Real Estate and Business Agents and Sales Representatives Code of Conduct 2016

The Code introduces or refines several core concepts that underpin the regulation of real estate and business agency work in Western Australia.

Client is defined broadly in rule 3(1) to include not only a current client but also, where the context permits, a prospective client. For sales representatives, client also includes a client of their employing licensee or developer. This expansion means that pre-contractual dealings with a potential principal may trigger the Code’s duties before a formal appointment is signed. An agent must therefore act in the best interests of a prospective client even during initial negotiations, which creates practical uncertainty about when the duty crystallises.

Fiduciary obligations are referenced in rule 13 as a standalone duty, requiring compliance with any obligation arising from a fiduciary relationship. This is not a complete codification of fiduciary law; rather, it incorporates the equitable rules that would otherwise apply. The Code does not define the precise scope of the fiduciary relationship, so it remains for courts and tribunals to determine its boundaries on a case-by-case basis. The main consequence is that agents cannot profit from their position without informed consent and must avoid conflicts of interest.

Material facts are defined in rule 24(1) as all facts material to the transaction that a prudent agent would ascertain or verify. The agent must make all reasonable efforts to ascertain or verify these facts before the client executes any contract for sale or lease. This places an affirmative investigative duty on the agent, going beyond mere non-disclosure. The agent must also promptly communicate any material fact to any person who may be affected and appears unaware of it (rule 24(2)). This duty extends to potential purchasers and lessees, not just the agent’s own client. The breadth of “any person who may be affected” could capture neighbours, financiers or other interested parties, imposing a potentially wide disclosure burden.

Appointment to act (rule 17) requires a written appointment before an agent can act or represent that they are acting for a person. Changes to the appointment must also be in writing, though they can be made by amendment to the original document. This eliminates oral agency appointments and any reliance on implied authority. An agent who markets a property or negotiates without a signed appointment risks breaching the Code even if a verbal agreement exists.

Discounts and rebates (rule 18) from service providers (stocktakers, tradespeople, advertising providers) must be disclosed in full nature, extent and amount to the client, who must give written consent before the agent can demand or receive them. This targets hidden kickbacks that may distort the agent’s incentives when recommending suppliers. The rule is economically significant because it removes the ability of agents to capture third-party rebates without client awareness, which may increase the net cost to clients if agents pass on otherwise hidden revenue streams.

Supplier recommendations (rule 16) require disclosure of any significant relationship, connection or affinity between the agent and the supplier, as well as any potential conflict of interest. Where the supplier is not a settlement agent, the agent must also disclose any commission accepted for the recommendation. For settlement agents, the agent must not accept any commission at all. This creates a strict prohibition on referral fees for settlement work, eliminating a common cross-selling arrangement between real estate agents and conveyancers.

The Code applies directly to every licensed agent and every registered sales representative in Western Australia, as stated in rule 4(1). This includes agents who are principal operators of a business, employees of a licensee, and sales representatives employed by a licensee or developer. The effect flows through to the businesses they operate and the clients they serve.

Agents and sales representatives bear the primary compliance burden. They must adopt new documentation practices, particularly around written consents for multiple clients, referral arrangements, advertising authorisations, expense reimbursement caps, and market price opinions. Individual agents and sales representatives face personal liability for breach, which may affect their licence status and ability to continue working in the industry. The Code also requires agents who carry on a business to supervise and control all employees, paid or unpaid (rule 14). The person in bona fide control of a corporate or partnership agency must personally manage the business and frequently attend its offices (rule 14(4)). This prevents absentee owners from delegating all operational control to unlicensed managers.

Vendors and purchasers of real estate or businesses are indirectly affected as the beneficiaries of the disclosure and conduct duties. Vendors gain stronger protections against undisclosed rebates, inflated expense claims and unauthorised advertising. Purchasers benefit from the requirement that agents disclose their relationship with a vendor (rule 8) and from the material facts duty (rule 24), which gives them earlier access to information a prudent agent would verify. However, those protections come at a cost: agents may pass on increased compliance overheads through higher commission rates or fixed fees.

Suppliers of goods and services such as stocktakers, tradespeople, advertising providers, finance brokers and settlement agents are affected by the restrictions on referral commissions. Settlement agents face a complete ban on paying or receiving commissions for referrals from agents, removing a revenue channel. Other suppliers may find agents less willing to recommend them unless they offer nothing of value, because the agent must now disclose any commission received and obtain client consent. This may reduce the flow of referral business to suppliers who historically paid referral fees.

