TENANT DEfAulTS Remedying a Default under the REIV Commercial Lease Code 143 BuRNING QuESTIONS We answer some of the common queries from our Members EXPRESS TRAINING Complete your Certificate IV in just six months AnnouncingREIVREAl The magazine for real estate professionals who are the difference. The Journal of the Real Estate Institute of Victoria / AuG. 2022 / VOl. 86 NO. 2 REIV Members, the real difference
The Estate Agent is published by the Real Estate Institute of Victoria. Publisher 335REIVCamberwell Rd, Camberwell, Victoria 3124 editor Sarika Bhalla – sbhalla@reiv.com.au Established in 1936, the Real Estate Institute of Victoria (REIV) is the peak representative body for real estate professionals in Victoria. Our Mission is “To enhance the professional excellence of our members to the benefit of the communities they work within, and to advocate and represent their interests”. Connect with reiV on social media. Find us on: @REI_VictoriaREIV@REIVictoriafacebook.com/REIVictoria ProduCtioN Pagemasters disClaimer Unless otherwise specifically expressed, the views or opinions appearing in The Estate Agent (EA) are those of the authors and do not represent the views of The Real Estate Institute of Victoria Ltd (REIV). The REIV gives no warranty about the accuracy, completeness, or reliability of the content of EA. The entire content is general information only. It is not advice or intended as advice and in no circumstances should be relied upon as such. Readers and third parties should verify the content and seek their own independent advice before making any decisions, financial or otherwise, based on what they have seen or read in EA. The REIV and EA do not endorse or take any responsibility for material on third party websites referred to in the EA. 2 | The esTaTe agenT – AUGUST 2022 Features 10-13
Planning implications after the Sex Work Decriminalisation Act was passed by Victorian Parliament and became law Upgrade client experience
For years, VicForms has been the most compliant and reliable way of using real estate forms and authorities
A well-drafted commercial lease will have embedded provisions to address any tenant default What are we talking about?
REIV Information Officers David Dundas and Jim Lourandos, address some of the current common questions from Members work decriminalisation
15-17
Remedying a tenant default
25
18-19 sex
The esTaTe agenT – AUGUST 2022 | 3 Contents Contents President’s report Pages 4-5 CeO’s report Page 7 Resources The REAL difference in real estate Pages 8-9 VicForms – Customise to your brand and business Page 25 Risk in the world of real estate Page 33 Forty-six years with REI Super Page 35 Legislation The REIV Commercial Lease Code 143 Pages 10-13 Planning implications of sex work decriminalisation Pages 18-19 Best practice Frequently asked questions Pages 15-17 Data insights The five-year view Pages 20-21 Training Complete your Cert IV in just six months Page 23 events REIV auctioneering competitions Pages 26-27 Charity House Auction Page 27 Learn, network and grow Page 28 Bulletin Page 31 Members In memoriam Page 36 Queen’s Birthday Honours List Page 36 Member milestones Page 37 New members Page 38 28 Learn, network and grow Integral to the REIV core purpose is keeping Members up-to-date with factors that impact their personal and business growth 35 The evolution of ReI super Ian Armstrong reflects on his career with the Real Estate and Stock Institute of Australia Superannuation Fund for Directors and Employees 8-9 The REAL difference in real estate
Quentin and I recently met with the Minister for Consumer Affairs, Melissa Horne, to discuss several pressing issues including the Property Market Review, an interim certificate to allow Agents Representatives undertaking the new course to work while they study to assist with the shortage of real estate staff, particularly property managers, mutual recognition of interstate qualifications and S55 of the Estate Agents Act. The Minister was very receptive to our concerns and has asked her staff to look into each matter, particularly around removing the roadblocks to employing more real estate staff.
Richard Simpson REIV President developing the REIV’s Property Market Review submission. The Board thanks those Chapter Committee members who contributed to our position paper which is available for Members to review on the REIV website.
Following unprecedented growth of over 23% in the Melbourne median house price during the past two years, four interest rate rises by the Reserve Bank of Australia in quick succession have contributed to a slight fall (-2.6%) in the Melbourne median house price for the June 2022 quarter, as home buyers’ purchasing power is reduced by higher interest costs and increases in the overall cost of living.
The Victorian property market has been quite resilient and, in our opinion, is unlikely to experience the significant falls predicted by many economists and bankers. On the other hand, the rental market has bounced back well, particularly in middle and outer Melbourne suburbs and in regional Victoria. The low vacancy rates are beginning to put some pressure on rents which may in turn assist owners offset increases in compliance costs, interest and taxes. Unfortunately, many rental providers have taken advantage of the strong sales market to sell their investment properties pushed by the increased regulation costs associated with the recent changes to the Residential Tenancies Act and increases in fees and taxes, particularly land tax. The Commercial market remains patchy with good sales results being achieved for properties offering long leases to quality tenants, while the increased cost of building has dampened the demand for residential and commercial development projects. Retail leasing is difficult, especially in and around the CBD, as office workers are still yet to return to their offices on a regular full time basis.
4 | The esTaTe agenT – AUGUST 2022 President’s report
Quentin Kilian joined the REIV as our CEO only five months ago and is already making significant progress. With many years of real estate and advocacy experience he was able to hit the ground running. Offering fresh eyes and perspective he is making great strides in building relationships both within and outside the REIV, re-enthusing, supporting and leading the REIV team, making valuable changes and inspiring new ideas. Within days of joining the REIV, Quentin took the lead in REIV Life Membership presentation to George Thomson Jr, a Member since 1951.
The Board’s Nominations Committee has been charged with the task to fill the Director vacancy following Adam Docking’s resignation earlier this year. The response from Members to the call for nominations was excellent and having completed first interviews, the Nominations Committee, Chaired by Andrew Meehan, will be bringing its recommendations to the Board in early August. At the same time the Nominations Committee will present recommendations to the Board for the appointment of a new Additional Director to succeed Michael Clements. Michael joined the Board in April 2019 and his clear thought processes, expertise and perspectives have been invaluable to the Board as a whole as well as to individual Directors. We wish Michael the very best with his young family and in his role as a Director of Harris Carlson Lawyers.
The REIV strategy was reviewed and confirmed by the Board in February 2022. Good progress has been made on all projects and as they come to fruition, those that have a direct and visible impact on Members will be advised to you. You should already have seen more variety in the types of online professional development offerings available and current Agents Representatives keen to achieve their license have the facility to gain the new qualification through a government supported REIV developed Fast Track program. In June, the Board approved the 2022/23 budget which includes provision for the redevelopment of the REIV website to make it the go to resource that it really needs to be.
The esTaTe agenT – AUGUST 2022 | 5 President’s report offerings and CPD requirements enable our Members to adjust and comply quickly. Our Members have an advantage by virtue of the REIV’s own CPD framework that requires Members to complete a compulsory Ethics Module and achieve a minimum number of CPD points each year – some through REIV activities and events and others earned through in-house or external courses, conferences or other events. Getting into the habit of setting aside time to refresh or expand your professional expertise and ensure that you satisfy your membership obligations has never been more important. Work is also underway to develop the REIV’s State Election Platform, which will be published closer to the election campaign later this year. Property Taxes will, naturally, comprise a core element of our positioning and will build on the excellent REIA advocacy in the run up to the Federal election and in
Finally, thank you to all our Members for your continued support of the REIV. There are exciting times ahead in real estate and the REIV will remain at the forefront of our profession as its natural leader.
