A check on professional conduct

On 16 February 2023, the Attorney-General and Minister for Justice, Minister for Women and Minister for the Prevention of Domestic and Family Violence announced a proposal for reforms to Queensland’s body corporate and community management legislation [1]. This legislation governs lots in a community titles scheme (for example, units, apartments and townhouses).

Among the items being considered, was the lowering of the threshold to terminate a scheme by resolution, from 100% of lot owners to 75% of lot owners.

If the proposed reforms do become law, this means that older and unmaintained buildings may more easily be redeveloped if 75% of the lot owners agree.

There is much contention in the sector about the broader implications of the proposals.

Although they are consistent with other States such as New South Wales, which introduced similar legislation in 2015, and will expedite redevelopment of buildings that could potentially add much needed supply to the housing market, such a reform would provide that dissenting lot owners will not have choice about selling their lots which could disadvantage members our community, particularly vulnerable members that are not able to secure housing.

These issues are expected to be explored during stakeholder consultation.

Since the announcement, the REIQ has become aware of instances where eager real estate professionals, possibly acting on instructions or in an attempt to prospect, are approaching lot owners about an appointment to sell their lots in response to the proposal believing it may already be law or that it is guaranteed to be law soon.

As a real estate sales agent, it is your professional responsibility to stay abreast of legislation that may affect your role and your clients.

It is important to note:

• The proposed changes have not yet become law and at this stage, there is no guarantee that they will become law or when. Legislative changes are made through a parliamentary process including consultation from stakeholders. The REIQ will keep members informed about when this process commences and will engage in consultation.
• Real estate professionals must not engage in misleading or deceptive conduct, which includes misrepresentation. Asserting that the laws have changed and that lot owners will be forced to sell in the near future may fall foul of the Australian Consumer Law [2].

WHEN DOES PERSUATION BECOME DURESS?

Although prospecting and obtaining new clients is an important part of every real estate business, it is essential to remember the importance of professional conduct.

For example, sending multiple emails or letters to property owners, excessive cold calling and using an overly assertive or forceful tone could be considered by members of the public as harassment.

Sales agents should be mindful that using high pressure sales tactics can lead to allegations that the client felt bullied or ‘talked into’ an appointment. Of course, issues can arise in these circumstances potentially resulting in claims about duress and ultimately, putting the validity of the appointment at risk.

Particularly in the case of emails and phone calls, sales agents should be mindful that the persons on the receiving end may be vulnerable, for example if English is their second language, are elderly, or have a disability or impairment. Where there is a power imbalance, this may give rise to a claim of unconscionable conduct.

The REIQ recommends as a best practice to take a professional approach with prospecting and exercise caution if the property owner does not have a clear intention of selling in their discussions with the sales agent.

WHAT SHOULD I DO IF ANOTHER SALES AGENT HAS CONTACTED MY CLIENT DURING THE EXCLUSIVE LISTING PERIOD? 

Since the sales market has begun steadying after the highly buoyant 2020-2022 sales period, the REIQ has received numerous reports of clients being approached by other sales agents during an exclusive appointment. Client dissatisfaction can be exacerbated by the increase of average days on market and clients in some cases receiving lower offers than they had expected as a result of the steadying market.

Although approaching another agent’s client is not an offence or contravention of legislation in Queensland, sales agents should bear in mind when prospecting that if the client has a prior appointment with another agent, strict requirements must be followed under s21 of the Property Occupations Act 2014 (Qld).This provision requires that before accepting an appointment to act, the agent must take reasonable steps to find out whether the client has already appointed another agent.

The new agent must not solicit or accept the appointment if the new agent knows, or should know, the appointment of an existing agent to perform the service is in force. Additionally, if appointed, the client may have to pay a commission under each appointment and damages for breach of contract under the existing agent’s appointment, unless a prior appointment statement is given to the client prior to entering into the new appointment. The REIQ recommends using the Prior Appointment Statement which can be found in Realworks.

The REIQ recommends that sales agents educate their clients about the requirements of an exclusive appointment, in case they are contacted. If open communication about the topic is established earlier in the appointment, as well as client expectations being managed throughout the process, this may prevent issues later for the client and yourself.

Find more information like this in the REIQ Best Practice Guidelines coming soon. 

References

[1] Body Corporate and Community Management Act 1997 (Qld) & associated regulation modules

[2] Schedule 2 Australian Consumer Law, Competition and Consumer Act 2010 (Cth)

Read a similar article on Misleading and Deceptive Conduct in Advertising Campaigns here.

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