The real estate and property reforms start today – Monday, 23 March 2020.
If you have a certificate of registration or a licence to work in the property services industry in NSW the following changes have occurred.
- If you are currently a nominated LIC or a sole trader and have notified Fair Trading you are now transitioned to a Class 1 Agent licence.
- If you do not want to retain a Class 1 Agent licence, you can ask for this to be changed to a Class 2 Agent licence at your next renewal.
- You’ll need to talk to your employer about changes in your business processes – for example, agency agreements prepared by assistant agents, and new business processes for trust accounts.
- Making sure your business cards, e-signatures and promotional material to make sure your job title is accurate and not misleading (Assistant Agent vs Agent)
If you are uncertain of these changes, you can watch the embedded Fair Trading Webinar and listen in to our podcast with Minister Kevin Anderson.
Fair Trading is providing free information webinars about the tenancy reforms which also start on 23 March 2020. For more information and to register, visit the NSW Fair Trading Events page.
Frequently asked questions and answers
Q: Can a licensee in charge (LIC) authorise trust account fund transfers that need to be made simply by outlining the process in the agency’s operational procedures?
A: No. The LIC would need to indicate their approval for each specific release of funds and cannot delegate their authority to authorise the release of funds to anyone else.
Q: Can anyone other than the LIC press the button to transfer a payment from the trust account?
A: Yes, but only if a licensee in charge has first authorised the withdrawal of the money from the trust account.
From 23 March 2020, an agent may not authorise the withdrawal of money from a trust account unless the agent holds a Class 1 licence and is currently appointed as a licensee in charge and is the sole licensee in charge with responsibility for that particular trust account.
This makes licensees in charge ultimately accountable for any trust money released from agency trust accounts.
The Supervision Guidelines will require agencies to maintain operational procedures which include the process to obtain and document the express authorisation of the LIC for all releases of trust money.
There can be only one LIC authorising withdrawals for each trust account. However, an LIC can authorise withdrawals for more than one trust account.
Trust money can be withdrawn by cheque or electronic funds transfer only – cash withdrawals are prohibited.
For electronic funds transfers, another person may physically disburse funds (for example, by pressing the final release button on a bank account), but only if the LIC of that trust account has first authorised the withdrawal.
Cheques cannot be signed by anyone other than an LIC.
Q: What restrictions will come into effect on 23 March 2020 for certificate of registration holders/assistant agents?
A: Assistant agents cannot:
- enter into a contract for the sale of land
- enter into an agency agreement (this includes a sales agreement or a property management agreement) – except for livestock transactions
- enter into a franchising agreement
- authorise the withdrawal of money from a trust account
Assistant strata managing agents also cannot affix the seal of the owner’s corporation.
This means that from 23 March 2020, an assistant agent can still prospect for new clients. However, only a Class 2 or Class 1 Agent can sign and bind the agency to an agreement with a vendor, landlord, franchisor or other agency.
Q: What are the differences between a Class 1 and Class 2 licence?
A: Both a Class 1 and Class 2 licence holder can perform all agent functions in their relevant category of work. However, only a Class 1 agent can be nominated as a licensee in charge and can authorise withdrawal of funds from a trust account. Class 2 agents are prohibited from authorising the withdrawal of funds from a trust account.
A Class 1 agent must complete an additional 3 hours for CPD requirements and their licence has a higher application and renewal fee.