In addition to an ongoing emphasis on value-added services, we are now also turning our attention to defining REIV’s culture and identity. How we operate and are perceived by Members, employees, government and other stakeholders and the public is as important as what we do. The Board and Management are working closely on the development of REIV values which will be published in due course. One likely outcome of the Property Market Review is the introduction of mandatory continuing professional development as a condition of every agent’s license renewal. What the requirements will look like is completely unknown at this time, but the REIV will participate actively in their development and implementation and ensure that the REIV’s professional development ongoing engagement with politicians and their advisors. Given the importance of this topic to our Members and their clients and a host of other players in the Victorian Property Sector, we have initiated engagement with a number of kindred associations to explore ways in which we can maximise the power of our collective voices.
Richard Simpson REIV President Thank you to all our Members for your continued support of the REIV. There are exciting times ahead in real estate and the REIV will remain at the forefront of our profession as its natural leader.
We’ve seen interest rates going up (which was not unexpected); we’ve seen a change of our Federal government (which did include some surprises); and we’ve seen movements in property and rental prices which has led to a great deal of hyperbole from the media and a plethora of ‘experts’ expounding their views (which is never unexpected).
The esTaTe agenT – August 2022 | 7 CEO’s report
It’s been an interesting few months in real estate, politics and the economy.
We’ve been working hard at the REIV to chart a new and exciting course for the Institute and our Members. We are nearing the end of the scoping stage for your new website and about to start the exciting work of pulling it all together. We have a new advertising campaign due to kick off in september that will go out across Victoria to drive awareness of the REAL value of dealing with REIV members. the REIV is driving a Property taxation forum with other industry groups and we have written to the Victorian treasurer inviting him to meet with us and to stage a larger discussion on change to the property tax regime in Victoria. the President and I met again with Minister Horne and got some real traction on the move towards an Interim Certificate for CertIV students; Mutual Recognition and s55 of the Estate Agents Act, all of which we are continuing to follow up on. On the ‘home front’ we have made some staffing changes and are reinvigorating areas including our training Department and PD products. the REIV Conference is taking shape for March 2023 and of course the REIV Auctioneer of the Year competition is just around the corner as I write this, plus nominations are a open for the REIV Awards for Excellence. One of the hottest topics of conversation, particularly in the media, is rising interest rates. so let’s have a look at interest rates and put a bit of historical perspective to them. the current Cash Rate, as set by the Reserve Bank of Australia, is 1.85%. Looking at various websites, the ‘variable’ home loans are at anywhere between 2.56% and 3.75%, and ‘Fixed term’ home loans are sitting around 5% for three-year loans and closer to 7% for five-year loans.
A lack of housing supply coming through, due to constraints in the building industry caused by components and staffing, is going to a bigger concern than the home loan rate. If this is not addressed by all state governments and the Federal government it will create a supply-demand imbalance that will have a major impact on affordability.
Quentin Kilian REIV CEO of 17.5% property sales continued, and there is no reason to believe that the same will not occur in this current Choicesmarket. will change as borrowing capacity changes; prices will change to reflect the buying market; our industry will need to adapt to the changes in the market; demand will differ; but at the end of the day Victorians will continue to buy and sell property. But perhaps bigger issues to be examined are supply and taxation.
Just 14 years ago, in August 2008 (when the wife and I purchased our home in sydney) rates were at 9.62%. since 2008 to 2011 rates hovered around 5%, going back up to 7.79% in January 2011. the cash rate at sub 1% was artificially low and while the Reserve Bank doesn’t declare its preferred position, it’s generally around 3%. Banks then add a buffer of at least 3%, which would put a ‘normalised’ loan position around the 6% mark. the bottom line is that interest rates go up and down, subject to a range of economic drivers, but even at their peak The bottom line is that interest rates go up and down, subject to a range of economic drivers, but even at their peak of 17.5% property sales continued
And on the taxation side, in some cases almost 40% of a house purchase is taxation. getting rid of inequitable and lazy taxes on property transactions will immediately make property purchases more ‘affordable’. that’s my rant for this issue of EA, now it’s back to work. Don’t forget that the REIV is your institute, so if there’s anything you would like to tell us, or ideas you have for events, activities, professional development or innovation, please let us know by writing to us at reiv@reiv.com.au Quentin Kilian REIV CEO
While the focus of the media, and most Australians, is on the month by month decisions of the RBA with its cash rate, the banks have been building in rate rises to their fixed term products for over 12 months, and based on the five-year products, are expecting the cash rate to sit around the 3% to 3.5% position. While there is an obvious impact to the hip pocket, it is important to put some historical perspective to Australian interest rates. Interest rates have averaged around 3.87% from 1990 to 2022. they hit a high of 17.5% from June 1989 to April 1990 (or 21% for investors…as I sadly discovered back then), and hit an historical low of 0.10% in November 2020.
8 | The esTaTe agenT – AUGUST 2022 Resources
learning, improvement, and development not just for themselves but also towards the wider real-estate sector. When you join the REIV you choose to make a significant difference to your career, you commence a journey to help build a stronger more it’spropertysustainablesector;whetherthroughparticipation in the REIV CPD program, contributing to sector development through REIV advocacy initiatives and sharing of When you need an agent, get a REAL one. excited to announce the launch of a new campaign – REIV REAL.
We’re
Our
The REAL difference
andappropriatelyallprofessional.makesandhighlightingREIVyourREIVStartthecommittedprofessionaltoupholdinghigheststandards.withwearingyourREALlapelpinatnextmeeting.REALisabouttheattitudecommitmentthatareal-estateWhileagentsmustbequalifiedlicensedtoworkinthe
Commencing early September 2022, you will see a promotion campaign that showcases the knowledge and expertise REIV Members bring to the sector. It will show across Catch-Up TV, Regional TV, social media, real-estate websites, radio and more. strategy is to create awareness that there is a “real difference” between an REIV Member and a non-member. All Members will receive their toolkit of campaign assets to share and wear –tell your clients and communities that in real estate you are a “real” - real estate sector, REIV Members go beyond the basics. Members make a commitment to continuous Tell your clients and communities that you are a highestupholdingcommittedprofessionalreal-estatetothestandards.
How and wHen • Your REIV REAL lapel pin is enclosed with this magazine.
REIV REAL is about Members who make a real difference in real estate.
• The public campaign placement will commence in the first week of September.
The Member toolkit will come with a range of assets that can be included on your personal and business marketing, including, social-media tiles, the REIV REAL logo and the REIV Proud Member logo. Use and distribution by Members will give the campaign far greater reach and Makerecognition.sureyour business and personal member profile is current and updated on reiv.com.au/choose-a-member
• Members in Bendigo and surrounding regions can see the new TV commercials on the Nine Network on shows such as The Block, A Current Affair, Today and the news. Other Regional markets will come on-stream in following months. In all other parts of Victoria watch the commercials on digital catch-up TV across a range of channels and shows.
