Everyone is aware that Section 55 of the Property, Stock and Business Agents Act 2002 (The Act) disentitles agents to any commission if they do not comply with the act. We often focus on what is in the agency agreement, but forget to consider what is in the agency.
Section 8(2) of the act states that a person is not entitled to commission if they are not licensed. Further, Section 55(1)(b) states that an agency agreement must be signed by and on behalf of the licensee to receive the commission.
In relation to licensing, this requires two things:
- If the agency is a corporation, the corporation license is valid at the time of signing the agency agreement; and
- The agent executing the agency agreement, whether the person be licensed or a certificate of registration holder, their license or certificate must be valid at the time of the agency agreement being signed.
Many years ago, we had a client who had a valid corporation license, but their agent had let their certificate lapse. This made the agency agreement invalid under Section 55.
It is paramount to get this third thing in place. Section 127 of the Corporations Act 2001, states that a contract can only be executed by a corporation if the person is a director or a person duly authorised by the company. Section 126 states that a person can only be authorised by a resolution of the board.
In short, an agency agreement is not valid if the company minute does not exist allowing that agent to execute the agency agreement. A company minute should be in every agent’s file that states the following:
“It is resolved by the directors to authorise those persons holding licenses and certificates of registration, recorded with the Office of Fair Trading as being registered under this corporation, to sign agency agreements on behalf of the corporation.”
We work too hard for our commission. Keep all licenses and certificates up to date. Make certain you set up a company minute.
This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.
To get in touch with Bailey, please email email@example.com.