Real Estate Licence Categories and Appointing a Licensee in Charge

There are various classes of licences within the industry, including a class 1, class 2 or corporation licence.  This article outlines what functions you can perform under those classes of licences.

The Property and Stock Agents Act 2002 (NSW) (the Act) requires eligible persons to hold a real estate licence to perform real estate functions.  Those functions, as defined by the Act, include acting:

  • as an auctioneer of land;
  • as agent for a real estate transaction;
  • as a sales agent in a real estate transaction;
  • as a buyers agent;
  • as an agent providing property management services (including collection of rent) in respect of any lease.

License Classes

In order to obtain a licence, you must first hold a certificate of registration as an assistant agent for at least 12 months and obtain industry experience under the supervision of a licensee. The various license classes have been set out below:

Class 2 Licence

A holder of a Class 2 Licence holder may perform all the functions of a real estate agent, as defined in the Act, however, they cannot open or manage a trust account and cannot be nominated as a Licensee In Charge (LIC) of a business.

Class 1 Licence

A Class 1 Licence holder can perform all the functions of a real estate agent, as defined in the Act, and can be appointed as a LIC of a business.  Alternatively, they may work independently as a sole trader.

Corporation Licence

A corporation must hold a corporation licence to perform the functions of a real estate agent.  The corporation and each director must be a fit and proper person to hold a licence.  Importantly, at least one director of the corporation must hold a real estate licence, and the corporation itself must appoint a LIC to supervise the business.

It is important to note that assistant agents cannot enter into binding contractual agreements such as agency agreements.  Only Class 1 and Class 2 Licence Holders are able to sign Agency Agreements.  An assistant agent may, however, undertake, complete and sign inspection reports, provided that a Class 1 or Class 2 licence holder has ensured that the report and its contents have been completed properly.

Appointing a Licensee in Charge

Pursuant to Section 31 of the Act, a holder of a class 1 licence must be appointed to supervise all aspects of the business.

The LIC is responsible for supervising the business, and this may be done in many ways.  For example, a Principal Licensee (a corporation or an individual that employs a LIC of the business) can nominate one Licensee in Charge to be responsible for supervising the entire business. Alternatively, a Principal Licensee can nominate several class 1 licence holders to be LIC of different parts of the business (for example Sales and Property Management).  Finally, a Principal Licensee can nominate a LIC for different locations (for example branch offices).

Details of the LIC must be displayed at your place of business.

A LIC cannot act as LIC for more than one corporation, unless those corporations are in partnership.  This is not a traditional partnership, but rather a partnership for the purposes of the Act.

A LIC is not only responsible for supervising the business, they are also the only person that can authorise withdrawals from a trust account.

The Office of Fair Trading (OFT) must be notified of who is appointed as LIC.   OFT must also be notified if for any reason the LIC is temporarily unable to carry out their duties, and who will step into their place in the interim.

It is important that the Licensee in Charge familiarises themselves with their responsibilities and obligations pursuant to the Act and Supervision Guidelines.

Baybridge

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