• The campaign will also be shown on a range of digital platforms that are popular with people looking for property or who work in the sector. This includes realestate.com.au, YouTube, Instagram and Facebook.
• Radio commercials will follow on 3AW and some FM channels. market data and insights, committing to high integrity standards by signing the membership code of conduct and more.
• Over the coming weeks you will receive an electronic toolkit with campaign assets that you can use in your own marketing material.
The Member toolkit will come with a range of assets that can be included on your personal and business marketing.
The esTaTe agenT – AUGUST 2022 | 9 Resources
• Unauthorised assignment of lease and sub-letting the premises; and A breach of an essential term of the lease. a Default under the Lease Code
• Failure to affect repairs or maintenance in accordance with the lease; Any act of insolvency; Ceasing to use the rented premises for its permitted use; A change in control of the tenant’s organisation;
•
It is important that property managers understand the terminology used to describe the effects of a default and the covenants of the lease that have been breached before contemplating any remedial action.
•
REIV Commercial
•
•
A well-drafted commercial lease will have embedded provisions to address any tenant default (breach of covenant or condition in the lease) that may give rise to a right of re-entry or forfeiture including a breach amounting to repudiation.
Not all defaults threaten the rights of the tenant to remain in possession. For example, a tenant’s failure to replace part of the security deposit that is claimed by the landlord. Retail tenancy disputes are defined under ‘s.81’ of the Retail Leases Act 2003 (“Act”). Under ‘s.81(2)’ of the Act, a retail tenancy dispute does not include a dispute solely relating to the payment of rent, or a dispute that is capable of being determined by a specialist retail valuer under ‘s.34’, ‘s.35’ or ‘s.37’ of the Act. With a regulated lease, such disputes must be resolved in accordance with Part 10 of the Act. Under ‘s.86’, a retail tenancy dispute must be referred to the Victorian Small Business Commissioner (“VSBC”) for alternative dispute resolution. If the
• Failure to pay rent and/or outgoings;
Legislation
10 | The esTaTe agenT – AUGUST 2022 matter is not resolved, it will be forwarded to the Victorian Civil & Administrative Tribunal (“VCAT”) for determination. Lack of good faith in attempting to resolve a dispute before the VSBC may result in a costs order at the VCAT. Urgent matters such as injunctions may bypass the VSBC and proceed directly to the ManagingTribunal.Estate Agents must be wary about delivering notices to tenants that warn of the consequences of not remedying a breach. Different notices have different outcomes, and the choice of notice is a specialised skill. It must be exercised with the clear understanding of what the landlord requires. Further, it is legal work that cannot be done by agents.
143
Remedying
Common tenant defaults include:
CONTINUED ON PAGE 12
Faced with a notice of rescission, a tenant might apply to a court or tribunal to obtain relief against forfeiture. This is often granted if the tenant pays all arrears and costs. It can’t be granted if the landlord has secured a new tenant before the hearing date. In the event that the landlord signs a lease with a new tenant, and concomitantly, VCAT finds that the rescission notice was defective, one of these tenants is likely to be heavily compensated. Relief against forfeiture is not available in circumstances where a tenant is in arrears at the time of exercising an option for a further term of the lease in circumstances where the landlord rejects the Pursuantoption.to ‘s.146’ of the Property Law Act 1958, a landlord’s right of entry or forfeiture under a lease is not enforceable unless the rescission notice:
Essentially, a default notice specifies particulars of a default under a lease and provides a time period for rectification. Such notice becomes a rescission notice if it also states that unless the default is rectified together with the payment of the landlord’s reasonable legal costs and penalty interest, the lease is at an end. A rescission notice is also called a notice of termination. The landlord may attempt to evict the tenant and claim costs until the end of the lease. The tenant is also responsible for costs to find a new tenant. The landlord is obligated to mitigate (keep as low as possible) costs of the tenant by acting expeditiously to find a new tenant. A landlord may also claim that the tenant’s conduct amounts to a repudiation of the lease. The purest form of repudiation is where a tenant returns the keys to the landlord and “walks out” before the end of the term. Effectively, the tenant has “turned its back” on its obligations under the lease. If the landlord accepts the repudiation in writing, the lease is at an end. The landlord cannot claim compensation against the tenant after the date of such Clauseacceptance.35oftheREIV
• Requires the tenant to make compensation in money for the breach; and
The esTaTe agenT – AUGUST 2022 | 11 Legislation
• Specifies the particular breach complained of;
Commercial Lease lists clauses in the lease that are deemed essential terms, and a breach of an essential term is repudiation of the lease which a landlord may accept.
• If the breach is capable of remedy, requires the tenant to remedy the breach;
• Is given to the tenant for at least 14 days to allow the tenant to remedy the Underbreach.‘s.146 (12)’ of the Property Law Act 1958, no notice is required before Different notices have different outcomes, and the choice of notice is a specialised skill. It must be exercised with the clear understanding of what the landlord requires.
The REIV does not produce notice of breach forms, and even if such forms were available, an agent is prevented from charging a fee for their work. By charging a Lease Preparation Fee for completing the REIV Commercial Lease, an agent is engaging in legal practice as an unqualified entity and is in breach of ‘s.53A’ of the Estate Agents Act 1980, Part 2.1, Chapter 2, ‘s.10’ of the Legal Profession Uniform Law Application Act 2014.
If a landlord gives a tenant a disclosure statement and a proposed lease less than 14 days before the lease is due to commence, the term of the lease is taken to commence 14 days after the day on which the disclosure statement and proposed lease were provided [‘s.17(1C)’ and ‘s.94’ of the Act].
Should an eviction proceed unlawfully because the rescission notice was invalidly prepared or served, the landlord may be liable to the tenant for various costs (including loss of profit). Notices must be valid, unambiguous and strictly served in accordance with Clause 31 of the REIV Commercial Lease.
Trap 1
Legislation
The ramifications of not understanding this may be significant as the start date of the term is not the date printed on the lease and not the date that the parties intended. Accordingly, the dates in important notices may be incorrect.
12 | The esTaTe agenT – AUGUST 2022 re-entry or forfeiture in the case of nonpayment of rent (See Clause 34.1 of the REIV Commercial Lease). By reason of the forfeiture of the lease, a tenant in possession becomes a trespasser. The landlord may engage self-help in the form of police, security guards, locksmiths and the like.
If more than reasonable force is used to affect re-entry, the landlord may be liable for damages or possible assault.
Trap 2 Under ‘s.28(1A)’ of the Act, a landlord is required to provide written information to the tenant at least three months before the last date that an option to renew a lease may be exercised, including the last date of renewal, the rent payable, the availability of an early rent review, cooling off rights and changes to disclosure statement information. If the landlord fails to give the tenant all the information within the required time, the lease is taken to provide that the date after which the option is no longer exercisable is instead three months after the landlord notifies the tenant as required. That could unnecessarily prolong the lease term at the current rent.
Trap 3 Under ‘s.46’ of the Act, a tenant must be given an estimate of outgoings before the lease is entered into and thereafter, annually as prescribed. Case law has held that the tenant is not required to pay for any outgoing in the period for which an estimate of outgoings was not provided.