Employees of agencies are subject to the supervision requirements of rule 14, but the Code does not impose direct duties on unlicensed employees. However, the agent carrying on the business must take all reasonable steps to ensure employees comply with the Act, regulations and Code. This effectively makes the employer vicariously liable for employee misconduct, which may encourage more stringent training and monitoring.

Developers who employ sales representatives are also captured because the definition of client includes the developer when the sales representative acts for them. Developer-employed sales representatives must comply with the same duties as agency-employed representatives.

The Code creates a matrix of duties owed by agents and sales representatives to clients and, in some cases, to other persons involved in transactions. It also confers corresponding rights on clients.

Duty to act in best interests (rule 5) is the overarching standard. It requires the agent to act in good faith and in the client’s best interests. This duty prevails over the agent’s own commercial interests, such as earning a quick commission. It may conflict with the agent’s desire to recommend in-house services or favoured suppliers. The duty is not absolute; it is qualified by the client’s reasonable instructions (rule 10(b)), so an agent must follow instructions that are not inconsistent with the client’s best interests.

Duty of care, diligence and skill (rule 6) codifies the tortious standard but sets no specific benchmark. It requires the agent to exercise the level of care and skill that a reasonably competent agent would exercise. This duty is particularly relevant to the material facts obligation and to market price opinions, where failure to investigate or support an opinion could constitute negligence.

Duty of honesty (rule 7) applies in all dealings with clients, other agents and other persons involved in a transaction. It is broader than the duty not to mislead; positive honesty may require correcting misunderstandings even where no representation was made.

Confidentiality (rule 9) prohibits disclosure of any confidential information obtained while acting for a client unless required by law or the client gives written informed consent. This survives the end of the agency relationship. It may impede an agent who wishes to use information from a previous client in later dealings.

Client identification verification (rule 25) imposes a specific, time‑sensitive duty when the agent receives instructions to offer real estate for sale. The agent must promptly obtain a copy of the certificate of title and verify the identity and authority of each person claiming to be the seller or their agent. This must occur before a contract for sale is executed. The obligation applies only to sale of real estate, not to leases or business sales. It does not require ongoing verification if the identity appears clear, but a failure to check could expose the agent to liability if the purported vendor turns out not to be the registered proprietor.

Right to informed consent appears repeatedly. Clients have the right to give or withhold written consent before an agent acts for multiple clients (rule 15), demands a discount or rebate from a service provider (rule 18), or conducts advertising without separate authority (rule 23). The consent must be fully informed, meaning the agent must explain the relevant circumstances and obtain written agreement. This right forces agents to reveal conflicts of interest that they might otherwise keep hidden.

Right to itemised expense information (rule 20) entitles a client to all information reasonably required to satisfy themselves that an expense was properly incurred and that the amount is correct. For advertising, sign boards, printed materials and promotions, the client must have agreed in writing to a maximum amount, which must be initialled. This creates a ceiling on reimbursable expenses, preventing agents from running open-ended advertising campaigns and then billing the client.

Duty to communicate offers promptly (rule 27) requires the agent to pass on each offer as soon as practicable. This prevents agents from withholding offers to create leverage or to increase their own commission. It applies to all offers, not just those the agent considers serious.

The Code itself does not prescribe maximum penalties or fines. Instead, enforcement occurs through the disciplinary provisions of the Real Estate and Business Agents Act 1978 (the Act). Rule 29(2) of the Code cross-references three key sections of the Act: sections 34(1), 50(1) and 103(2)(c)(iii) and (4)(c)(iii). These sections relate to the grounds on which an agent’s or sales representative’s licence or registration can be cancelled, suspended or made subject to conditions. A breach of the Code can therefore result in loss of the right to practice.

The Act (which is not reproduced in the source) typically empowers the Commissioner for Consumer Protection or the State Administrative Tribunal to impose disciplinary sanctions. These may include formal reprimands, fines, orders to pay compensation, suspension of licence for a fixed period, or outright cancellation. The Code’s status as subordinate legislation means that non-compliance is a matter that goes directly to fitness and propriety. An agent found to have systematically breached the Code may be deemed no longer a fit and proper person to hold a licence.

Compensation orders are available under the Act where a client suffers loss due to a breach. While the Code does not create a direct right to sue, a breach may also constitute a breach of fiduciary duty or negligence at common law, giving rise to separate civil liability. The Code itself does not provide for statutory damages; clients must rely on other causes of action.

