Real Estate and Business Agents Act 1978

The Act primarily affects four classes of persons: licensees (agents), registered sales representatives, developers, and consumers (principals, purchasers, tenants and claimants against the Fidelity Account).

Licensees (defined in s.4(1) as persons licensed under the Act) include individuals, firms and bodies corporate carrying on business as real estate or business agents. They are prohibited from operating without a licence and current triennial certificate (s.26(1)). Individuals must satisfy character, fitness, resources and understanding criteria (s.27); firms and bodies corporate must ensure controlling persons are fit, have adequate resources, meet minimum licensed-person requirements and place bona fide control in a licensee (ss.28-29). Licensees must maintain registered and branch offices (ss.36-37), notify commencement or cessation of business (s.35), comply with educational requirements (s.40B), exhibit notices (s.41), keep trust accounts (s.68), submit to annual audits (s.70), avoid conflicts (s.64), and adhere to codes of conduct (s.34(1)). Breach exposes them to SAT discipline (ss.102-103), automatic cancellation for certain offences (s.104), and personal liability for directors where the licensee is a body corporate (s.139).

Registered sales representatives (natural persons only – s.42) negotiate transactions on behalf of agents or developers. They must hold current certificates of registration (ss.44-45), notify changes of employment (s.51), comply with educational requirements (s.50C) and codes of conduct (s.50(1)), and may not act for more than one principal (s.55). Partners and directors of licensees must also be registered in certain cases (s.46). Representatives are subject to SAT discipline (s.103(3)-(4)) and employment restrictions if their registration has been cancelled twice (s.106).

Developers (persons selling real estate on their own behalf – s.4(1)) must register their principal place of business (s.57), notify changes (s.58), keep records of transactions (s.59), and ensure any real estate sales representatives they employ are registered (s.54(2)). They are caught by advertising rules (s.62), document-copy obligations (s.63) and the prohibition on charging for keys or tenancy information (s.66). Developers may be parties to conciliation (s.23C(7)) and are jointly liable with agents under franchising agreements (s.56(3)).

Consumers include vendors, purchasers, lessors, lessees, tenants and any person suffering loss from a defalcation. The Act confers rights to written appointments (s.60), copies of signed documents (s.63), conflict-of-interest disclosures (s.64), proper apportionment of outgoings (s.65), and compensation from the Fidelity Account (s.116). First-home buyers may receive grants for incidental expenses (ss.131L-131N). Claimants against the Fidelity Account must exhaust other remedies (s.117(1)), are subject to time bars (s.116(2)), and cannot recover interest on judgments (s.117(3)). Spouses, de facto partners and certain insiders are excluded from fidelity claims (s.117(5)).

The Commissioner (defined via the Fair Trading Act 2010 s.6) exercises licensing, approval, audit, investigation and claim-determination functions. The SAT determines reviews (s.23) and disciplinary matters (s.103). Authorised financial institutions hold trust moneys, pay interest (s.68B) and must disclose accounts on request (s.100). Auditors owe confidentiality duties (s.82) but must report breaches (s.81). The chief executive officer administers the Fidelity, General Purpose, Interest and Assistance Accounts (ss.112, 124A(2), 125(2), 131G).

Indirectly the Act affects lenders (as "lending institutions" under s.131A), settlement agents, legal practitioners and valuers whose fees may be covered by home-buyer grants. It does not apply to court-appointed receivers, official trustees in bankruptcy, authorised probate corporations, certain Corporations Act licensees dealing in securities, or prescribed holiday-accommodation agents (s.4(4)).

Duties of licensees and representatives are both positive and negative. Positive duties include maintaining trust accounts and paying client moneys into them "as soon as practicable" (s.68(1)), issuing prescribed receipts (s.69(1)(a)), keeping auditable records balanced monthly (s.68(6)), notifying the Commissioner of trust-account openings and closures (s.68C), and delivering audit reports within three months of year-end (s.70(3)). Agents must ascertain that rates and outgoings are paid and apportioned before settlement (s.65(1)), supply copies of signed documents immediately (s.63), and exhibit prescribed notices (s.41). Educational compliance is mandatory (ss.40B, 50C). Licensees must surrender licences in prescribed circumstances (ss.34C-34D) and notify changes of business name or address (ss.40(3), 58).

Negative duties prohibit unlicensed holding-out (s.26), demanding commission without a valid written appointment (s.60(3)), acting under unapproved franchising agreements (s.56(1)), demanding tenant payments for letting (s.61A(1)), charging for keys or tenancy information (s.66(1)), and having undisclosed interests in transactions (s.64(1)-(2)). Representatives must not serve multiple principals (s.55(1)) or permit use of their certificate by others (s.52(2)).

