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Expression of Interest Deposits
NSW Fair Trading has conducted a review of the Property and Stock Agents Regulations which will come into effect on 1st September 2022.
One area that has been reviewed is the information that is to be provided to a purchaser and vendor when an expression of interest deposit has been paid, which is set out at Clause 5, Schedule 2 of the Property and Stock Agents Regulations 2014:
5 INFORMATION TO BE GIVEN WHEN EXPRESSION OF INTEREST DEPOSIT PAID
- When an agent issues a receipt for an expression of interest deposit made prior to exchange of contracts, the agent must inform the person who paid the deposit that the vendor has no obligation to sell the property or business or the purchaser to buy the property or business and the deposit is refundable if a contract for the sale of the property or business is not entered into. The information must be provided in writing and may be provided on the receipt.
- The agent must promptly inform the vendor when an expression of interest deposit has been paid.
- The agent must promptly inform the person who paid the deposit when the agent becomes aware of any subsequent offer to purchase the property or business received from any other person. The agent must also advise the person who paid the deposit that they have the right to make further offers up until exchange of contracts has taken place.
The updated Regulations add the following clarifications:
- Agents must only accept Expression of Interest Deposits from a consumer after the consumer signs a written statement declaring the agent has informed them of certain information and that they understand the information (Schedule 2 sections 6 and 13; Schedule 3 section 4).
- Requires the vendor’s agent to refund an Expression of Interest Deposit within 14 days if another person enters a sales contract (Schedule 2 section 6(5)(c)).
The reality of these amendments for an agency is that there is a clear process that should be followed if an agency is accepting Expression of Interest Deposits.
You MUST ensure the information set out in Clause 5 (1) above is provided in writing to the person who has paid the Expression of Interest Deposit and subsequently the person who pays that Expression of Interest Deposit acknowledges the terms of that payment by signing the statement. This is similar to the acknowledgements an agent would receive when providing a vendor with the Agency Agreement Consumer guide.
Further, there is now clarity on WHEN that Expression of Interest Deposit is to be paid to the person who has paid it if another contract is entered into for that property by another purchaser. It is now within 14 days of that contract being entered into.