Mid-year bumper edition rent-rolls, audit results & more: Real estate industry bulletin 178
16 July 2018
Considering buying a rent-roll?
Buying a rent-roll can be an attractive way to grow your business. However, it can be a complex undertaking and a source of headaches down the road if not done carefully.
Let us help you navigate some of the common pitfalls. Please note that it’s always also a good idea to consider obtaining independent legal and financial advice before making the decision to acquire a rent-roll, even if you already have one.
Prior to undertaking any property management work regarding your new rent-roll, make sure you hold a valid appointment to act on behalf of the owner. You achieve this by having the owner sign a new management authority with your agency. Alternatively, a deed of assignment may be acceptable, provided that the original management authority is annexed and the owner has re-initialled all the relevant clauses on the contract.
Without a valid management authority in place, you are not entitled to any commission or reward for managing the property and you may need to return money to the owner. Even if you're certain the owner is going to sign, wait until the process is complete before providing any services or charging fees.
There is no obligation for an owner to agree to transfer management to you if you are buying the rent-roll. At Consumer Protection, we receive complaints from owners who have been told they must agree to transfer management to a new agency. This is incorrect and could result in legal action down the track.
Rent in advance
In some cases, the previous agent may be entitled to deduct fees as a percentage of the full amount paid, even if they are not managing the property for the full period covered by the payment. This could leave you managing the property without payment until the advance rent runs out. Check whether any tenants have paid substantial amounts of rent in advance to the previous agency. Check whether the management agreement specifies at which point the agent can deduct management fees.
Avoid missing documents
The selling agent should provide copies of any relevant documents and other information that you will need to manage the properties effectively. Use our handy transfer of management checklist to make sure nothing is left out.
Check for unsafe pool gate latches this winter
The winter months provide an opportunity to make sure swimming pools and fences are safe and in good repair so you're prepared when the weather heats up.
This year, when checking pool fencing during property inspections or when completing property condition reports, we urge you to pay particular attention to gate latches.
A voluntary recall is currently underway for a striker component contained in several pool latches that were sold by Bunnings.
The recalled striker component does not comply with Australian standards and can cause the gate to be locked in the open position, posing a potential drowning risk for children.
A recent Ombudsman’s report found that between 2006 and 2015, the majority of drowning incidents involving children occurred in swimming pools.
Find out more about the recall of unsafe pool gate latches.
CPD progress reminder
We encourage licensed agents to check with their employees to ensure their CPD compliance is up-to-date.
Real estate agents have a responsibility under the Code of Conduct to ensure that they, and their employees, comply with their annual educational requirements by completing at least 10 CPD points each calendar year. To date, only 36% of all current licensees and registrants have completed the mandatory activities for 2018. Only 14% have completed their elective activities, with 45% of licensees and registrants yet to undertake any elective activity.
If your employees haven’t completed their CPD points, their registration/triennial certificate may not be renewed and as an employer, you may be breaching your responsibilities to properly supervise staff.
You can find a list of training providers and their contact details on our website. Please do not contact Consumer Protection to make bookings.
We acknowledge the delay in making the mandatory activities available online for licensees and registrants who live more than 100km from any of the places the course is being delivered.
The online courses are expected to be available in August so please accept our apologies and ensure that you make time available in the second half of the year for these activities.
Results of this year’s annual audit program
Consumer Protection has completed the annual real estate agent audit program for this year. Overall, it is clear that most agents are meeting their legislative requirements. The majority of real estate and business agents lodged their audit report or statutory declaration on time, with minimal serious problems identified by the auditor.
However, there are 11 audit reports and a large number of statutory declarations yet to be received. Those matters have been referred to our Investigation and Compliance team to take the appropriate action. Non-compliance may result in an administrative warning or prosecution in more serious cases.
An assessment of the audit reports received identified just under a third having been qualified by the auditors. The most common issues were minor administrative mistakes and failing to perform monthly reconciliations. Keep these issues in mind so that you can avoid them next year.
Tips to assist you next year
- Make sure you include all REBA trust accounts, including interest bearing trust accounts and strata trust accounts.
- Make sure any witnesses to statutory declarations are authorised
- Arrange your auditor well ahead of time, especially if you are making a change.
- Confirm all trust account names contain the required information and are correctly designated at the bank.
- If you change any details, including your email address, please notify us.
We're here to help
Consumer Protection’s Proactive Compliance program helps real estate and business agents understand the law by assisting with information on areas of risk and providing general advice.
Call Leanne Reimers on 6552 9273 to book in your free visit.
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