Rights are largely protective. Consumers have a right to a written appointment disclosing services, property, remuneration method and containing prescribed information (s.60(2)), a copy of any signed document (s.63), and prior written consent before an agent or employee takes an interest (s.64). Claimants against the Fidelity Account may recover for defalcation occurring while the licensee held a current triennial certificate (s.116(1)), subject to the chief executive officer's discretion for post-cancellation defalcations if just and reasonable. First-home buyers meeting criteria formulated under s.131O may receive grants up to the prescribed maximum toward incidental expenses (s.131M(3)(a)).

Licensees and representatives have rights to procedural fairness before adverse licensing decisions (s.24(5)), before imposition or non-removal of special conditions (ss.34AA(3), 34AB(2), 50AA(3), 50AB(2)), and to SAT review of reviewable decisions (s.23(1)). They may surrender licences or certificates (ss.34C, 53) and apply for late renewal within defined windows (ss.32-33, 49). Auditors may examine books at any time (s.77(2)) but must maintain confidentiality except for statutory reports (s.82). Financial institutions must be given notice before restraint orders (s.99) and may seek discharge or variation (s.97).

The Commissioner may initiate investigations under the Fair Trading Act 2010 Part 6 (s.22), require information about trust accounts (s.100A), disallow claims not notified timely (s.116(2)), and appoint supervisors (s.94). The SAT may suspend licences for non-compliance with its orders (s.34B), restrain bank accounts (s.92), appoint supervisors (s.93), and make distribution schemes (s.98).

Penalties are graduated. The most serious offence – carrying on business without a licence or current triennial certificate – attracts a fine of $100 000 (s.26(1)). Acting or holding out as an unregistered sales representative carries a $25 000 fine (ss.44(1)-(2), 45(1)-(2)). Permitting use of a licence or certificate by another person also attracts $100 000 (s.39(3)). Trust-account offences are particularly heavily sanctioned: improper withdrawal or failure to pay entitled persons carries a fine of $25 000 or two years' imprisonment (s.84(1)(a)); failure by financial institutions to pay interest to the Interest Account attracts $50 000 (s.84(1)(b)). Other trust-account breaches carry $25 000 (s.84(1)(c)).

Lower-tier offences include failure to register an office or nominate a branch manager ($1 000 – ss.36(1), 37(1)-(2)), failure to notify changes ($1 000 – s.40(3)), demanding commission without entitlement ($5 000 – s.60(3)), exceeding maximum remuneration or demanding unjust remuneration ($5 000 – s.61(5)), demanding tenant payments ($5 000 – s.61A(1)), conflicts of interest ($5 000 – s.64(1)-(2)), charging for keys ($5 000 – s.66(1)), and hindering supervisors ($4 000 – s.96). General offences carry $2 000 (s.142(2)). False or misleading information to the Commissioner or chief executive officer carries $20 000 (s.134A(1)). Corporate officers are personally liable for corporate offences (s.84(2), s.139).

Enforcement is multi-layered. The Commissioner may investigate under Fair Trading Act 2010 Part 6 (s.22), obtain trust-account information (s.100A), refuse or condition licences (ss.24, 34AA), and refer matters to SAT for discipline (s.102). SAT may reprimand, fine, suspend, cancel or disqualify (s.103(1)), order repayment of improper commission or profit (s.103(1)(d)-(e)), and make restraining or supervisory orders (ss.92-93). Certain convictions automatically cancel licences (s.104); courts have additional sentencing powers for repeat or turpitudinous offences (s.105). The chief executive officer may disallow fidelity claims not notified within time (s.116(2)), settle claims after exhaustion of other remedies (s.117(1)), and apportion insufficient funds according to hardship (s.120(3)). Criminal proceedings may be brought by the Commissioner within three years (or later with Ministerial consent – s.143), with certificates of licensing status prima facie evidence (s.134(3)).

Civil recovery is preserved: improper commission may be recovered as a debt (ss.60(4), 61(6)), as may amounts received in breach of conflict rules (s.64(5)). Supervisors may require production of documents (s.95) and court orders may be enforced as judgments (s.92(4)).

The Act is not a code. Section 140 expressly preserves other rights and remedies. It interacts with the Fair Trading Act 2010 at multiple points: the Commissioner is defined by reference to that Act s.6; investigations and inquiries are imported via s.22 and Part 6; confidentiality obligations are applied via s.138; and authorised officers may require bank disclosure under s.100. SAT review and disciplinary jurisdiction derive from the State Administrative Tribunal Act 2004 (ss.23, 34B, 50B, 92-93, 97-98, 102-103).

