Nigel Hales 24 July 2014 Miller Harris in Business

The Current Situation Property Agents and Motor Dealers Act 9 licence types 4 types of registered employees Warning statements and strict requirements about form Strict protocol about presentation or proposed contracts Uncertainty about application of act in some circumstances Contracts can be terminated if you get it wrong. Miller Harris in Business

Property Occupations Act 2014 – not yet commenced 3 licence types- auctioneer - real estate agent - residential letting agent 1 registered employee type - real estate salesperson Property developers no longer require a licence No longer necessary for a director of a licensed corporation to have qualifications. Under new act, the person in charge of the corporation’s business must hold the equivalent licence. Principal licensee or person in charge must take reasonable steps to ensure each real estate salesperson is supervised and complies with act. Miller Harris in Business

Commission and Payments No longer any cap on commissions Commission only on actual amounts Can only recover payments if licensed and properly appointed Miller Harris in Business

Appointment Must contain a warning to seek independent legal advice Must contain details of services, fees, expenses etc. For a sale or exclusive agency, cannot be for more than 90 days Open listing may be revoked at any time Other listings may be revoked on 30 days notice Miller Harris in Business

Disclosure of Beneficial Interests An agent must not acquire a beneficial interest in an option to purchase the property An agent can acquire a beneficial interest in a property (eg. Purchase the property) if: o The agent acts fairly and honestly o The client acknowledges that the agent is interested in obtaining a beneficial interest and consents to that o The client is in substantially as good a position as if the property were sold at fair market value. Miller Harris in Business

Disclosure of Referral Relationships On the sale of residential property, an agent must disclose to the buyer: o any relationship the agent has with any person to whom the agent refers the buyer for professional services o Benefits from any referral o Any benefit in connection with the sale, other than commission from the seller. Property developers must also make the same disclosure regarding referrals and benefits. Miller Harris in Business

Residential Property Sales Residential Property o Residential property is real property that is used, or is intended to be used, for residential purposes but does not include real property that is used primarily for the purposes of industry, commerce or primary production. Does not apply to: o Contracts formed at auction o A sale to a registered bidder before 5pm two business days after the property has been passed in at auction o A contract formed by exercise of an option, between the same parties o Sales to a publicly listed company, a subsidiary, the state or statutory body o A sale of three or more lots to a buyer at the same time. Miller Harris in Business

Property Developers A property developer is a person who completes more than 6 residential sales in a year and has more than a 15% interest in the properties. Deposit or part payment must be held in trust by: o Public trustee; o Law practice; or o A property agent. Miller Harris in Business

Replacement for Statement Statement must be inserted immediately above buyer’s signature o “The contract may be subject to a 5 business day statutory cooking-off period. A termination penalty of 0.25% of the purchase price applies if the buyer terminates the contract during the cooling-off period. It is recommended that buyer obtain an independent property valuation and independent legal advice about the contract and his or her cooling-off rights, before signing.” Failure to do so is an offence, but does not allow termination of the contract. Miller Harris in Business

Cooling Off Period 5 business days from when buyer receives signed contract. Can be waived by notice to seller (no need for a lawyer’s certificate). Termination by notice, seller may deduct termination penalty. Miller Harris in Business

Marketeers Broad definition of marketeer: o A person directly or indirectly involved in the sale or promotion of the sale, or provision of service in connection with the sale of residential property. Includes: o A person who provides advisory, management, legal, accounting, administrative or other services. Offence for marketeer to: o Engage in unconscionable conduct (s.208) o Make false or misleading representations (s.209) o Unduly harass another person (s.211) Miller Harris in Business

Other Property Law Reform Land Sales Act – amendments introduced, not yet passed Developers will be able to sell off the plan, before getting approvals Developments of 5 allotments or less exempt No longer a maximum 10% deposit on proposed allotment sales Contract can provide for settlements of community title lots up to 5 ½ years after contract date Increase installment contract deposit threshold to 20% for proposed lots Better identification of proposed community title lots – disclosure plan, by a surveyor Buyer will have 21 days to terminate for changes to plans if materially prejudiced Property Law Act – still in review Change to what constitutes an installment contract – 20% deposit on proposed lots Making obligations in easement documents binding on subsequent owners. Body Corporate and Community Management Act Discussion paper released – possibly lot entitlements will change again Miller Harris in Business