Interview For EAC With Lisa Jemmeson | Restraints Of Trade

A business owner has the right to protect their legitimate business interests through the provision and enforcement of restraints of trade. However this happens very differently in the context of an employee, including commissions-only sales people, as to an independent contractor, which functions as a separate businesses operating in parallel to an agency.

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Fraud Prevention Guidelines

Many agents are receiving fines from NSW Fair Trading for failure to include proof of identity documents in their sales files. While the Fraud Prevention Guidelines are an adjunct to the Supervision Guidelines set out by the Commissioner of Fair Trading, and there are no specific rules of conduct, fines may be issued at Fair Trading’s discretion.

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Declaring Agents Interest

The Property, Stock and Business Agents Act (PSBA) provides that if a licenced agent is selling a property they own through the agency at which they work, they must disclose in all marketing materials that there is an “Agents Interest”.

If the property being sold is owned by an employee of the Agency that is not a Licenced Agent, for example a Certificate Holder, there is no requirement in the PSBA to disclose Agents Interest in marketing materials for the sale of that property.

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Competitive Advantage

What can Agents do when competitors receive a competitive advantage by not following the requirements of the Property Stock and Business Act?

Agents that want to make a complaint against a competitor cannot use the online NSW Fair Trading Complaints Register as the Register is only for customers of that particular agency. An agent can make a written complaint about that agency to the Minister, Local Member or by contacting the enforcement branch of Fair Trading. Agents should be mindful that if they do submit a complaint to Fair Trading, they too may be investigated to ensure their office is in order.

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Fair Trading Complaints Register

The NSW Fair Trading Complaints Register commenced on 1 July 2016. The Register records complaints against businesses according to their recognisable ‘trading’ or ‘business name’. Only businesses with a collective total of 10 or more complaints in a month will appear on the Register. Once a business receives more than 10 complaints, NSW Fair Trading will contact that business in relation to those complaints.

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Underquoting

It is an offence under the Property, Stock and Business Agents Act 2002 and the Australian Consumer Law for agents to underquote the price of a property being marketed. Agents should consider implementing best practices to ensure the estimated selling price remains reasonable at all times. Please click below to watch our short video on the key underquoting laws and points agents should consider to prevent underquoting practices.

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Cooling Off Period Contract For Sale

The cooling off period is a statutory right given to all Purchasers whereby property is purchased by private treaty. The cooling off period entitles the purchaser to 5 business days within which they can change their mind on the purchase and rescind the contract.  This 5-day cooling off period is able to be extended or shortened but in order to do this validly, certain procedures need to be followed. Agents do not have the authority to make changes to this period.

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Exchanging Contracts

Agents are authorised under the Property, Stock and Business Agents Act 2002 to participate in the exchange of contracts for the sale and purchase of land. This authority is not absolute and is limited and excluded in certain circumstances. Agents need to be aware of their rights and where the limitations lie in order to avoid the risk of any potential litigation. An example of a particular situation where issues may arise is where a party is represented by a solicitor or conveyancer. 

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Handling Confidential Information

In recent decisions handed down by the courts it has been highlighted that the courts are now more willing to uphold and enforce restraint clauses in employment contracts. As a result both Employees and Employers need to be aware of the effects of a breach of these restraints and its consequences. Business owners need to regularly review the efficacy of their restraint clauses and employees need to be aware of the repercussions that arise from the misuse and mishandling of information which belongs to the business.

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Exchanging With A Deposit Bond

It is a common occurrence for purchasers to seek to provide a deposit bond in place of a cash deposit on the exchange of a contract for sale of land. When dealing with these situations there are a few pitfalls for agents to avoid. An example would be attending to exchange of the contracts with a deposit bond without the prior approval and authority from the Vendor.

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Handling Deposits

As a result of the role an agent plays in the sale and purchase of property they are given the authority to participate in the exchange of contracts and do so on a regular basis.  Incidentally they are also given the authorisation to act as a stakeholder and to receive and hold deposits. The importance of the role they play in this process places duties and obligations upon them which will need to be properly discharged. The contract for the sale of land requires a ten percent deposit and problems will arise where a lesser amount is received on exchange. This makes agents potentially liable to a damages claim in the situation where the Purchaser is unable to complete. As this is a common occurrence, there are things agents can do to ensure they are protected.

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Price substantiation & True estimates on Agency Agreements

Under the Fair Trading Supervision Guidelines, agents must be able to substantiate the selling price inserted on their agency agreements. Please click below to watch our short video on factors that agents should consider when substantiating price and the Best Practices to follow.

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Authority to sign a contract on behalf of a party

Often a situation will arise whereby all parties who are purchasing a property will not be able to all attend on the date of the auction. When circumstances like this arise, agents need to be aware that a written authority to bid on the property & to sign the contracts on the parties behalf must be obtained and kept as part of the documentation as part of the bidders register.

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