Part 1 - An examination of the PO Form 6 appointment for property managers

With the upcoming rental reforms coming into effect on 1 October 2022, it is a good time for property agents to review all Property Occupations Form 6 Appointment and reappointment of a property agent, resident letting agent or property auctioneer (PO Form 6 Appointment) to ensure that they are valid and that any variations made to the PO Form 6 Appointment are enforceable.

In this article, we examine some of the requirements for a valid Form 6 Appointment relating specifically to property management and some common mistakes that are being made by property agents and resident letting agents.

Requirements for a valid PO Form 6 Appointment

A real estate agent or resident letting agent must not provide management or other services to a client if they have not been validly appointed.^[1]

The PO Form 6 Appointment must be completed in accordance with the requirements of the legislation and must be signed by the client before an agent can lawfully provide any services to the client.

The general requirements, which must be satisfied in order for the PO Form 6 Appointment to be valid, are listed in section 104 of the Property Occupations Act 2014 (Qld) (PO Act). It is important that agents are aware that section 112(4) of the PO Act mandates that any appointment is ineffective from the time it is made if the appointment does not comply with section 104 of the PO Act. Accordingly, much care and consideration needs to be taken to ensure that all relevant information is included in the PO Form 6 Appointment.

Property agents and residential letting agents must be appointed using the approved form and the PO Form 6 Appointment must contain, inter alia:

• A prominent statement that the client should seek independent legal advice before signing the appointment;^[2]
• A statement outlining:

1. whether the appointment is a single appointment or a continuing appointment^[3];
2. the type of service to be performed by the agent;^[4]
3. the fees, charges and any commission payable for the service;^[5] if the commission payable for the service is expressed as a percentage of an amount of rent to be paid or collected, the appointment must state that the commission for the service is calculated and payable only by reference to either the actual rental for the property or the actual amount of rent collected (whichever is applicable); ^[6]
4. when the fees, charges and any commission for the service become payable;^[7]
5. any expenses, including advertising and marketing expenses, the agent is authorised to incur in connection with the performance of each service or category of service;^[8]
6. the source and the estimated amount or value of any rebate, discount, commission or benefit that the agent may receive for any expenses that the agent may incur in connection with the performance of the service;^[9]
7. any condition, limitation or restriction on the performance of the service;^[10] and
8. a statement that the appointment may be revoked by either party giving the other party at least 30 days written notice of the revocation, unless the parties agree, in writing, to an earlier day for the appointment to end.[11]

The PO Form 6 Appointment must be signed and dated by the client and the property agent or residential letting agent before any management services are provided (including advertising the property or showing the property to prospective tenants).^[12] Furthermore, an agent must provide the client with a signed copy of the PO Form 6 Appointment or potentially face a penalty of up to $28,750 (200 penalty points).

All sections of the POA Form 6 Appointment must be completed for the appointment to be valid.

Common Mistakes

As solicitors for the REIQ Professional Indemnity Scheme, we often see many claims arise due to incorrectly completed PO Form 6 Appointments. Some common mistakes, include:

• Listing the commission payable to the agent on the PO Form 6 Appointment as an amount which excludes GST, such as "3% of rent paid + GST". The commission payable must be inclusive of GST. The commission can be expressed in a number of ways, which may include as a percentage or a flat fee (or a combination of both), however, it is imperative that agents clearly express the commission payable and that the client fully understands the likely amount;
• Failing to insert a written statement into Part 7 of the PO Form 6 Appointment, which complies with section 105 of the PO Act, in circumstances where agents elect to express the commission payable as a percentage of an estimated rental price;
• Commencing services outlined on a PO Form 6 Appointment without the PO Form 6 Appointment being signed and dated by both the client and agent;
• Failing to provide the client with a copy of the PO Form 6 Appointment;
• Failing to record minor amendments on the PO Form 6 Appointment and failing to ensure all parties note their agreement by writing their initials and the date next to the amendment;
• Failing to draft a fresh PO Form 6 Appointment in the event of major amendments, such as changes to the fees, charges or commission payable for the agent's service;
• Failing to list any annexures or schedules in Part 9 of the PO Form 6 Appointment; and
• Omitting the end date of the appointment for single appointments.

Conclusion

Without a valid appointment in place, an agent is not entitled to claim its commission for services they purport to provide and face penalties of up to $28,750 (200 penalty units).

It is therefore critical that all agents take the time at the very start to ensure the PO Form 6 Appointment has been correctly completed and complies with the legislative requirements.

Also, by ensuring that agents a fully aware of their legislative obligations and best practices for handling new appointments, it is possible to minimise the risk of claims.

The REIQ recommends using its New Residential Property Management Checklist available in Realworks, which sets out how to complete each section of the PO Form 6 correctly and ensure compliance.

In the next REIQ Journal we will examine the requirements for a valid PO Form 6 Appointment specifically relating to sale agents.

References

[1] Property Occupations Act 2014 s 102(1), (3).

[2] Property Occupations Act 2014 s 104(1)(a).

[3] Property Occupations Act 2014 s 104(1)(b).

[4] Property Occupations Act 2014 s 104(1)(c)(i).

[5] Property Occupations Act 2014 s 104(1)(c)(ii).

[6] Property Occupations Act 2014 s 105.

[7] Property Occupations Act 2014 s 104(1)(c)(iii).

[8] Property Occupations Act 2014 s 104(1)(c)(iv).

[9] Property Occupations Act 2014 s 104(1)(c)(v).

[10] Property Occupations Act 2014 s 104(1)(c)(vi).

[11] Property Occupations Act 2014 s106(2).

[12] Property Occupations Act 2014 s 109(1).