The NSW Office of Fair Trading has recently embarked on a 3 month blitz on agents who may be illegally underquoting.
The NSW Fair Trading Minister, Linda Burney, has recently announced that up to 40 investigators will be attending open house inspections and auctions to compare advertised prices with sale prices. The blitz is to be carried out over the next 12 weeks across all areas of Sydney. Agents found guilty of under-quoting face fines of up to $22,000 and the loss of their license.
Agents should be aware of the obligations they face pursuant to Division 5 of the Property, Stock & Business Agents Act 2002 (NSW) (the "Act"). In particular, section 51, which provides that a licensee must not publish or cause to be published any statement that is materially false, misleading or deceptive (whether to the licensee’s knowledge or not). It is a defence under this section if the person proves that they took all reasonable precautions against committing the offence; and the person believed on reasonable grounds that the statement was true; and the person had no reason to suspect that the statement was false or misleading.
Section 51 of the Act resembles section 52 (1) of the Trade Practices Act 1974 (Cth), which provides that a corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
Another important provision of the Trade Practices Act is section 53A (1) (b), which specifically prohibits the making of false or misleading representations concerning the price payable for land. The best way of avoiding/limiting the likelihood of being found in breach, is to ensure any representations about a property are as accurate as possible and to ensure that wherever possible, you have supporting material, or the advice of appropriately qualified experts on the issues.
When advertising the price of a property, whether it be for auction or for private sale, you have a duty to give a true and accurate representation of the expected price of the property. In practice, this is done by making comparisons to similar properties recently sold in the area.
Undoubtedly the most important section in the Trade Practices Act is s52 (1). Although the section is short, and relatively innocuous, it has the potential to be an extremely powerful legislative tool in the hands of an unhappy client, a competitor, or the ACCC. It is powerful because conduct which is ‘likely’ to mislead or deceive someone is enough to be found in breach. Section 52 and the words ‘misleading and deceptive conduct’ have been given the widest imaginable interpretation by Courts across Australia. It is very rare that loopholes can be found to protect an agent who has had a claim made against them pursuant to s52.
It is clear that the Property, Stock & Business Agents Act and Trade Practices Act are fundamental to all agents’ day to day activities. Each and every agent should be acutely aware of the obligations they face, especially in light of the crackdown being carried out over the next 12 weeks.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.