Auditor qualifications cross-reference the Corporations Act 2001 Part 9.2 (s.72(1)). Exclusions for financial services licensees dealing in securities (s.4(4)(b)-(c)) prevent overlap with the Commonwealth regime. Trust-account interest distribution (s.127) and fidelity claims interact with the Financial Management Act 2006 through special purpose accounts (ss.107, 124A, 125, 131B). Home-buyer assistance references the Duties Act 2008, Settlement Agents Act 1981 and Residential Tenancies Act 1987 (via definitions in s.131A and s.61A(3)).

Strata and community titles legislation is engaged by deeming provisions (s.4(3a)) and prescribed-transaction rules (s.61(4a)(aa)-(a)). Bankruptcy and probate exclusions (s.4(1) definitions of business agent and real estate agent; s.4(4)(a)) align with the Bankruptcy Act 1966 (Cth) and State probate laws. Transitional provisions (Part XI) interface with the Acts Amendment (Fair Trading) Act 2010, abolishing the former Board and transferring functions.

The Act prevails over inconsistent contractual waivers (s.141) but yields to specific later legislation where expressly overridden. Regulations under s.145 may prescribe bodies for authorised financial institutions (s.145(2)(f)) and lending institutions (s.145(2)(ja)), linking to banking and finance statutes.

The compilation table reveals a pattern of incremental but significant amendment. The Consumer Protection Legislation Amendment Act 2019 (No. 25 of 2019) introduced or refined special conditions on licences and certificates (ss.34AA, 34AB, 50AA, 50AB), educational requirements (ss.40B, 50C), surrender obligations (ss.34C, 34D), cancellation for insufficient resources (s.105A), and increased several penalties (e.g. ss.26, 39, 44-46, 84). These changes responded to regulatory gaps exposed by practitioner misconduct and aligned the Act with contemporary risk-based licensing.

The Licensing Provisions Amendment Act 2016 (No. 44 of 2016) streamlined application processes, removed redundant notice requirements and adjusted late-renewal provisions (ss.24, 33, 43, 49, 134A). Earlier, the Acts Amendment (Fair Trading) Act 2010 (No. 58 of 2010) fundamentally restructured administration: it abolished the former Board, transferred powers to the Commissioner, inserted SAT review rights (s.23), applied Fair Trading Act 2010 investigation powers (s.22), and created the Education and General Purpose Account (Part VIIIA). These reforms were driven by national competition policy, separation of policy and regulatory functions, and the need for a modern administrative tribunal.

The Real Estate Legislation Amendment Act 1995 (No. 59 of 1995) introduced the separate-account facility (s.68A), interest-remittance obligations (s.68B), levy powers (s.115), and the tripartite distribution of Interest Account moneys (s.127), while expanding fidelity claim time limits and defences. The home-buyer assistance scheme (Part IXA) was added by the Real Estate and Business Agents Amendment Act 1982 (No. 29 of 1982) to address affordability pressures.

Each wave of change has been justified by the need to strengthen consumer protection, reduce regulatory burden, align with national standards, and respond to emerging risks (e.g. inadequate resources leading to s.105A). The 2019 amendments in particular responded to reviews identifying weaknesses in condition-imposition processes and educational standards.

The Act itself does not contain reported cases, but its provisions have generated SAT and Supreme Court litigation on proper cause, fidelity claims and procedural fairness. SAT decisions have explored the meaning of "fit and proper" (cross-referencing Schedule 1 qualifications and s.27(2)), with character findings often turning on prior dishonesty or regulatory breaches. In disciplinary matters under s.103(2)(d), SAT has held that unfitness may arise from conduct falling short of criminality but demonstrating disregard for statutory obligations.

Fidelity Account litigation has centred on the "defalcation" definition in s.4(1). Courts have required a causal link between the licensee's business and the loss, excluding purely personal fraud. Time-bar disputes under s.116(2) have tested when a claimant "became aware" of the defalcation, with SAT adopting an objective test that constructive notice may suffice. Subrogation under s.119 has produced controversy where insurers or co-claimants assert priority; the State’s statutory subrogation has been upheld as overriding equitable doctrines.

Procedural controversies have arisen around ex parte restraint orders (s.92(3)) and supervisor appointments (s.93). Applicants have argued insufficient evidence of deficiency, but SAT has accepted "reasonable grounds" as a low threshold. Challenges to Commissioner decisions imposing special conditions (ss.34AA, 50AA) have emphasised the mandatory procedural fairness steps; failure to allow submissions has led to set-aside orders.

Controversies also surround the home-buyer assistance scheme. Eligibility criteria formulated under s.131O have been criticised for excluding certain dwelling types or failing to keep pace with rising incidental costs. The exclusion of spouses and insiders from fidelity claims (s.117(5)) has been challenged on equality grounds but upheld as a legitimate anti-fraud measure. The automatic cancellation triggered by certain offences (s.104) has raised double-jeopardy concerns when SAT later imposes further sanctions, though s.103(6) makes clear that statutory penalties do not limit SAT powers.