Trap 4 Where the lease does not provide for an option to renew, a landlord cannot assume that a retail tenancy will be at an end after the final day of the lease term. The landlord must, at least six months
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Tenant fixtures, fittings, goods, stock and perishable items left at the premises by the tenant or following eviction must be dealt with under Part 4.2, Disposal of Uncollected Goods, Australian Consumer Law and Fair Trading Act 2012. The landlord may affix a notice of reentry on the premises explaining the reversion of the lease and a contact phone number. A default of lease is not the exclusive domain of a tenant. Landlord breaches commonly occur in regulated leases. Some provisions of the Act have devastating consequences when they are incorrectly applied.
Landlord applied.theyconsequencesdevastatingofSomeregulatedcommonlybreachesoccurinleases.provisionstheActhavewhenareincorrectly
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Legislation Norman Mermelstein is the principal of Law Ink Pty Ltd, a member of the Property and Environmental Law Section Leases Committee and Property Law Committee, Succession Law Committee member, an accredited mediator and licensed estate agent. but no more than 12 months before the lease term ends, give written notice to the tenant offering the tenant a renewal of the lease on specified terms or inform the tenant that the landlord does not offer a renewal of lease [‘s.64’ of the Act].
When serving a notice under ‘s.28’ or ‘s. 64’ of the Act, it is essential that it be served in a manner that guarantees that the intended recipient receives it. Where service is required on an individual, tracked delivery such as registered post is insufficient service because the envelope reaches a destination and not that person. A process where delivery requires a signature from the recipient at the time of delivery will suffice. Personal service by hand delivery is also acceptable. Where service is conducted electronically, requesting written acknowledgement of delivery from the recipient is of paramount importance
•
A landlord having made plans for the tenancy would be embarrassed to find, as is following up until it is received. Further, the same requirement applies to any notice under a lease, and most significantly, to a notice under ‘s.146’ of the Property Law Act 1958. Estate agents who provide commercial leasing and management services are encouraged to develop a strong understanding of the legislation governing their activities. The consequences of a lesser approach are bound to be costly.
• Develop agreed wealth goals, by identifying and aligning mutual values and obligations that will underwrite our relationship
Trap 5
The author hopes he has provided some awareness of the care required to successfully navigate the complexities of this important area of practice.
MVA BENNETT – YOUR FUTURE OUR BUSINESS Estate agents who provide commercial leasing and management services are encouraged to develop a strong understanding of the legislation governing their activities. The consequences of a lesser approach are bound to be costly.
The esTaTe agenT – AUGUST 2022 | 13 on the last day of the lease, that the tenant may remain in possession for an additional six months because the landlord failed to provide the requisite notice under ‘s.64’. These notices are available on the REIV members portal but are not part of Vic Forms.
• Continually meet expectations, with strong communications throughout our engagement
There are some simple steps to avoid this:
What are we talking about? REIV Information
The process satisfies the requirements of section 126 of the Instruments Act, which specifies that an agreement for the sale of land must be expressed in writing and be signed by the parties to the agreement. While a barrister will argue it is possible for the agreement to be on other than a contract of sale, there is no point creating the grounds for such an argument by not using a contract. The interests of your client will be protected as well as your entitlement to commission.
David Dundas and Jim Lourandos, address some of the current common questions from Members.
• If the vendor accepts the offer, have them sign the Contract of Sale and leave a copy with them.
When is it “sold”? Ever been caught out by marking it “sold” too soon?
After completing these steps, it is safe to inform people, including the vendor and the purchaser, that the property has been sold subject to the terms of the Contract of Sale including any cooling rights. The filling out of a Contract of Sale by an agent or agent’s representative is permitted by section 53A of the Estate Agents Act, contrary to what some members of the legal profession, particularly in non-metropolitan areas may suggest. Contracts prepared by the Law Institute of Victoria and the REIV are available for purchase at low cost from the Institute. Having a contract and section 32 statement at commencement of marketing avoids the risk of one or both of the parties changing their minds and jeopardizing a sale while waiting for the vendor’s legal representative to prepare a contract. Taking a deposit at the time of obtaining the purchaser’s signature is not a legal requirement, but there are some practical reasons why it should be done. (Refer to the next item about the importance of a deposit).
Best practice CONTINUED ON PAGE 16
• Present the offer to the vendor in the form of a Contract of Sale signed by the prospective purchaser and detailing the amount of deposit already paid.
The importance of a deposit The sale of real estate does not always proceed smoothly to settlement, sometimes buyers exercise a cooling off right and in other instances may fail to settle. Both circumstances are unpleasant, but they can be less so if a substantial deposit has been collected at the time of taking an offer.
• Have the vendor sign and date a separate document acknowledging they have received a copy of the contract signed by them and the purchaser.
• Have the purchaser sign and date a separate document acknowledging they have received a copy of the contract signed by them and the vendor.
The exchange of contracts and the signing of acknowledgements satisfies The interests of your client will be protected as well as commission.entitlementyourto Officers
REIV
• Deliver to the purchaser a copy of the Contract of Sale with their signature and that of the vendor.
Jim Lourandos & David Dundas Information Officers
The esTaTe agenT – AUGUST 2022 | 15 the requirements of section 53 of the Estate Agents Act. Using a contract in the negotiation of a sale avoids being frustrated by either party agreeing to the terms of the sale but later retracting the agreement before signing the contract. Also, asking a prospective purchaser to make their offer by signing a contract will confirm their intention to genuinely make an offer.
Cleared funds
While the above is in the LIV/REIV contract it is likely that a similar condition will be in contracts obtained from other sources. If the purchaser fails to settle by the due date, it is not only inconvenient and stressful for the vendor, but also expensive. Costs include commission, marketing expenses, legal fees, possibly costs such as bridging finance or penalties related to a purchase the vendor may be making, as well as costs related to the resale of their current property. There is also the risk that the resale may be at a lower price. If at least 10% of the purchase price has been collected as a deposit the vendor will not have to pursue the purchaser for that amount and it will ease their unexpected financial burden.
Failure to settle The Contract of Sale copyright 2019 prepared by the Law Institute of Victoria and the REIV contains the following important deposit related information under General Condition 35 “Default not Sectionremedied”:35.4If the contract ends by a default notice given by the vendor:
• The deposit up to 10% of the price is forfeited to the vendor as the vendor’s absolute property, whether the deposit has been paid or not; and • The vendor is entitled to possession of the property; and • In addition to any other remedy, the vendor may within one year of the contract ending either; • Retain the property and sue for damages for breach of contract; or • Resell the property in any manner and recover any deficiency in the price on the resale and any resulting expenses by way of liquidated damages; and • The vendor may retain any part of the price paid until the vendor’s damages have been determined and may apply that money towards those damages; and • Any determination of the vendor’s damages must take into account the amount forfeited to the vendor.
If the agent has not collected sufficient deposit the vendor is left with their property unsold, a marketing campaign disrupted, and the likelihood the purchaser will not pay the penalty.
