Our firm recently acted for a client who had been the subject of an Office of Fair Trading Investigation as a result of a failure to properly identify a party to an agency agreement. This is a relatively ‘new’ area for agents, and we are surprised that many still do not understand what they are required to do.
The legislative requirement for a Licensee (defined as the holder of a licence) to properly identify a Vendor or Landlord prior to entering into an Agency Agreement is stipulated in Part 4, pages 7-8, The Secretary’s Guidelines for the Proper Supervision of the Business of a Licensee, also known as the Secretary’s Guidelines and Section 32(4) of the Property and Stock Agents Act 2002.
A Licensee may be issued a Penalty Infringement Notice, fine, $1100 for a Corporate Licensee or $550 per Individual Licensee per offence if they fail to properly identify parties to agency agreements.
Licensees are reminded to undertake the appropriate due diligence when identifying whether a person has the right to sell or lease a property by ensuring it has sighted (either an original or certified copy) and recorded primary and secondary documentation such as:
- Driver licence/passport/photo identification
- Council rates/water rates/strata rates
- Title searches
In some circumstances, the above information will not be enough to properly identify the vendor/landlord, therefore additional documentation may be required. OFT has provided us with the following guide:
- ASIC Report / Historical Extract for identifying Vendors/Landlords whom are company Directors of Corporate Vendors/Landlords when the property is owned by one or more Corporation.
- Enduring Guardianship documentation when the property in question is subject to guardianship.
- Family Law Court Orders when the sale of the property is subject to Family Law proceedings.
- Probate documentation when a property relates to deceased estate.
There is no requirement for an agency to keep the originals or certified copies on file but rather a record stating that they have completed the identification check. We recommend our clients use the form provided by OFT to assist in this process.
As always, if you have any questions, please do not hesitate to contact us.