Real estate legal and compliance wrap up

14 Dec 2020
Estate Agents Co-operative
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This year has presented many challenges, and keeping up with the changes in real estate legislation has been one such challenge for many agents.

Throughout 2020, we saw significant changes to agent qualifications, tenancy agreements and amendments to legislation to address Covid-19-related issues.

Earlier in the year, Sarah Heuvel and Tanya Delkou of HD Legal & Advisory joined EAC as our new partners in legal and compliance, manning our compliance hotline.

Recently, they sat down to provide a Facebook Live Q&A and 2020 legal wrap up for our members and friends.

Didn’t make it to the Q&A? Don’t worry, you can watch the recording on Facebook or browse through the notes below.

Licence Categories

Licence categories was both an area to be covered because of the notable changes this year, and also a topic Sarah and Tanya have received many questions about.

They clarified the changes simply, so every agent knows what is expected of them:

Previously, as an agent, you were a certificate holder or a licenced agent.

As of the introduction of the changes in March 2020, agents can now be granted a certificate for 4 years only.

To keep admin simple, certificate holders do not need to renew their qualification annually, though they do need to complete CPD points as required.

After 4 years, they cannot renew their certificate, and can either stop practicing as an agent, or undertake the course to qualify for a Class 1 or 2 licence.

A certificate holder can continue to sign the inspection report that forms part of a Management Agency Agreement (MAA), but only Class 1 and 2 licence holders can sign the MAA or Exclusive Agency Agreement.

Only a Class 1 Agent can be a licensee-in-charge and authorise the withdrawal of monies from the trust account.

Covid termination processes

Sarah and Tanya next covered off on Covid termination notices and acknowledged that this has been a source of confusion for many agents.

Most notably, where 30 days’ notice of termination usually needs to be given to a tenant at the end of a fixed-term agreement, Covid-19 amendments now mean that 90 days’ notice is required.

As was always the case, 90 days’ notice still applies for termination of periodic agreements.

These changes were initially short-term, but have been extended into April 2021.

Despite the amendments, rent arrears remains at 14 days, and if the owner does not agree to abate the payments, often deferral arrangements are another option.

This needs to be managed carefully by the agent, landlord and tenant to avoid accumulation of large debts.

Sarah mentioned one recent example, wherein a tenant had built up quite a large debt of $12,000 through deferral, claiming a Covid-affected status.

The woman had been made redundant, so was genuinely Covid-affected, but as she could not prove a 25% reduction in income and would not produce bank statements to prove an inability to pay back the amount, the Tribunal ruled against her.

A tenant can still be terminated if a large debt has been accrued. If you are satisfied the tenant has lost 25% income due to Covid-19, first you will need to engage in a full rent negotiation, with the intervention of Fair Trading.

If you don’t follow this process, you can’t terminate, and any termination notice issued may be void.

If the two parties can’t reach an agreement during mediation, Fair Trading will issue a notification advising that negotiation had failed, and this can be presented to NCAT so you can proceed through the normal channels.

The legal team advised agents to issue a termination notice sooner rather than later to avoid the accrual of large debts.

If a tenant can’t substantiate they have lost 25% income due to Covid-19, the existing 14-day notice period and process via NCAT remains in place.

Sarah did also note that, based on their current experiences, NCAT is very delayed, with up to 8 weeks wait or longer.

Water efficiency measures

Another change announced this year relates to the humble household toilet.

Amendments to the Residential Tenancies Act mean that, by 2025, every toilet must be a dual flush, and adhere to a minimum star rating in order for water usage to be charged.

Sarah and Tanya advised agents to be proactive and not let the new rule sneak up on them, by changing toilets over now, whenever they are reported to be leaking and require maintenance.

Condition Reports

Tanya noted an important reminder this year that could catch a lot of agents out, is the requirement for a tenant to be sent a copy of the condition report before they sign the lease, not at the same time or after.

The example was given of a recent case within which an agent went to tribunal with a bond claim.

The member asked the agent if the tenant had received the condition report prior to signing the lease, and as this wasn’t the case, the member dismissed the entire bond claim.

The agent was at fault as it was their responsibility to adhere to the legislation, and as such, was required to pay the bond amount to their landlord.

Residential Tenancy Agreement

Two more immediate changes to the Residential Tenancy Agreement relate to landlord contact details and interstate landlords.

Firstly, the landlord must now acknowledge the Landlord Information Statement prior to the tenant signing the lease.

They also need to provide contact details so the tenant can contact them directly if they so choose.

Sarah and Tanya advise your landlords can simply provide a PO Box or email address if they have privacy or other concerns, but the passing on of their information is provided for in legislation and in the MAA itself.

The Residential Tenancy Agreement must now also disclose if the landlord lives interstate.

It is assumed the reason for this amendment is the jurisdictional issue wherein the tribunal can’t make a judgement or order if one of the parties is living in another state.

This does not apply if the party lives in another country, or in an Australian territory, such as the ACT or Northern Territory or if a party is a corporation.

It was noted that agents also need to be aware of this jurisdictional challenge when tenants move interstate, as if an application is made for tribunal after a tenant has moved interstate, the tribunal cannot make a decision or order.

In the instance where you do have a dispute and one party is interstate, you will still need to apply to NCAT. The application will be formally dismissed.

You then take the dismissal notice, a summons and affidavit and file it in the local or district court, depending on the sum in conflict.

The EAC would like to thank Sarah and Tanya from HD Legal & Advisory for their time and effort in our first Facebook Live Q&A and welcome them into the EAC community.

HD Legal & Advisory provides a comprehensive legal service to property professionals. Members can contact Sarah or Tanya using our compliance hotline (and receive 30 minutes free advice per month), non-members can contact the team at info@hd-legal.com.au

 

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