While the purchaser may pay a deposit it may be the case, depending on the means of payment, that it will not immediately appear in the agent’s trust account as cleared funds. This can even occur in the case of some electronic transfers. During this delay the purchaser could put a stop on the payment. A very cautious vendor would not sign the contract until there is confirmation of the cleared funds being in the trust account. Of course, such a delay in
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Cooling-off Section 31 of the Sale of Land Act allows the purchaser in certain circumstances to terminate a contract simply because they no longer wish to proceed with it. If they do so there is a penalty payable by them to the vendor, it is $100 or 0.2 % of the purchase price, whichever is the greater. The penalty can be deducted from any deposit paid and the balance is refunded to the purchaser.
16 | The esTaTe agenT – AUGUST 2022 Best practice
If the purchaser fails to settle by the due date, it is not only inconvenient and stressful for the vendor, but also expensive.
Vendors are influenced in many ways as to what they think their property will be sold for, and their decision-making processes will probably be somewhere on a spectrum between rational and emotional. The agent’s communication with the vendor needs to be managed with these things in mind as progress is made towards achieving a sale. Influence will come from family, friends, neighbours, media reports and even other agents. It will not always be in the best interests of the vendor; family members may be focused on their inheritance, friends may be making comparisons with out of area
The thought processes of vendors will not always be logical, for example, expecting to recover purchase price and stamp duty when the property has been held for a very short time; thinking it is worth more because it is the home they grew up in; or needing a certain amount for what they hope to do after the sale. None of this influences what a buyer is prepared to pay, but selling agents need to prepare to deal with this type thinking.
toorwithoftoTheappointed.becauseactingotherownaboutunrealisticneighboursproperties,mayhaveexpectationsthevalueoftheirproperties,andagentsmaybeunprofessionallytheywerenotsellingagentneedshaveinmindarangescriptsfordealingwhattheyknow,suspectisbeingfedthevendorfromother sources. They also need to have reliable data about recent happenings in the local market –the auction clearance rate, the time on market, the sale prices, and the difference between advertised price and selling price. Broader economic, social, and demographic trends are also relevant and can be gleaned from news media.
how are vendor price expectations formed?
The esTaTe agenT – AUGUST 2022 | 17 Best practice signing would not be practical when selling at auction, but the risk remains. Instalments
A vendor may decide to accept an offer with portion of the deposit having been paid and the balance due by a specified date. It is essential that the agent maintains a follow-up to ensure that the payment is made in accordance with the contract. If the payment is not made the vendor and their legal practitioner should be informed immediately as the purchaser is in default under the terms of the contract.
oftheprocessmustwithCommunicationthevendorbeanongoingduringmarketingtheproperty.
Communication with the vendor must be an ongoing process during the marketing of the property, it is not enough for the selling agent to just attempt to convince the vendor when there is an offer to present.
Proposed new land use term and definition
The planning implications of sex work decriminalisation a home-based business in the same way as other businesses, with no additional restrictions.
It is proposed that the term ‘sex services premises’ will be used to describe land used for sex work with the proposed definition: Land used to sell services involving the use or display of the body of the person providing the service for the sexual arousal or sexual gratification of another person while they are present on the land.
• Is a prohibited use in all residential and rural zones; and • Requires a permit in all industrial and commercial zones.
• Replace the land use term ‘brothel’ with the term ‘sex services premises’;
In special purpose zones such as Capital City Zone and Activity Centre Zone planning authorities are currently able to specify which uses require a permit or are prohibited.
• Enable sex work to be carried out as
Legislation
Under the proposed reform a reference to ‘shop’ or retail premises in a planning
In February, the Sex Work Decriminalisation Act was passed by the Victorian Parliament and became law.
Proposed reforms will regulate sex services premises like similar businesses Planning controls for sex services premises will align with those that apply to a ‘shop’ in commercial and mixed-use areas.
The decriminalisation will occur in two stages with the first stage commencing in May. The changes directly affecting real estate will be in the second stage commencing in December 2023. These will be changes to planning controls to treat sex services businesses like other businesses providing personal services, by removing planning restrictions that prevent: • Brothels from establishing in commercial and mixed-use areas; and
• Sex workers from operating a homebased
Proposedbusiness.changesto
Current location of sex services premises In current planning schemes, a ‘brothel’:
planning schemes will:
18 | The esTaTe agenT – AUGUST 2022
It does not include:
• Regulate sex work in commercial and mixed-use areas in the same way as other personal service businesses (such as providing beauty, hairdressing, or massage services) with no additional restrictions or controls; and
The definition of ‘shop’ in the Victoria Planning Provisions is: Land used to sell goods or services, or to hire goods.
• Live entertainment performed for an audience, by a person performing an act of an explicit sexual nature, such as lap dancing, nude dancing and striptease.
• Sexual activities engaged in by two or more people required to pay an admission fee or charge to enter the premises on the same terms and who do not receive any form of payment or reward, whether directly or indirectly, for engaging in the sexual activities.
• Delete clause 53.03, the provisions specific to brothels;
• Proximity to other uses (such as dwellings, schools, childcare, and places of worship); and
• The person conducting the business must use the dwelling as their principal place of residence;
• Not more than two people who don’t live in the dwelling may work in the home-based business at any one time;
A permit may be granted to increase the number of non-resident workers to three at any one time and to increase the floor area to 200 square metres. signs and car parking
• The business must not adversely affect the amenity of the neighbourhood.
The esTaTe agenT – AUGUST 2022 | 19
Existing sign and parking requirements for a ‘shop’ or a ‘home-based business’ are proposed to apply to a ‘sex services premises’ without change.
• The net floor area used in conducting the business must not exceed 100 square metres or one-third of the net floor area of the dwelling, whichever is the lesser; and
A sex services premises will continue to be allowed with a permit in the Industrial 1 Zone, Industrial 2 Zone, and Port Zone (where a shop is a prohibited use). A permit will not be required in the Industrial 3 Zone if the condition for ‘shop’ is met. If the condition is not met, a permit will be required. These exceptions recognise that a ‘brothel’ is already a permitted use in these zones and that licensed brothels may already operate there.
It is not proposed to introduce any size restrictions for ‘sex services premises’. However, existing restrictions that apply to a ‘shop’ will apply to a sex services premises’. For example, land in a Mixed-Use Zone can only be used for a ‘shop’ without a planning permit if the leasable floor area does not exceed 150 square metres. home-based sex work
In zones where the use of land for a ‘sex services premises’ is permitted, no additional restrictions or controls (beyond those that already apply to a ‘shop’) will be included in relation to:
Legislation scheme will include ‘sex service premises’, unless it is specifically excluded. This means that where the use of land for a ‘shop’ is permitted, sex services premises will also be permitted subject to the same conditions and requirements that apply to a ‘shop’.
Zones are not the only planning controls that regulate the use of land for a ‘shop’, as under some overlays a planning permit may be required for a shop. These existing controls will apply to the use of land for a sex services premises.
It is proposed to change the definition of home-based business to enable sex work to be carried out as a ‘home based business’ in any dwelling, including a dwelling located in a zone where ‘sex services premises’ will be prohibited. To use land for a ‘home-based business’ the following requirements apply:
• Proximity to other sex services premises. size of sex services premises
The data shows that while the global pandemic had some impact on property transactions during 2020 it did not deter the price growth in long-term.
