Conveyancing contracts have been in the news recently, particularly with the recent story about the young Brisbane couple who lost the $75,000 deposit when the settlement of their contract fell over.
With the housing market moving quickly at the moment, we are seeing properties go on the market and offers made and contracts signed in hours, not even days or weeks.
Perhaps surprisingly, conveyancing is an area where disputes are very common. Disputes arise over building & pest inspections, and finance, and increasingly where a conveyancing contract is also tied to a new building and construction contract, for the building of a new home on vacant land, or renovations to an existing property, once a sale is completed.
But conveyancing is also the scene of disputes between sellers and their real estate agents, sometimes even before a sale is made.
The conduct of real estate agents is governed in Queensland by the Property Occupations Act 2014 (“the Act”), and agents must get a seller to sign a completed ‘Form 6 Appointment and reappointment of a property agent’ (“Form 6”) in order for the appointment of the agent to be legally valid.
A Form 6 will explain the basis of the agent’s appointment, including whether the appointment is an exclusive agency (only 1 agent engaged) or an open listing (more than 1 agent), and will outline the circumstances when a commission is payable to the agent, the amount of the commission, plus other fees and charges an agent can legally charge.
Typically, things like advertising fees can legally be charged, and maintenance items.
However, we have recently experienced an uptick in real estate agents blurring the lines about what fees and charges they can legally charge in a Form 6 and specifically, agents proposing to charge ‘Contract Process Fees’ or similar fees for preparing the sale contract. We have seen agents proposing to charge over $500 for that service, on top of the already generous commissions.
Eager owners looking to take advantage of the current ‘seller’s market’ might not even think to check the Form 6 properly, but they should take care to do so. Section 219 of the Act states that a real estate agent “must not charge a fee for the provision, preparation or completion of a document for a transaction relating to or arising out of the performance of their activities” – in short, an agent can’t charge you a fee for preparing the sale contract on top of their commission.
An agent can be fined over $27,000 for doing so, but relevantly for clients, you can’t be charged a ‘contract process fee’ and you can legally ask them to remove that from the Form 6, or refuse to sign until they do.
We encourage clients to carefully read any legal document before they sign it, whether that is a Form 6, an REIQ sale contract, or a building and construction contract with a builder, and to urgently seek legal advice if they have any doubts whatsoever.