwise cause an agent's representative to become
ineligible to hold that position and changes the requirements
concerning police checks of people employed, or to be employed,
as agent's representatives.
Clause 23 repeals section 16C(4).
Clause 24 is a minor change to update the wording of the Estate Agents
Act 1980.
Clause 25 inserts in section 22 new sub-sections (2A), (2B) and (4).
These provide for the automatic cancellation of a corporation's
licence as an estate agent in specified circumstances.
Clause 26 inserts a new section 22A, which provides that where an agent's
representative, a licensed estate agent or a director of a licensed
corporation is convicted of certain offences, the conviction only
takes effect for the purposes of the Estate Agents Act 1980 once
all applicable appeal rights have expired or been exhausted.
6
Clause 27 makes changes concerning applications by the Director to the
Tribunal for the holding of enquiries to determine whether a
person has contravened the Sale of Land Act 1962.
Clause 28 substitutes, for section 29B, a new section 29B, that applies to a
licensed agent and an officer in effective control of a licensed
corporation, and inserts a new section 29C.
Section 29B sets out the duties of estate agents and officers in
effective control.
Section 29C prohibits a person involved in the management or
control of an estate agency business from preventing or hindering
another person from complying with a duty imposed on him or
her under section 29B. This section also prohibits a person from
inducing or procuring another person to contravene a duty
imposed on that other person by section 29B.
Clause 29 repeals section 30AA, as these duties are now provided for by
new section 29B.
Clause 30 inserts new section 31CA. This enables a corporation to apply to
be able to be granted, or to continue to hold, an estate agent's
licence even though it would otherwise be disqualified from
being granted, or holding, the licence
Clause 31 amends section 31D(1) to allow the Authority when considering
an application for permission by a corporation under new section
31CA to impose any conditions it considers appropriate to ensure
the ongoing public interest.
Clause 32 clarifies that the provisions relating to advertising, in section 42,
also apply to advertising on the Internet.
Clause 33 inserts a new section 45 that allows the Director by notice
published in the Government Gazette to require estate agents and
agents' representatives to undertake specified training and
professional development activities. The clause also inserts a
new section 45A that requires the notice to be laid before both
Houses of Parliament. New section 45C requires the notice to
also be published on the Internet.
Clause 34 removes, by substituting new section 47(2) and (2A), the
prohibition on an agent's representative being employed by
another estate agent, except where the agent's representative is
employed as a branch manager under section 30(2) or 30(3).
Clause 35 removes the prohibition, in section 48, on an estate agent sharing
a commission, but requires the estate agent to let clients know
that a commission will be shared.
7
Clause 36 inserts a penalty of 120 penalty units for a breach of sections
55(1), 55(3) and 55(5) and makes various other changes
concerning the purchase of real estate by estate agents from their
clients.
Clause 37 inserts, in section 59, a new sub-section (8) that states that the
requirement to deposit money received by an estate agent on
behalf of another person into a trust account does not apply to a
bond cheque from a tenant, made payable to the Residential
Tenancies Bond Authority, or to a cheque payable to another
person in prescribed circumstances.
Clause 38 inserts a new section 59A. Sub-section (1) states that the
requirements to deposit money into a trust account, under
section 59, also apply to a payment received by an estate agent by
electronic funds transfer where the estate agent cannot identify
the person who made the payment or the person who is entitled to
receive the payment.
Sub-section (2) requires the estate agent to deal with the money
under the Unclaimed Moneys Act 1962 if, at the end of
12 months after the payment was received, the estate agent has
not been able to identify the person from whom the payment was
received or the person entitled to the payment.
Clause 39 substitutes new sections 63(3) and 63(4) which state that an
estate agent is not required to retain a duplicate copy of a receipt
issued, in relation to a cash payment a payment made by cheque
or electronic funds transfer, if an electronic record of the payment
was made as soon as is practicable after the payment was made.
Sub-section (4) also states that an estate agent is not required to
issue a receipt in relation to a payment made by cheque or
electronic funds transfer in certain circumstances.
Clause 40 inserts a new section 63A which allows the Director to issue
directions in relation to the conduct of audits of estate agents'
trust accounts.
Clause 41 Sub-clause (1) removes the requirement from section 64(1) that
an estate agent's trust accounts be audited by "a person or firm
qualified as prescribed by section 66".
Sub-clause (2) inserts a new sub-section (1A) which prohibits an
estate agent from engaging a person or firm as an auditor if the
person or firm is not qualified under section 66 to act as the
auditor.
8
Clause 42 makes various changes concerning audits of estate agent's trust
accounts ordered by the Director.
Clause 43 makes various changes in relation to the audit of the trust
accounts of a business that ceased during the year.
Clause 44 inserts a new section 64C which requires an estate agent when
appointing an auditor, to require the auditor to conduct, during
each financial year, one unscheduled examination of the agent's
trust accounts without notice to the agent. The auditor must send
a report of the audit to the Director and the estate agent.
Clause 45 makes various changes concerning the qualifications of auditors
of estate agents' trust accounts.
Clause 46 substitutes, in section 69, new sub-sections (1), (1A) and (1B).
Proposed sub-section (1) removes the requirement that an estate
agent who did not receive or hold any trust money in a financial
year lodge a statutory declaration to that effect with the Director.
Instead, new sub-section (1) states that it is not necessary that an
estate agent comply with the audit requirements of sections 64
and 64B where the agent neither held nor received any trust
money during the course of the financial year.
Proposed new sub-section (1A) enables the Director to require an
estate agent to lodge with the Director a statutory declaration as
to whether he or she held any trust money during the period
specified in the notice from the Director.
Proposed sub-section (1B) requires an estate agent to comply
with a notice from the Director under sub-section (1B) within the
time specified by the Director in the notice.
Clause 47 makes various changes that are consequential on the insertion of
the new sections inserted by clause 48.
Clause 48 inserts new sections 70A to 70E. These sections make changes
concerning how the Estate Agents Act 1980 may be enforced
while ensuring that those enforcement powers are tempered by
provisions safeguarding the rights of the people with respect to
whom those powers may be used.
Clause 49 inserts, in section 91, a new sub-section (2) that creates new
offences where an agent's representative or other employee
fraudulently converts to his or her own use, fails to account for,
or fraudulently renders an account, for any money received or
held by him or her during the course of his or her duties or by his
or her employer. These offences are indictable offences and a
9
penalty of 500 penalty units or imprisonment for a maximum of
10 years applies for non-compliance.
Clause 50 amends the regulation-making powers of the Estate Agents Act
1980. Paragraph (a) inserts a provision which enables regulations
to be made requiring estate agents to give consumers information
about estate agency services.
Paragraph (b) makes a minor consequential amendment.
Paragraph (c) enables the making of regulations concerning
requirements establishing competency.
10