Enforcement priorities are likely to focus on the more prescriptive rules that are easy to verify: failure to obtain a written appointment, failure to disclose a relationship with a vendor, failure to give a written market price opinion, and failure to verify client identity before sale. The overarching duties such as best interests and fiduciary obligations are harder to prove and may be reserved for more egregious cases.

Transitional immunity under rule 29 provided a two-month period from 5 October 2016 to 5 December 2016 during which agents were deemed not to have breached the Code if they complied with the 2011 Code instead. This immunity is now expired, so all agents must be in full compliance with the 2016 Code.

Private enforcement is not directly available. A client who suffers loss may report the agent to the Commissioner, who may investigate and take disciplinary action. The client may also sue the agent for breach of contract or negligence, and the Code may be used as evidence of the standard of conduct expected. However, the Code does not create a statutory cause of action.

The Code operates alongside the Real Estate and Business Agents Act 1978, which is its parent statute. The Act is the primary source of licensing and registration requirements, financial provisions (including trust accounts), and the disciplinary framework. The Code fills in the conduct standards that the Act leaves to regulation. Breach of the Code is a ground for disciplinary action under the Act, but the Act’s broader provisions, such as those relating to false representations and trust account mismanagement, remain independently enforceable.

Australian Consumer Law (WA) is directly incorporated by reference in two key rules. Rule 11 prohibits misleading or deceptive conduct within the meaning of the Australian Consumer Law (WA) Part 2-1. Rule 12 prohibits unconscionable conduct within the meaning of Part 2-2. This means that the test for misleading conduct and unconscionable conduct under the Code is identical to the test under the Australian Consumer Law. A finding of a breach of the Australian Consumer Law will automatically constitute a breach of the Code, and vice versa, though the remedies differ. The Australian Consumer Law provides for pecuniary penalties, injunctions, damages and other orders through the court system, while the Code’s enforcement is through the Act’s disciplinary process.

Fiduciary law is not displaced by the Code. Rule 13 confirms that agents must comply with any obligation arising from a fiduciary relationship. This preserves the common law equitable duties of loyalty, no-profit and no-conflict, which are not fully codified in the Code. Courts may impose stricter standards than the Code’s written duties. For example, a fiduciary must not put their own interests ahead of the client’s even if the client consents, unless the consent is fully informed and the transaction is fair. The Code’s requirement for written consent (rules 15, 18) reflects this fiduciary principle but does not supplant it.

Other WA legislation such as the Property Law Act 1969 and the Land Administration Act 1997 may impose additional disclosure obligations on vendors and agents, particularly concerning land title defects, encumbrances and zoning. The Code’s material facts duty (rule 24) operates concurrently with statutory disclosure regimes. An agent cannot rely on the vendor’s duty to disclose; the agent must make their own inquiries.

Common law of negligence is not superseded. The duty of care, diligence and skill in rule 6 parallels the common law duty of care, but the Code does not limit civil liability. A client may sue in negligence for economic loss caused by an agent’s failure to exercise reasonable care, and the Code’s standards will be relevant to establishing the standard of care expected.

Privacy laws may interact with the confidentiality rule (rule 9). The agent’s duty to keep client information confidential must be balanced against obligations under the Privacy Act 1988 (Cth) where the agent holds personal information. However, the Code permits disclosure if required by law, which includes lawful requests under privacy legislation.

Employment law intersects with rule 14, which requires an agent who carries on a business to supervise employees. This complements workplace health and safety obligations and industrial instruments. The term “frequently attend the offices” (rule 14(4)(b)) may affect how flexible work arrangements or remote supervision are structured.

The Code was published in the Western Australia Government Gazette on 4 October 2016. It replaced the Code of Conduct for Agents and Sales Representatives 2011, which was formally repealed by rule 28 of the 2016 Code. The repeal was not an abolition of the regulatory scheme but a consolidation and update. The 2011 Code had been in operation for approximately five years; the 2016 Code maintains its structure but introduces several new obligations, notably around supplier relationships, discounts and rebates, client identification and market price opinions.

