2021 in Review
December 13, 2021
Off-the-Plan Contracts
February 4, 2022
Agent Disclosures
Almost on a daily basis, the trainers at ACOP are asked questions relating to various requirements for disclosure of information. In order to address the issue of conflicts of interest, the NSW Property and Stock Agents Act 2002 (the Act), requires that agents provide disclosures in a prescribed manner for the following areas:
- financial and investment advice
- relationships that the agent has with anyone to whom the agent refers the client for professional services associated with the sale or purchase. Such professional services may include finance broker, financial advisers, property valuers, legal practitioners, other agents.
- any payment that the agent may derive, or expects to derive. Section 47(1)(c) of the Act, states that the disclosure must include the amount, value or nature of any benefit of which the agent is aware that a person to whom the agent has referred the client or a prospective buyer has received, receives, or expects to receive in connection with the sale, or for promoting the sale, or for providing a service in connection with the sale of the land.
Disclosures include family relationships, business relationships, fiduciary relationships.
Furthermore, Section 50 of the Act refers to advertisements and states that all advertisements must include information about the licensee. Section 50(2) states that:
A licensee who has a relevant interest in the sale of real or personal property must not in the course of carrying on business as an agent on the sale publish or cause to be published an advertisement relating to or in connection with the proposed sale of the property unless the relevant interest is disclosed in the advertisement.
Section 50(3) goes further to define “relevant interest” as:
(a) the licensee has an interest in the property as an owner of the property, or
(b) the licensee is a corporation and a director of the corporation is an owner of the property, or
(c) the licensee is a director of a corporation and the corporation is an owner of the property.
In all of these situations, all advertisements relating to a property for sale or lease must disclose that the agent has interest. This is usually done with the words “Agents Interest Disclosed”, but this is not prescriptive and you may use other words to describe this interest. Advertising includes, but is not limited to, newspaper advertising, websites, window displays, brochures, floor plans, sign on property, Contract for the Sale and Purchase of Land and what you as an agent say to prospective purchasers or tenants.
The Act prohibits real estate agents and their sales employees from obtaining or being connected to the obtaining of a beneficial interest in the sale of a property, unless agreed to by the client. If you, or anyone associated with you, purchased property you are offering for sale in your capacity as an agent, then the legislation demand you make that fact known up front and get the clients consent in writing. You will also need to get the client’s written consent to be paid a commission on the sale. A breach of these requirements can lead to up to two years imprisonment.
There are many other aspects to disclosure, but the best rule of thumb that an agent can use, is to ask themselves the question – is this information something that I would like to know prior to purchasing or leasing this property. If you need to stop and think, even for a quick moment, about the answer to that question – then this is an issue that you need to discuss with the property owner and ultimately disclose to your vendor/tenant.