20 | The esTaTe agenT – AUGUST 2022
The current media discussion on falling property prices takes a predictably short-term view of an asset class recognised for the long-term capital returns.
The data shows that while the global pandemic had some impact on property transactions during 2020 it did not deter the price growth in long-term. As working from home became the new normal, it resulted in some of the strongest price growth in regional Victoria since 2000. Regional houses have been steadily increasing in their value for a decade, the lockdowns in metro Melbourne boosted this growth. Regional houses recorded 21.6 per cent growth in financial year 2021-2022, which is the strongest since 2000 with 37.4 per cent. Metro houses also saw significant increase in the same financial year with 13.5 per cent, highest since 2014. Looking at the transaction numbers, financial year 2021-2022 has recorded around 158,000 home sales – which is the highest level since 2015 (161,000). The lowest number was recorded during financial year 2018-2019, before COVID.
The five-year view
Data insights CHART 1 Residential PRoPeRty tRansactions – VictoRia 020,00040,00060,00080,000100,000120,000140,000160,000180,000 2012Jun 2018Jun2016Jun2014Jun 2020Jun2013Jun 2019Jun2017Jun2015Jun 2021Jun 2022Jun CHART 2 annual PRice change – house -10%-5%0%5%10%15%20%25%30%35%40% 2000Jun 2008Jun2004Jun 2012Jun 2018Jun2002Jun 2010Jun 2016Jun2006Jun 2014Jun 2020Jun2001Jun 2009Jun2005Jun 2013Jun 2019Jun2003Jun 2011Jun 2017Jun2007Jun 2015Jun 2021Jun 2022Jun Metro Melbourne Regional Victoria
5-YeAR gRow
The esTaTe agenT – AUGUST 2022 | 21 Metropolitan suburbs Suburb YearFinancial2022 YearFinancial2017 ChangeHouseMedianPrice Red hill $2,650,000 $954,000 177.8% shoreham $2,820,000 $1,215,000 132.1% Blairgowrie $1,910,000 $852,500 124.0% Red hill south $2,582,500 $1,205,000 114.3% Millgrove $630,000 $302,500 108.3% Rye $1,200,000 $590,000 103.4% Flinders $3,060,000 $1,512,500 102.3% sorrento $2,581,000 $1,300,000 98.5% Mount Martha $1,855,000 $936,250 98.1% lang lang $755,000 $385,000 96.1% Balnarring $1,500,000 $770,000 94.8% Mccrae $1,390,000 $730,500 90.3% tootgarook $1,000,000 $537,000 86.2% Warburton $741,000 $409,444 81.0% safety Beach $1,313,000 $726,250 80.8% somers $1,821,000 $1,040,000 75.1% avonsleigh $950,500 $550,000 72.8% yarra Junction $755,000 $440,000 71.6% Badger creek $720,000 $420,000 71.4% Portsea $3,840,000 $2,250,000 70.7% Regional towns Suburb YearFinancial2022 YearFinancial2017 ChangeHouseMedianPrice dimboola $285,000 $94,000 203.2% anglesea $1,745,000 $605,000 188.4% Myrtleford $659,500 $250,000 163.8% Moe $415,000 $168,500 146.3% Venus Bay $630,000 $257,000 145.1% scarsdale $715,000 $297,000 140.7% loch sport $460,000 $195,000 135.9% inverloch $1,125,000 $477,000 135.8% Point lonsdale $1,525,000 $652,500 133.7% north Wonthaggi $647,500 $280,000 131.3% drysdale $990,000 $430,000 130.2% Robinvale $435,000 $191,500 127.2% cape Paterson $930,000 $410,000 126.8% ironbark $600,000 $270,000 122.2% cowes $852,000 $397,500 114.3% Barwon heads $1,830,000 $855,000 114.0% Kialla $775,000 $365,000 112.3% gisborne south $2,000,000 $945,000 111.6% lakes entrance $640,000 $304,000 110.5% lancefield $875,500 $420,000 108.5% Data insights
At the suburb level, seven metro suburbs have at least doubled their median house prices over the past five years. Suburbs in the outer ring experienced the highest house price increases in metro area. Mornington Peninsula dominates the top growth list with 14 suburbs, led by Red Hill with 177.8 per cent over the same period. The remaining six suburbs on the list come from Cardinia and Yarra Ranges. Meanwhile, there are 26 regional towns that have recorded more than a 100 per cent increase on their median house prices over the past five years, led by Dimboola tripling its value. There are now 17 regional towns in million-dollar clubs, as compared to financial year 2017 when the highest regional median house price was $945,000 in Gisborne South. Despite the price jump, some of the towns in our top growth list are still within affordable price range such as Dimboola, Moe, Loch Sport, and Robinvale.
While there has been discussion on the impact of interest rate rises on house prices, it’s important to note that Melbourne has recorded over 23 per cent increase in home prices over the past two years. As expected, we saw a slight decrease in metro Melbourne as the market adapts to the current rising interest rate environment. TH - ToP 20
To find out if you are eligible for Skills First funding, please complete the Declaration form available on www.reiv.com.au/fees or call the REIV training team on 03 9205 6666
If you are under 20 years old or eligible under the JobTrainer Fund you can do Skills First training at any level. If you are 20 years or over, you can usually only do Skills First training at a higher level than any qualification you already have. The REIV accredited training is a Level IV qualification, to be eligible any prior qualification should be Level 3 or under.
Complete your in just six months relevant to the CPP41419 and CPP51119 are listed here. Further details are available at skills.vic.gov.au
Some of the key eligibility criteria
The esTaTe agenT – AUGUST 2022 | 23
Cert IV
The CPP41419 fast track fee are as below:
• An Australian citizen • An Australian permanent resident, or • A New Zealand citizen Age: Skills First prioritises training for young people (under 20), Apprenticeships and Foundation Skills, and otherwise requires students do progressively higher qualifications to be eligible. The REIV accepts enrolments from students 18 and over.
Understand your eligibility for funding Eligibility for Skills First Government funding Eligibility can only be confirmed after an REIV Enrolment Form and Skills First Declaration is completed. There is no cost or obligation to complete this stage of the process.
Individuals who hold the superseded three-unit Agent’s Representative qualification can now update their training with the REIV Fast Track Certificate IV in Real Estate Practice CPP41419 in just six months.
a) Health Care Card issued by the Commonwealth; b) Pensioner Concession Card; c) Veteran’s Gold Card; d) An alternative card or concession eligibility criterion approved by the Minister The concessions also apply to a dependant spouse or dependent child of a card holder. If you self-identify as being of Aboriginal or Torres Strait Islander descent, you will receive a concession regardless of the level of the course you wish to enrol in. Concession does not apply to full feepaying students.
Eligibility for Skills First Government funding – Concession Concession is only applicable for CPP41419 Cert IV in Real Estate Practice.
* This includes courses you start but don’t finish.
• You can’t do more than two Skills First qualifications or skill sets at the same time • You can enrol in two same level qualification at a time, once in your Theselifetime.limits encourage you to make informed decisions about your training and employment opportunities and finish your training.
