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Real Estate Agents’ Commission at Risk in Victoria

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Real Estate Agents’ Commission at Risk in Victoria

Real estate agents who have used REIV Exclusive Sales Authority forms are exposed to claims by vendors that they are not entitled to any commission following the decision of the Court of Appeal of the Supreme Court of Victoria in Advisory Services Pty Ltd (t/a/ Ray White St Albans) v Augustin & Anor [2018] VSCA 95.

The VSCA has determined that the REIV Exclusive Sales Authority form used by the agent did not comply with the Estate Agents Act 1980 (VIC) (“EAA”), as it did not contain a rebate statement in accordance with wording prescribed in s49A(4)(c) of the EAA

The agent is not entitled to retain any rebate and must not charge the client an amount for any expenses that is more than the cost of those expenses.

The consequence of the noncompliance was that the agent was not entitled to any commission on the sale of the property pursuant to s50 of the EAA.

The REIV Exclusive Sales Authority form used by the agent in Advisory Services contained a statement that had been approved by the director of Consumer Affairs Victoria in accordance with s49A(4) of the EAA that:

Item 6:  Rebate Statement – No Rebate will be received

The agent will not be, or is not likely to be entitled to any rebate.  A rebate includes any discount, commission, or other benefit, and includes non-monetary benefits.

However, the VSCA found that s49A(4)(c) of the EAA required strict compliance by agents, and the rebate statement in the REIV Exclusive Sales Authority had omitted the prescribed wording in s49A(4)(c) set out above.   The fact that the rebate statement had been approved by the director of Consumer Affairs Victoria did not relieve the agent from the obligation to provide the rebate statement prescribed by s49A(4)(c) of the EAA.

Consumer Affairs Victoria has recently published on its website a notice to agents that in addition to using the director-approved rebate statement in their sale authorities, they must also include all the other requirements of section 49A of the EAA.   Presumably the REIV will amend its Exclusive Sales Authority forms to include the rebate statement prescribed by s49A(4)(c) of the EAA.

Not only will the VSCA decision have far-reaching consequences for real estate agents who have used the Exclusive Sales Authority forms, but also for vendors, for the REIV (which has supplied the Exclusive Sales Authority forms to real estate agents), and perhaps for Consumer Affairs Victoria (which approved the short form rebate statement).

Marsh & Maher Richmond Bennison is currently acting for a real estate agent in proceedings involving the agent’s entitlement to commission and/or third party indemnity in circumstances where the REIV Exclusive Sales Authority form was used.

If you require any advice in relation to the REIV Exclusive Sales Authority forms or rebate statements used in recent sales, please contact Amy Sheggerud-Woods on 9604 9400 or amy@mmrb.com.au .

 

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