Professional Indemnity Reform Provides more protection for Consumers and Agents

Minister for Fair Trading Anthony Roberts has announced consultation on proposed
compulsory professional indemnity insurance for licensed property occupations, to ensure
consumers’ compensation claims for loss or injury can be met by industry members such
as real estate agents and strata managing agents.

Mr Roberts said proposed professional indemnity insurance means consumers renting or
living in a strata scheme have the security of knowing that if they are entitled to financial
compensation, the agent has the insurance to cover the claim.

“Given the risks associated with liability confronting the property industry, it makes sense
to require the industry to hold appropriate professional indemnity insurance cover,” Mr
Roberts said.

“The majority of the property industry already holds this kind of insurance however it is
essential that those who do not are brought in line with best practice standards.”

It is proposed from 1 January 2013, all licensees under the Property, Stock and Business
Agents Act 2002 be required to hold a minimum of $1 million professional indemnity
insurance with a number of set policy inclusions.

“The NSW Government values the comments of all interested parties on this important issue and NSW Fair Trading will carefully consider all views before finalising a proposal,” said Mr Roberts.

NSW Fair Trading has released a draft Amending Regulation proposing the introduction of mandatory professional indemnity insurance and is seeking feedback by 5 October 2012.

Copies of the Amending Regulation can be found on the Fair Trading website at
www.fairtrading.nsw.gov.au.

Estate Agents Co-operative Ltd has previously provided feedback on this proposal in our meetings with Fair Trading and will be making a submission. If you have any feedback on the draft Amendment regulation please forward them to our Practice Support Team.

Changes to NSW Fair Trading fact sheets

NSW Fair Trading has amended its fact sheets for tenants and below is an overview of the changes.

Breaking a lease early
Property managers would be aware of the controversial issue relating to the interpretation of s.26 and s.100 of the Residential Tenancies Act 2010 as discussed  in the 14 March communication, Important tenancy issue, sent by EAC Compliance & Practice Support. If you missed it. If you are a Member and did not see it please contact Practice Support on  1300 137 161 and we can arrange to get it sent through to you.

Details of fact sheet changes
The text in the January 2011 fact sheet, Break a lease early, (see last bullet point under the sub-heading, ‘Breaking the agreement) has been changed and the words “a contract for sale had been drawn up” have been removed. The change brings the fact sheet in line with Fair Trading’s present interpretation of the legislation.

Former text:
“the landlord has put the premises on the market for sale, and you were not told before signing the lease that a contract for sale had been drawn up.”
March 2012 FTR78 text:
“the landlord has put the premises on the market for sale, and you were not told before signing the lease that the property would be sold.”

Rent increases
Last year, NSW State Parliament passed the Statute Law (Miscellaneous Provisions) Act 2011, which contained amendments to residential tenancies legislation including s.42 of the Residential Tenancies Act 2010 for rent increases under fixed term agreements. The change to the fact sheet brings it into line with the amended provision.

The text in the January 2011 version, under the sub-heading, ‘During the fixed term’, paragraphs 1 and 2 read as follows:

(1) “During a fixed term agreement of 2 years or less…”
(2) “During a fixed term agreement of more than 2 years…”

The text in February 2012 FTR85 reads as follows:

(1) “During a fixed term agreement of less than 2 years …”
(2) “During a fixed term agreement of 2 years or more …”

Getting your bond back
Text that appeared in the January 2011 fact sheet has been removed in the updated version, March 2012 FTR79. Although the changes are minor, if you include this fact sheet in your information folders to tenants it is recommended that you use the latest version.