Blog / Prospecting
Legal Tips compiled by Jemmeson and Fisher
Trust Account Requirements Update
From 1 January 2015, there has been a change to the Property Stock and Business Agents legislation which affects your EXISTING trust bank account/s. Licensees are now required to obtain a “Unique Identifying Number” for all existing and new trust bank accounts.
Unique numbers are issued by Fair Trading. To obtain your Unique Number, follow this link http://www.onegov.nsw.gov.au/new/ agencies/oft/trustaccount.aspx and select
1. “New Account” if you are opening a new trust bank account. OR 2. “Existing Account” if you have an existing trust bank account.
You will be emailed a form to complete which should then be given to your bank. Make sure you also keep a copy for your records and for audit purposes.
IMPORTANT. Please note that you do not need a Unique Identifying Number for separate trust bank accounts such as Interest Bearing Accounts (IBDs). This means that IBDs you open on behalf of a vendor and purchaser for a sales deposit are exempt from the unique numbering requirements.
Expired Agency Agreements
This is a common mistake that is occurring time and time again in the industry, where Agents have an exclusive agency agreement, it expires or is terminated and they continue to show the property thinking that the vendor is happy with their services.
In a particular case recently the agent had the property on and off for a period of approximately 6 months. The vendors were starting to express concerns that there was no sale imminent and were looking at having another agent appointed.
On the 3rd of June they gave a termination notice giving 30 days notice in writing that the agency agreement would be terminated. The agent then contacted the vendor asking if they were going to list it with another agent and they were categorically advised that no, they were just going to take it off and rest it for a while but that the agent still had the 30 days.
Subsequently on 3rd July the Agency Agreement was terminated in accordance with the terms of the contract. However, the agent still had people with some interest in the property. He subsequently made an arrangement with the vendor to show the property on the 8th July. He then on the 8th July showed the property to some people who have previously been interested and also to a new party who saw the property for the very first time on the 8th July who subsequently purchased the property.
The agent then claimed his commission but the vendor obtained legal advice and told the agent that they no longer had an agency agreement. The agent’s position was that the vendor continued to allow him to show the property so even though they terminated it, that agency agreement was still valid or in the alternative, they had an implied agency agreement.
What the tribunals found in this particular case was that you can’t have an implied agency agreement. It must be in writing so agents who continue to show properties run a huge risk if the vendor takes them on as it is likely that they will lose out on their commission every single time.
In this particular case, the commission was $17,500 and on top of that the agent would have been hit with their legal fees so he was probably out of pocket around $30,000 all because he didn’t get a new agency agreement.
For further information please contact Jemmeson & Fisher on 02 9267 6263
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