NSW Fair Trading introduces changes to the Residential Tenancies Condition Report

Real Estate offices may have received an email from NSW Fair Trading on 28 February regarding a New Condition report for residential tenancies. The prescribed report has been changed by the addition of ‘window safety devices’ wherever ‘windows/screens’ appears. This change is effective from 1 March 2014.

eForms
For those offices using EAC eForms the necessary changes have been made and the updated form is now available for use.

Printed Forms
If you are using EAC printed forms these forms may still be used BUT YOU MUST write in the additional words”/window safety devices” as outlined above.

So on the form wherever you see “windows/screens” you must change this to “windows/screens/window safety devices”

EAC_Condition _ReportThe example above shows the change to EAC’s Condition Report on our eForms system.

These changes do not impose any obligation on the landlord to install window safety devices if none exist.

EAC believe that the notice provided by Fair Trading of this change was inadequate and is seeking clarification from Fair Trading as to the practicality of these changes and the likely implications for leasing and managing agents and members will be informed as soon as this advice comes to hand.

EAC Members may direct any questions they have to our Helpline on 1300 137 161.

EAC & NSW Fair Trading Partner to Provide Real Estate Fact Sheets

This week NSW Fair Trading announced the partnership with EAC to supply fact sheets pertaining to Agency Agreements, Bidders Guides as well as New Tenant Checklists.

This partnership sees NSW Fair Trading ceasing to supply their real estate fact sheets in print form, which bulk copies can now be purchased through EAC. Click here for details.

NSW Fair Trading will however continue to provide online access to fact sheets for consumers to download and print from the NSW Fair Trading Website. These forms will be also available to order in selected community languages.

EAC also offer a wide range of real estate forms that cover residential, rural, commercial, business and retail requirements for real estate professionals. Click here to view the benefits of EAC printed real estate forms.

Contracts and Deposits – Agents Should Be Ready, Willing And Able

Many agents properly and correctly participate in the process of exchanging contracts either with a cooling off period for residential property or immediately following a sale by auction of property in all categories.

The great majority complete this process without error but there are some stunning examples of very costly mistakes being made.

Here are some simple procedures to follow to avoid those mistakes:
• When you receive the contract in your office ensure that the necessary documents are annexed as required. (Page 2 of the Standard Contract for Sale has the checklist)
• Ensure that the attachments are the relevant ones for the property. It is not uncommon to find the wrong S.149
• Certificate or Sewerage Diagram – make sure they are for
the right address and not missing any pages.
• Check the original against the counterpart to ensure they are exactly the same. One missed page can destroy the integrity of the document and provide the opportunity for
the purchaser to rescind.
• Be particularly careful when photocopying- always check the result no matter how tedious it may be.
• Check both the “Inclusions” and “Exclusions”. Are they as nominated by the Vendor and do they match your understanding?
• Check that the vendors name(s) and property particulars are correct.
• Check that all lots are identified. Particularly important when selling Strata property. Units, car spaces, garages and storerooms may be separate lots in the Strata plan, make sure they are all included.
• Are you selling with vacant possession or subject to tenancy? If tenanted the details must be included, (copy of lease).
• Settlement time, is it as you expected?
• Check the GST status; if applicable make sure you fully understand the implications and discuss with your client and their solicitor (and accountant if necessary).
WARNING: Do not give GST advice to prospective purchasers or anyone else for that matter – they must seek their own advice.
• Are the improvements properly represented on the contract?
Whilst some of the details are strictly not your “responsibility” as such you do need to check to make sure there is no confusion.

Let’s face it – a simple mistake or a missing page can provide the opportunity for the purchaser to rescind and have their deposit refunded, cost the vendor a sale and cost you your selling fee. If the mistake is a result of your negligence then legal action will almost certainly follow and you can be sure that it will be very costly!

When it comes to “filling up” the contract in preparation for exchange remember that an agent can only complete the details inside the “black box” on the front page.
These details are:
Inclusions
Exclusions
Purchaser(s)
Purchaser’s Solicitor/Conveyancer
Purchase Price, Deposit Amount and Balance
Contract date

Some Handy Tips
• Have the purchasers write their full name(s) and address on a separate piece of paper together with their solicitor’s name and contact details BEFORE you fill these in on the
contract. This avoids making errors and then also avoids very untidy corrections.
• Do the calculations for purchase price, Deposit and Balance separately also. Have someone else check the maths to ensure you are correct, and then fill in the contract.

Deposit Danger Zone
The deposit must be as shown on the contract, normally 10%. On no account should an agent alter the amount of the deposit without written instruction from the vendor’s solicitor or conveyancer. If a purchaser is seeking to pay a deposit less than the amount stipulated in the contract then it must be agreed before the auction or before negotiations are finalised and the agent so authorised in writing.

This also applies to an exchange with a cooling off period for residential property. Some agents have adopted the practice of amending the contract to reflect only .25% as the deposit. This is completely incorrect.

The obligation on the purchaser is to pay the full deposit as shown on the contract, normally 10% and then to forfeit .25% of the purchase price if they cool off.

You as agent have both a duty and serious obligation to collect the full deposit as nominated. Failure to do so can expose you to legal action and a potential financial minefield.

In the same way agents MUST NOT delete, add, alter or amend in any way any clauses or special conditions in the contract, and this includes the completion date, without first having written instructions from the vendor’s solicitors.