Overall, litigation has clarified that the Act’s protective purpose prevails over literal readings that would narrow consumer remedies, but strict compliance with procedural and time provisions is required.

Most practitioners realise that commission is irrecoverable without a compliant written appointment (s.60), yet many overlook the precise content requirements: the document must "clearly set out the method by which the amount of any commission, reward or other valuable consideration … is to be calculated" (s.60(2)(iia)). An hourly rate or "reasonable fee" formula has been held insufficient by SAT; the method must enable the client to verify the final sum before signing.

A subtler trap is the interaction between s.68(4) and s.4(3). Moneys collected post-settlement for rents or mortgage payments are deemed received "in the course of his business" even if the agent did not negotiate the original transaction. Failure to bank them to trust account within the required timeframe can trigger both disciplinary action and fidelity claims years later.

Few licensees appreciate that directors of a corporate licensee are jointly and severally liable for defalcations and SAT orders (s.139), even if they take no active role in day-to-day management. The "in accordance with whose directions or instructions the directors … are accustomed to act" extension (s.139(4)) can capture shadow directors or controlling shareholders.

The separate-account facility (s.68A) is rarely used but carries a hidden compliance burden: the agent must still comply with all audit and reporting obligations, and interest must be paid to the client even if the institution fails to remit it. Auditors have been known to qualify reports where institutions have not paid the prescribed interest under s.68B, exposing the agent to Commissioner direction to top up the account.

Another gotcha is the 12-month post-expiry renewal window under s.33. If more than 12 months have elapsed, the triennial certificate cannot be back-dated; business conducted in the interim is unlicensed, potentially voiding appointments and exposing the practitioner to s.26 penalties and fidelity claims. SAT has refused to exercise discretion where the licensee continued trading knowing the certificate had expired.

Finally, the fidelity claim time bar (s.116(2)) runs from when the claimant "became aware" of the defalcation, not from the date of the loss. In complex schemes involving commingled funds, courts have held that awareness arises when the claimant receives the auditor’s report or bank statements showing the shortfall, not when the agent first misappropriates. Claimants who delay notifying the chief executive officer pending civil action against the licensee risk complete disallowance.

Compliance begins with licensing hygiene. Applicants should prepare evidence addressing each s.27(1) or s.47(1) criterion, including Schedule 1 qualifications and two years’ practical experience where claimed. Firms and bodies corporate must maintain at least the minimum number of licensed principals (ss.28(c), 29(c)) and ensure the bona fide controller is licensed and gives "substantial time and attention" (s.132). Changes in directors, partners or control must be notified immediately; failure triggers mandatory surrender under s.34D.

Trust-account compliance requires a written procedure manual covering receipting (s.69(1)), next-day entry (s.68(6)(b)), monthly balancing (s.68(6)(d)), and monthly reconciliation to bank statements. Separate accounts should be opened only after confirming prescribed requirements (if any) are met (s.68A(4)). Auditors must be appointed at licence application (s.73(2)) and any change approved by the Commissioner (s.73(3)). Interim reports to the Commissioner are mandatory upon discovery of irregularities (s.70(6)).

Appointment documents must be pre-approved templates containing all s.60(2) elements. Remuneration should be calculated by reference to a Gazette notice under s.61(1) where available; otherwise a clear formula (e.g. "X% of the purchase price plus GST") must be stated. Conflicts must be disclosed and written consent obtained before any personal interest is acquired (s.64).

Annual audits must be lodged within three months of 31 December (or approved substituted date – s.71). Agents with no trust activity must still file a statutory declaration (s.86). Educational records demonstrating compliance with regulations made under s.145 should be retained for SAT or Commissioner scrutiny.

Fidelity Account contributions and levies must be paid on every licence or registration application (ss.113, 115); non-payment prevents issuance. Claims against the Account should be notified in writing as soon as awareness arises, supported by all available documents (s.124). Licensees facing potential claims should immediately notify the Commissioner to preserve insurance and supervisory options.

Developers must register their principal place of business (s.57) and keep transaction records for the approved period (s.59). All parties should maintain a central compliance calendar tracking triennial renewals, audit deadlines, educational CPD, and office-notice updates.

In practice, implement a three-lines-of-defence model: operational staff follow checklists, a compliance officer reviews appointments and trust movements, and external auditors test the system. Regular training on codes of conduct (s.101) and conflict scenarios reduces SAT referrals. Where doubt exists, seek Commissioner pre-approval under s.34A or legal advice; the Act’s non-waiver provision (s.141) means contractual indemnities will not protect against statutory breaches. Consistent documentation and prompt reporting remain the safest shields against both civil recovery actions and regulatory sanction.