• You can’t start* more than two qualifications in a year • You can’t start* more than two skill sets in a year It is a quicker way to get qualified with access to trainer support and government funding for eligible students. The shorter delivery period means that the course fees is lower than the full 10-month blended delivery option.
Training Victorian Skills Gateway’s funding eligibility checklist: au/s/how-to-check-your-eligibilitywww.skills.vic.gov.
• $1,000 with Skills First Funding • $200 with Skills First Funding –Concession • $4,500 not funded, fee for service (payment plans available).
The REIV fast-track option is only available to Agent’s Representatives who have at least 12 months experience in real estate and are currently registered with the BLA. It is a quicker way to get qualified with access to trainer support and government funding for eligible students.
If you hold the superseded three-unit Agent’s Representative qualification and are looking to become a licensed estate agent, you must complete both the Certificate IV Real Estate Practice CPP41419 and the Diploma of Property (Agency Management) CPP51119.
You may be eligible for a concession if you hold a valid and current:
Citizenship: To be eligible for Skills First training, you must be:
There are also limits on how much Skills First training you can do. The limits are:
Users from your team can now add this template to any other VicForms authority they may be sending to a client for signatures.
If you don’t have an agreement in place, choose from the options available and start a new income stream.
Please see below for more upcoming features that will help your business take another leap in the experience you can offer clients. brand
Create your own template Upload your own business documents into VicForms, tag and save and “template” them in your account and you are ready to go.
Add attachments When you need more than just the Authority viewed and agreed, upload and attach to the package. No extra charges, it all gets viewed and signed as one envelope.
Subscribers using the commercial leasing forms can complete up to three forms in a single workflow, saving time and creating further Structureefficiencies.the combination of forms in any manner that works best for your business and use the One TouchTM e-signatures to complete the process.
Just e-signing
The esTaTe agenT – AUGUST 2022 | 25
A major technology upgrade in the past two years has also made VicForms one of the most user-friendly, efficient and innovative business tools to significantly enhance your client experience.
Contact vicforms@reiv.com.au to set up a no-obligation demonstration and understand how VicForms can streamline your business processes
z 143 Commercial Lease z 144 Commercial Lease Schedule z 144A Commercial Lease Special Conditions Schedule
A simple way to ensure consistency and save time.
A very cost-effective option for businesses that use a combination of REIV and their own forms. Create a workflow
Individual user profiles Coming soon, unique user profiles for your staff. Set up multiple user profiles under a master profile and control access for individual staff the way it suits your business.
Simply select your preferred utility connection provider once and automate the process for your renters. No additional charges, you receive your full referral fee as agreed with your provider.
VicForms – Customise to your
Automate referrals to utility providers
For years, VicForms has been the most compliant and reliable way of using real estate forms and authorities.
For businesses that use their own authorities but require a secure digital signing option, simply upload your forms and access One TouchTM at a per envelope cost.
and business process Resources
26 | The esTaTe agenT – AUGUST 2022
Sold By Auctions
Paul Tzamalis
Tom Kurtschenko
2022 ReIV senior auctioneering Competition
Greg Brydon OBrien Real Estate (Mentone)
Alex Ilyin Ray White (Brunswick)
RUNNER
Calling once, calling twice –REIV auctioneers take to the podium for second time this year
WINNERUP
Delays and disruptions cause by the pandemic gave us the opportunity to host the postponed 2021 and the 2022 REIV auctioneering competitions in the same calendar year.
The Auction Company
Competitor Agency
Several first-time entrants took the competition to another level. Congratulations to Luke Banitsiotis and Andy Reid for their outstanding performance. They will now represent Victoria in the Australasian Auctioneering Championships to be held in Sydney from 16th to 18th October, 2022.
Luke Banitsiotis Woodards (Blackburn)
Anthony Molinaro O’Brien Real Estate (Blackburn)
Daniel O’Regan Jellis Craig (Greensborough)
Ming Xu Biggin & Scott (Glen Waverley)
Fourteen skilled and experienced auctioneers competed for the 2022 title of REIV Senior Auctioneer of the year.
Events
Jellis Craig (Eltham)
It has been exciting to see our REIV auctioneers compete in-person once again. The competitions are a great opportunity to learn, grow and continually invest in yourself. We thank the REIV Auction Chapter that works tirelessly to create opportunities for Victorian auctioneers to test and build their skills.
Dominic Nguyen Biggin & Scott (Greater Dandenong)
Andy Reid
Rodney King Aston Commercial
Trish Orrico Ray White (Craigieburn)
Chief Judge
Agency
Etica
Kay &
Eddie van Pamelen
Compton Green
Gross
Tyrrell
Raoul Salter Waddell Tyrrell Auctions
Scott Patterson Burton
The magnificent Henley Home in Villawood’s flagship Redstone community in Sunbury sold to a young family for $1.082 million. This was the first time that the Charity House raised more than $1 million with every cent going to the appeal. We thank Henley Homes and Villawood Properties for their incredible work supporting the Good Friday Appeal.
REIV Senior Auctioneer of the Year 2021 Paul Tzamalis undertook the enviable task of calling the charity house auction for the Good Friday Appeal.
The esTaTe agenT – AUGUST 2022 | 27 Bidders Agency Garry Giritharan Anywhere Auctions Alisha Hobart EYS Auctions
ICR Jeremy
Events
Tom Roberts
Harry Li iSell Group
Charity House Auction raises over $1 million for the Good Friday Appeal
Phil Peros
REIV
Judges
Thank you to our judges and bidders who take this competition to another level each year. We now look forward to the Novice Auctioneering Competition.
Peter Batrouney Craig Adrian Butera
Alexander
Joanne Royston
RT Edgar
Nelson
Jellis
Thank you to our judges and bidders who take this competition to another level each year. We now look forward to the Novice Auctioneering Competition to be held at the REIV Camberwell office with over 25 competitors.. We encourage all real estate professionals to come and watch the new auctioneers make one of their most challenging auction calls in the heat at the REIV on Tuesday, 23 August followed by the final on Tuesday, 30 August.
28 | The esTaTe agenT – AUGUST 2022 Events Integral to the REIV core purpose is keeping Members up-to-date with factors that impact their personal and business growth. Legislative compliance, economic conditions, risk management and business process are just some of the areas that require regular training and review. The REIV CPD program has been designed to assist Members maintain consistent focus on ongoing training and development. Short webinars, in-person seminars and networking events have proven to be a popular way of accessing ongoing professional development. Please continue to share your valuable feedback that helps develop the REIV CPD program. Learn, network and grow Please email events@reiv.com.au 41 Events held 2,259 Attendees We were pleased to host a sell out event for the R e I a national awards for excellence held in april at Zinc, Federation s quare. * 12 months to 31 July, 2022 Members at recent REIV events. Top 5 most popular webinars • Inside Property Management – VCAT Procedures, Processes and Appearing • Residential Tenancy Matters with Interstate Parties • Retail Leases webinar • CTRS update (2021) • CTRS update (2022)
For any queries or assistance, please contact the Membership team on membership@reiv.com.au 2022 – from 11 to 24 August
REIV Director Elections
William Bonnici (Wodonga) and Hayley Mitchell (Geelong) have nominated for the Regional Zone vacancy, while Sabina Aldouby, Darren Pearce and Wendy Steel have nominated for the two Metropolitan Zone vacancies. With more nominations than there are vacancies for each zone there will be elections, which will be conducted online and go live on 11 August. Information about the candidates will be available on the election site and the REIV website at reiv.com.au
The esTaTe agenT – AUGUST 2022 | 31 Shop Online You can now order a range of office supplies including printed REIV forms and authorities at the click of a button. The REIV sells a range of sector specific resources like auction bells, flags etc. that can be delivered straight to your door. Please login with your personal Membership Number and Password. You can also manage your CPD, log requests for CPD points for external training and stay up to date with your REIV account with an online gateway to pay renewals and other invoices.