SIGNING TIME
• Have the vendor sign the front page of the original contract and then initial each page, including attachments. It is also good practice for them to initial the purchase price and
deposit in the margin.
• The purchaser(s) sign and initial the counterpart contract in the same way.
• Signatures need to be witnessed on the front page.
• Have both parties sign the appropriate “authority to exchange” document.
• Physically exchange the contracts by handing the one signed by the vendors to the purchasers and vice versa.
Once this has occurred the parties can choose to give the contract back to the agent to forward on to the respective solicitors. This is provided for in the ‘Authority to Exchange’ document.

The law provides the right for agents to participate in the exchange of contracts in certain circumstances and it is in the best interests of all parties that this process occurs efficiently and without confusion and error.

Principals and their staff should feel confident in this participation, by following the simple checklist and by not stepping outside the rules will ensure that this level of confidence is achieved.

From Compliance Matters – EAC From the Boardroom – Summer Edition 2012

Update – Draft Residential Tenancies Regulation 2010

The draft Regulation as previously advised was released for public consultation and EAC is currently preparing a submission to Government. The outcomes of this submission will not be known until the end of October at the earliest. A start date is therefore unlikely to be before mid December.
Below is a summary of key elements contained in the draft regulation, of which a number have also been identified for comment in our submission.
EAC will be delivering comprehensive training on the changes. In order to ensure the maximum benefit to agents, the training dates will be advised when the consultation outcomes are known. Do not compromise with early training.
Disclosure to prospective tenants
Prospective tenants must be told of any serious crime committed at the premises, if the property is being sold, if there is legal action pending to repossess the property or any serious health or safety risks at the premises, such as lead paint or asbestos.
Tenancy agreements and contact details and changes
The landlord’s contact details to be provided to the tenant even if the landlord has an agent.
Breaking a lease early
The residential tenancy agreement includes an optional term – ‘Break Fee’ that provides for the early termination of the fixed-term.
Additional term – Pets
The residential tenancy agreement includes an optional term that if the landlord consents to pets then the tenant agrees to have the carpet professionally cleaned at the end of the tenancy.
Water efficiency
  • water efficiency measures required in order to charge tenant water usage
  • landlords have 12 months to carry out work for existing tenancies (if they wish to continue to charge the tenant for water usage).
The prescribed standards are as follows:
  • internal cold water taps and single mixer taps with a maximum flow rate of nine litres per minute;
  • showerhead(s) with maximum flow rate of nine litres per minute; and
  • no leaking taps at the start of tenancy.
The draft condition report includes an appendix if the tenant is to pay water usage charges.
Ending a tenancy
If a termination notice is given by a landlord, on grounds other that ending a fixed term, the tenant is not liable to pay rent for any period after the tenant vacates and before the termination date.
Monetary limit of jurisdiction of Tribunal
The amount prescribed for compensation is $15,000 or $30,000 in relation to a bond.

EAC Real Estate Forms – Material Fact and OH&S

EAC Agency Agreements and the challenging question of Material Fact and OH&S
Recently Estate Agents Co-operative Limited (EAC) returned to the market with a new range of agency agreements. Their development was in consultation with solicitors, Greg Jemmeson and Michael Parasyn, and barrister Geoff Evans.
Requirements of agency agreements are set out and prescribed in the Property, Stock & Business Agents Act 2002 (the Act) and the Regulations 2003. The Regulations in particular prescribe what terms must be contained in an agency agreement.
It is important to note that both Material Fact and Occupational Health and safety (OH&S) are not prescribed terms and are not required to be set out in an agency agreement. The Act requires that agents must not conceal a material fact to prospective buyers and tenants. Agents also have a responsibility to ensure that premises are safe for purposes such as inspections.
It is our opinion that the current Material Fact and OH&S clauses, which appear in other industry agreements, do not necessarily protect an agent should a Material Fact or OH&S matter arise. These clauses on their own do not offer the Agent comfort, the Agent is required to make their own inquiries independent of the Agency Agreement as to any issues of Material Fact and OH&S, but not limited to just those issues.
Accordingly, EAC is preparing a more appropriate property assessment form. This form will allow the agent to make the relevant and appropriate enquiries of the Principal including disclosure matters such as Material Facts and OH&S and facilitate such matters are brought to the Principal’s attention and discussed.
In this respect, the current clauses appearing in other agency agreements do not give the agent the same level of comfort. Similarly, with the Occupational Health & Safety clauses, at all times it is encumbered upon the agent to conduct an inspection of the property and the inclusion of such a clause does not absolve the agent from that responsibility.
For all enquiries contact: Silvana Ferraro, Agency Compliance and Risk Management Services,
1300 137 161
About Jemmeson and Fisher Solicitors
Greg is a partner in Jemmeson and Fisher a boutique legal and accounting firm situated in Surry Hills which specialises in consulting services to the real estate industry. Greg has spent the past twenty years working in and around the Real Estate Industry, representing agents before the Office of Fair Trading, as well as commission disputes, industrial actions and the sale and purchase of real estate businesses. Greg also spent ten years with the Office of Fair Trading exclusively in the field of real estate compliance.
About Michael Parasyn, Solicitor
Michael’s grounding as a licensed real estate agent, business agent, stock and station agent, registered valuer and an active auctioneer for 30 years covered all aspects of agency activity. Armed with this practical experience Michael embarked on the practice of law in 1981 where he continues today specialising in all agency matters including licensing, commissions, franchise matters, defending actions against agents as well as substantial teaching and CPD training for TAFE and various industry bodies.
About Geoff Evans, Barrister
Geoff Evans is a senior barrister practising from Wentworth Chambers, Sydney. Geoff has been extensively briefed for twenty years in matters relating to Property Stock and Business Agents legislation.