Is this wrong? I am an agent who has listed a gorgeous little property that is suitable for my son and his partner. I asked the vendor if he minds if my son purchased the property. The vendor’s response is, “I don’t care who buys it. Provided I get my price, I’m happy to sell it to anyone.”
Your son goes to the auction and is the successful bidder. The property is purchased, and the pleasant vendor complains to Fair Trading that you have not represented his interests.
Is it wrong? You told him that it was your son and your son bought it at a competitive auction. Unfortunately, it is wrong.
Section 49 of the Property, Stock and Agents Act 2002 (The PSAA) prohibits an agent from purchasing a property from their vendor or earning any commission unless the sale is disclosed on the form issued by Services NSW. This form is referred to as a “Section 49 form.” Not too hard to remember!
The agent is in the wrong, not because they did not represent the best interest of their client, but because they failed to fill in the prescribed form.
Leverage has had a look at the form and, to ensure that the agent was not liable, all he needed to do was fill in less than fifteen words, cross one box and get two signatures. A fifteen second job.
What is significant about this section is that it not only carries a fine, it carries a custodial sentence of two years. In other words, this innocent behaviour can lead to a jail sentence.
Project marketers Australia-wide are engaging sales agents who are encouraged to use their database to sell the property. This can only be considered as a good strategy but it’s illegal if the section 49 form is not completed.
Section 49(4) of the PSAA defines ‘me’ to include my family and my business associates. A breach of 49(1) is constituted by merely selling it to someone who is a family member, close friend or business associate. Therefore, the average project marketer who doesn’t get this form completed is setting themselves up for a criminal offence.
In the case of residential real estate agents, we suggest that the section 49 form becomes part of their listing kit – that a policy be put in place in your operations manual that requires the licensees approval. Purchases by family, friends and business associates need to be disclosed to the licensee in charge so that they can ensure the section 49 form is included.
For project marketers; this form should form part of the contract so that any family member or business associate can execute the section 49 certificate for the vendor to then execute to comply with this section.
This clause may sound tough but it is the law. Getting to know section 49 allows you to be involved with good deals and to use your full database to sell the property. You may not be aware of this section, but Fair Trading and solicitors are!