Key changes from the 2011 Code include:

• Rule 16 (referrals) now requires disclosure of any significant relationship with a supplier and any commission accepted, and prohibits any commission for recommending a settlement agent.
• Rule 18 (discounts and rebates) is new and prohibits demanding or receiving a discount or rebate from a service provider unless the client is fully informed and consents in writing.
• Rule 25 (client identification verification) is new and requires the agent to obtain a copy of the certificate of title and verify the identity and authority of the seller before a contract is executed.
• Rule 26 (opinion of market price) is new and requires a written statement with reasons and supporting comparable sales data.
• Rule 19(c) now requires that a commission, reward or other valuable consideration not be initialled on the agreement by the client, which appears to be a new specific requirement (though similar to earlier general writing requirements).
• Rule 20(2) now requires a maximum amount for advertising and related expenses to be stated in the agreement and initialled.

Transitional arrangements: The 2016 Code allowed a two-month transition period (5 October 2016 to 5 December 2016) during which an agent could choose to comply with either the 2011 Code or the 2016 Code without penalty. After that period, only the 2016 Code applies.

No other amendments appear in the source. The compilation table at the end of the document shows only the original gazettal and commencement. There is no record of subsequent amendments up to the version provided. The Code as presented is the current law, but practitioners should check if later amendments exist outside the provided text.

The source does not mention any specific litigation involving this Code. Given that the Code is a regulatory instrument enforced through disciplinary proceedings, most adjudication occurs in the State Administrative Tribunal (SAT) or the Commissioner for Consumer Protection, rather than in court. Reported decisions under the 2016 Code are likely to be found in SAT rulings, but none are cited in the document.

However, the Code has been in operation since late 2016, so some disciplinary matters may have been decided. These would typically involve agents who failed to disclose relationships, did not obtain written consents, or breached the material facts duty. Because the source does not include any case references, this section must note that no litigation history is provided in the instrument itself. Practitioners should conduct their own search of WA SAT decisions and court cases citing the Code.

Notably, the Code’s predecessor (the 2011 Code) generated some litigation around the scope of fiduciary duties and the requirement to communicate offers. The 2016 Code’s more prescriptive rules, such as the explicit prohibition on settlement agent referral commissions, may reduce the scope for dispute by setting bright-line standards. Conversely, the material facts duty and client identification verification rules may create new grounds for complaint if agents fail to meet the “all reasonable efforts” standard.

It is also possible that the Code has been considered in commercial litigation between agents and clients, used as evidence of industry standards in contract or negligence claims. However, no such cases are mentioned, and it would be speculation to cite them.

Several provisions in the Code create traps for the unwary agent or sales representative, particularly those who have not updated their practices since the 2011 Code.

Multiple clients without written consent (rule 15): An agent cannot act for more than one client in a transaction unless the clients give fully informed written consent before the agent begins acting. This means the agent cannot negotiate a dual agency or represent both vendor and purchaser (with or without consent) until the paperwork is signed. Acting informally, even with verbal agreement, is a breach. The rule applies to all transactions, including leases and business sales.

Referral commissions for settlement agents (rule 16(3)(b)): A complete ban on accepting any commission, directly or indirectly, for recommending a settlement agent to a client. This is stricter than for other suppliers, where disclosure and client consent are required. An agent who receives a referral fee from a settlement agent, even if disclosed, still breaches the Code. The prohibition is absolute and includes indirect payments, such as through third parties.

Discounts and rebates (rule 18): The agent must disclose the full nature, extent and amount of any discount or rebate from a service provider and get written client consent. A vague disclosure such as “we may receive a discount from our advertising provider” is insufficient. The specific dollar amount or percentage must be stated. Failure to do so means the agent cannot lawfully demand or receive the rebate.

Expense reimbursement cap (rule 20(2)): For advertising, sign boards, printed materials and promotions, the client must agree in writing to a maximum amount, and that maximum must be initialled by the client. If the cap is not initialled, the agent cannot claim any reimbursement for those expenses, even if the client otherwise agreed. This is easily overlooked in an agency agreement that lists a range of expenses without a specific cap.

Market price opinion (rule 26): If an agent gives an opinion on current market price of real estate or a business, the agent must give the person a written statement of that opinion, the reasons on which it is based, and (if available) information about sales of similar real estate or businesses supporting the opinion. If the agent does not provide this written material, they cannot act as agent for that person. This means an offhand verbal market appraisal at an open home or in a marketing pitch may disqualify the agent from subsequently taking the listing unless the written statement is provided first.

