An article by Tim O’Dwyer, Solicitor and Consumer Advocate
On Monday 1st December POA, the Property Occupations Act 2014 (and POA Regulation 2014) come into effect in Queensland, and replace the much-amended-and-maligned Property Agents and Motor Dealers Act 2000 (PAMDA).
While real estate consumers (in particular residential sellers and buyers) will find little to rejoice over and less protection of their interests than before (despite one of POA’s expressed objects being “the protection for consumers in their dealings” with agents), real estate agents across the State will be jumping for joy. And writing thank-you notes to the Newman Government for coming up with this extremely agent-friendly legislation and not waiting for Christmas to put it in agents’ Santa stockings. As FairTrading puts it:” the forms will be fewer in total easier (for agents) to fill out”.
(Let me state at the outset that I am firmly of the view that the best consumer protection will always be that real estate agents should not be permitted to prepare contracts.)
Consider the following:
- While agents and sales people and their “associates” (their companies, spouses, parents, brothers, sisters or children) will as previously be able to buy properties listed with them for sale if the deals are fair and honest etc and sellers give informed consents, the new rules permit agents (and conjuncting agents) to collect commissions from their seller clients for making such “in house” sales. That’s right, agents can now charge you for selling your listed property to themselves or their associate!
- While the previous PAMDA regulation set a maximum percentage commission which agents could charge residential seller clients (and permitted agents and sellers to negotiate below this maximum), residential commissions are now “deregulated’. The REIQ says that this means agents and their clients “will have ultimate contractual freedom to negotiate commission rates which better reflect market conditions and the quality of services being offered”. In my experience most home-sellers have no great skills at negotiating something like this with experienced agents and their sales people. As before, when many agents misrepresented that that the regulated maximum commission was a fixed (REIQ) percentage that could not be deviated from, I suspect that few agents will really compete on their “commission price”, although Fair Trading advises agents: “A deregulated system will allow you to differentiate yourself in the real estate market on the basis of price as well as the services you offer”.
But wait there’s more consumer detriment: Previously agents’ listing agreements had to show their commission expressed not only in percentage terms but also in dollars-and-cents. Now agents can show their commission in either form. Needless to say a figure of say 2% or 3% will always sound more attractive than an amount of say $18,750.00. Go figure…
- Don’t get me going on “cooling off” rights, but sellers will still have no such rights and buyers who cool off may still be liable for a penalty expressed as a percentage of the purchase price. The higher that price, the higher the penalty. Still no cooling off rights for auction buyers or sellers where either can be pressured and act impulsively, but now there will be no buyer’s cooling off right if a registered bidder takes up to two business days to enter into a post-auction contract. The Common Law rule and standard auction condition remains unchanged so auctioneers may, immediately after the fall of the hammer, sign the sale contract for either party who may suddenly refuse to sign. Previously non-auction buyers could waive their cooling off right only after taking legal advice and obtaining a lawyer’s certificate. This not insignificant foregoing of a buyer’s right no longer needs prior legal advice and so, in my opinion, allows for more than a little agent persuasion. By the way, the cooling off period is still 5 business days including the day the buyer receives the signed contract, So if you receive it at 11pm you have one hour left of your first cooling off day.
- Incidentally real estate auctions are not “public auctions: auctioneers must not disclose bidders’ identities – except to the property owners after the property is passed in to later negotiate with that bidder or “to otherwise facilitate the sale of the property”.
- Now when sellers list their properties for sale, the agents will not detail in their agreement “how” they will perform their selling services. This will make it harder for a seller to sack an agent for non-performance. Meanwhile previously the maximum and eminently reasonable time an agent could be “exclusively’ appointed was 60 days. This has now been extended to 90 days, as the REIQ puts it, “to better reflect market conditions and realities”. Go figure…
- No more Code of Conduct for agents. (Not that Fair Trading ever properly policed it!) Just a couple of wishy-washy Regulation sections including agents having to take “reasonable steps” to find out or verify “facts material” to a sale. But still no positive obligation on agents or sellers to disclose material facts, such as past flooding and council approvals/inspections, to prospective buyers. And no longer any obligation on agents to give buyers and sellers alike a genuine opportunity to obtain legal advice before signing anything with agents. However when sellers are engaging a replacement agent the new agent must give a statement about double commission risks and damages for breach of contract risks, and the new agent must not take the listing if these risks are real.. This is good!
- The previous comprehensive two-page pre-contact warning statement for buyers, and drawing attention to it, has been replaced by a one paragraph warning in the contract itself above where a buyer signs. Red tape has been cut to make it easier for agents to make sales, and not be at risk of losing sales when buyers have not been properly warned particularly about getting legal advice before signing.. Needless to say there is no such warning to sellers…who are also consumers! While there is a fairly small similar, but no more prominent, “legal advice” warning to sellers in agents’ listing agreements, sellers get no cooling of rights when signing up such serious agreements with their agents.
- POA, just like PAMDA, permits a state of affairs where sellers can be liable for more than one commission on a sale, and depending on the listing agreement terms for agents to be entitled to commissions where sales have not settled or where an exclusive agent is not the effective cause of a sale.
- If a unit or town house is sold, no longer will a body corporate information statement (about community title schemes, body corporate by-laws and matters to investigate up front) need to be given to the buyer.
- Nevertheless I have spotted one new consumer protection of sorts: when agents or property developers are disclosing to buyers (as they must) any benefits (in connection with the sale, any promotion of it or providing any service) being received from third parties to a contract, the actual names of those benefiting persons must be supplied. However agents no longer have to disclose how much their commission is to buyers
- Interestingly, whereas under PAMDA, an agent not properly appointed would not be entitled to commission. Now most breaches of consumer protection rules on listings means a possible Fair Trading penalty but commission still collected.
- Previously conveyancing solicitors had to disclose to their buyer clients whether or not they were independent of the seller’s agent. This consumer protection has disappeared.
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