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P A G E 4 5
R E I Q J O U R N A L
| J U N E 2 0 1 6
The name of the person or entity and
the nature of the relationship needs to
be set out columns 1 and 2 of Part 3:1 in
the Form 8. The value or consideration
an agent derives or expects to derive
needs to be set out in column 3. Finally,
in column 4 the agent needs to disclose
the amount, value or nature of a benefit
which the person or entity to whom
the agent has referred the buyer has
received, receives or expects to receive in
connection with the sale, or for promoting
the sale, or for providing a service in
connection with the sale of the property.
If the exact amount of value of the
benefit is not known, a reasonable
estimate of the final amount or value
based on the purchase price at the time
of disclosure still needs to be provided.
Benefits
The Form 8 Notice document
includes a list of benefits that
need
to be disclosed, including, but not
limited to:
• Fees, commissions and
remuneration to be paid to any
entity which receives or expects to
receive a benefit including but not
limited to financial institutions,
finance brokers, financial advisors,
financiers, valuers, marketing
agents, sellers and promoters;
• All benefits dependent upon a
successful sale (ie a commission
or fee paid to any person as a
success fee); and
• Marketing, advertising and
promotion costs, where payment is
contingent on the sale of the property.
Some common benefits that may need
to be disclosed include conveyancing
related fees, insurance referral fees
and mortgage broker fees. As a general
rule, any benefit that is contingent
upon the sale of the property needs to
be disclosed in the Form 8.
Benefits that
do not need
to be
disclosed, include, but are not limited to:
• Mortgage pay-outs;
• Performance bonuses;
• Expenses incurred prior to the sale
in preparation of the property sale
and in developing the land (such as
professional fees and disbursements
paid to engineers, surveyors,
architects and town planners);
• Seller’s profit or net proceeds of sale;
• Property developer’s profit or
development fees;
• Non-monetary benefits;
• Solicitors’ professional fees and
ordinary disbursements in relation
to the developing, selling or
purchasing of the property; and
• Amounts payable to local, state or
federal government.
Pursuant to s 157(2) of the Act, if
the entity receiving the benefit is
a residential property agent and
the benefit is the amount the agent
received, receives or expects to receive
by way of fee, charge or commission
from the seller for the sale, then this
does not have to be disclosed.
Property Management
Appointments
Whilst the Form 8 relates only to
the sale of residential property,
s 104(c)(v) of the Act provides that
an appointment of property agent
(Form 6) must include the source
and the estimated amount or value
of any rebate, discount, commission
or benefit that the agent (both sales
agents and property managers) may
receive for any expenses that the
agent may incur in connection with
the performance of the service.
In accordance with s 112(4) of the Act,
the Form 6 may be ineffective from
the time it is made if this information
is not included.
Accordingly, property managers
also need to disclose in section 4,
Part 8 of the Form 6, the source and
the estimated amount or value of
any rebate, discount, commission
or benefit that they may receive for
any expenses that they may incur in
connection with the management of
the property.
This may include, insurance referral
fees and bond payment referral
fees. As a matter of best practice,
if a property manager is referring a
potential tenant to a company that
provides upfront bond payment
loans, we recommend that any
benefits are also disclosed to the
potential tenant.
Conclusion
It is imperative that agents acquaint
themselves with the disclosure
requirements of the Act, the
Form 6 and Form 8 to ensure
proper consideration is given
to the disclosure of benefits in
circumstances where the maximum
penalty under s 157 of the Act is
$23,560 (200 penalty units).
If sales agents or property managers
are in any in any doubt about what
their obligations are, they should
refer to the relevant legislation and, if
necessary, seek advice from the REIQ
Agency Advisory Service, which can
be contacted on 3249 7347.