Client identification verification (rule 25): The agent must obtain a copy of the certificate of title and verify the identity of each person claiming to be the seller or their agent before a contract for sale is executed. This must be done “as soon as practicable” after receiving instructions. An agent who rushes to exchange contracts without checking the title risks acting for a person who is not the legal owner, which would be a breach of the appointment and fiduciary duties. The rule applies only to sales of real estate, but agents dealing with business sales or leases should still take similar precautions to avoid potential fraud.

Definition of client includes prospective client (rule 3(1)): The Code’s duties may attach before a formal client relationship exists. This means an agent who begins advising a potential vendor without a signed appointment could still be held to the duties of best interests, honesty, and confidentiality. An agent who makes adverse comments about a property’s value during initial negotiations could later be accused of breaching the duty to act in the client’s best interests if the person becomes a client.

Supervisory duty for absentee owners (rule 14(4)): An agent who carries on a business (including as a director of a corporate licensee) must personally manage the business and frequently attend its offices. This rule prevents a passive investor from owning an agency and delegating all management to a non-licensee. A director who rarely visits the office may be in breach, even if the business is compliant otherwise.

Transitional period expired: The two-month grace period ended 5 December 2016. Agents still relying on compliance with the 2011 Code are now in breach if they do not meet the 2016 Code’s additional requirements.

Compliance with the Code requires systematic changes to office procedures, forms, and training. Each agency should review its standard documents and practices against the Code’s specific rules.

1. Written appointments: Ensure every client signs a written appointment before any marketing or negotiation begins. Changes to the appointment must be documented by amendment, not just verbal agreement. Use a standard form that includes space for client initials on maximum reimbursement amounts and dual agency consent.

2. Dual agency and multiple client consents: If an agent proposes to act for more than one client in the same transaction (e.g., vendor and purchaser), obtain fully informed written consent from each client before any negotiations. The disclosure must explain the nature of the conflict and why it is reasonable. Do not rely on a blanket clause in the general appointment; it should be a specific consent.

3. Supplier referrals: Before recommending a supplier (other than a settlement agent), disclose in writing: (a) any significant relationship with the supplier, (b) any potential conflict of interest, and (c) any commission the agent will receive for the recommendation. For settlement agents, do not accept any commission at all. Ensure the agency has a policy that no employee solicits or accepts referral fees from settlement agents.

4. Discounts and rebates: Identify all discounts and rebates that the agency receives from service providers (advertising, stocktakers, tradespeople). For each service, prepare a disclosure document stating the full nature, extent and dollar amount of the discount or rebate. Present this to the client and obtain written consent before receiving the rebate. Maintain a record of each disclosure and consent.

5. Expense reimbursement: For advertising, sign boards, printed materials and promotions, include a specific maximum amount in the agency agreement. The client must initial that maximum amount. Do not exceed the cap without further written authorisation. Provide itemised invoices to the client promptly upon request.

6. Market price opinions: When providing a verbal or written opinion of current market price, immediately follow up with a written statement containing the opinion, reasons, and comparable sales data. Have a template ready. If the opinion is given before the agency appointment, ensure the statement is provided then; otherwise, the agent cannot later act for that person.

7. Material facts: Establish a checklist of standard due diligence items for every property: zoning, encumbrances, building approvals, boundary issues, easements, pest history, and any other facts a prudent agent would verify. Document all inquiries made. Communicate any material facts promptly to affected persons (including potential purchasers) who appear unaware.

8. Client identification: Before any sale of real estate, obtain a current copy of the certificate of title from Landgate. Verify the identity of the person claiming to be the vendor by checking photo identification and, if the vendor is a company or trust, confirm authority (e.g., company extract, trust deed). Keep copies on file.

9. Advertising: Obtain written consent from the client before advertising the property or erecting a sign. Ensure the advertised price and terms match the client’s written authorisation. Do not use any inducements that could encourage a person to breach an existing appointment or contract (rule 22).

10. Training and supervision: The person who carries on the agency business must personally manage the business and attend offices frequently. Implement a supervision system for all employees, including unpaid interns. Provide training on the Code’s requirements, especially the new rules on referrals, discounts, and client identification. Document training sessions.

11. Record keeping: Maintain files for each client containing the signed appointment, all consents, disclosure documents, expense authorisations, copies of the certificate of title, identity verification records, market price opinion statements, and a log of all offers communicated. Keep records for at least the period required under the Act (likely 7 years).

12. Regular audit: Conduct an internal audit of current files against the Code’s rules. Correct any missing consents or disclosures. Implement a compliance calendar to review policies annually and after any amendments to the Code.