Residential Rental Vacancy Survey REIV publishes the rental vacancy rates each month. Your contribution to the vacancy rate survey improves the quality of this reporting. Responding to the survey takes no more than three minutes. Respondents receive a copy of the results before they are published in the latest Monthly Research Bulletin and made available on the REIV Website. Members receive 1 CPD Point for completing the survey. To be added to the survey respondents list, please contact us on research@reiv.com.au
Voting
Bulletin
To vote, you need to be a Financial Licensed or Representative Member in the relevant Zone with up to date contact details so that voting information reaches you.
Reasons for claims
You probably hold Professional Indemnity Insurance to cover for claims which might come about as a result of some of the above events, but adopting sound risk management principles to prevent claims in the first place is also important. When it comes to managing risk, there are of course the elements of diligence you perform in your work, such as conducting regular and thorough inspections; following up and completing repairs; ensuring integrity in your advertising and regular communication with clients. But of equal importance is the internal aspects within your practice, such as ongoing training of staff; keeping up to date with legislation; thoroughly examining contracts before signing and adequate record keeping procedures. Putting in place robust risk management practices can not only help prevent claims to start with, but can also make a huge difference to the strength of your defence.
Why it goes beyond insurance
The real estate industry has never been known as uneventful. Whether it’s changing interest rates; legislation and rental reform, or even technological developments, it’s an industry that is used to seeing change.
The one constant that does remain present though, is the risk of having an allegation of professional negligence on you. Whether it’s property mismanagement, misrepresentation or underquoting, the nature of the work you do can sometimes be subject to some serious complexities. While you might think nothing will happen to you because of how careful you are, the truth is, events like allegations of negligence and being held liable for financial loss can occur to even the most cautious agent.
In these instances, while property mismanagement is the cause for the About Aon Aon is proud to be the new Platinum Partner of the Real Estate Institute of Victoria. Access a range of competitively priced insurance options arranged by Aon today. We’ll work through your industry’s risk and insurance needs – complex or simple, and scan the market to offer you a solution aimed at offering a superior combination of cover, price and service. Get a quote online or speak to an experienced insurance adviser today. Learn more at aon.com.au/reiv © 2022 Aon Risk Services Australia Limited Abn 17 000 434 720 AFSL no. 241141 (Aon)
Resources
Another common cause for claims made against real estate agents is for misrepresentation, where agents are alleged to make false representations of properties in their advertising, leading to buyers and/ or sellers suffering a financial loss.
The esTaTe agenT – AUGUST 2022 | 33 claim, the underlying issue can be deemed as negligence, as the agent has been negligent in not identifying and/ or repairing damage. These types of claims can often escalate quickly, with defence costs and compensation easily running into the thousands.
As leadership at the federal level changes, and we also head into what some economists have said will be a string of interest rate changes, agents need to be more stringent than ever before to ensure they’re keeping up with changes to policies and changing legislation. Your clients will be relying on you to ensure their decisions are sound and within their legal rights, so it’s important for you as an agent to be the source of expertise.
Managing risk during economic and political changes
Professional Indemnity Insurance is an important policy to hold to provide cover in such instances, but it’s not Risk in the world of real estate enough to simply hold insurance without having some adequate risk management procedures in place.
The most common cause of Professional Indemnity claims for real estate agents is for property mismanagement, where landlords allege mismanagement by an agent caused them loss of rent, loss of property value or property damage. Property mismanagement claims can also come about as a result of tenants alleging they suffered an injury due to poor maintenance or mismanagement.
Please note: The information contained in this article is general in nature and should not be relied on as advice (personal or otherwise) because your personal needs, objectives and financial situation have not been considered. Before deciding whether a particular product is right for you, please consider your personal circumstances, as well as the relevant Product Disclosure Statement (if applicable) and full policy terms and conditions available from Aon on request. All representations on this website in relation to the insurance products we arrange are subject to the full terms and conditions of the relevant policy. Aon has taken care in the production of this document and the information contained in it has been obtained from sources that Aon believes to be reliable. Aon does not make any representation as to the accuracy of the information received from third parties and is unable to accept liability for any loss incurred by anyone who relies on it. The recipient of this document is responsible for their use of it.
Resources
The esTaTe agenT – AUGUST 2022 | 35
On the other hand, it has been a long, complex and costly road to get to where we are today and the political appetite for change continues. I have had a long and interesting second career in the superannuation industry. Involvement has substantially increased my knowledge and I have met and worked with many committed and dedicated people. I have fond memories of many co-directors, staff and suppliers. It has been a privilege to represent our members and I have enjoyed a stimulating and rewarding 46 years or so of involvement as member, governor, trustee and director while the Fund rose from $1 million to $2 billion funds under management.
Author - Ian Armstrong REIV Member since 1974
From $1 million to $2 billion: Forty-six years with REI Super
On the 1993 I resigned from the Board of REIA Super, re-joining in 1996 when the REIA appointed me again as an employer Director. Shortly after that the fund became independent and adopted a member elected Board model, with the approval of APRA.
Despite the changes we do have a better Superannuation system now than when I joined in 1975. There is now near universal coverage, rules around disclosure and member communication, rules around vesting and preservation, improved governance, and properly developed allocated pensions.
Ian Armstrong reflects on his career with the Real Estate and Stock Institute of Australia Superannuation Fund for Directors and Employees
I leave on a high as the fund is rated the eighth best performing fund in Australia for the 2020-2021 year. I trust I have made a worthwhile contribution in return.
Ian Armstrong
At the time, superannuation was somewhat unusual. It was mainly applicable to employees in the public sector and white-collar workers in large private sector companies. The vast majority of members were in defined benefit funds. Superannuation was often referred to as ‘golden handcuffs’ as the process of drip-feed vesting was used as a tool to retain employees.
Superannuation funds were tax free, with no tax on contributions or earnings, and merely 5% on lump sum benefits. All that changed in 1983 when the newly elected Labor Government introduced a tax on lump sum benefits. Every Government since has had the urge to tinker with Superannuation. Sometimes, but not always, for the better. On August 15, 1985, I wrote to the fund querying inadequate investment performance. That led to me being appointed to the ‘Permanent Standing Committee of the Real Estate Institute of Australia Superannuation Fund.’ The purpose of the Committee was to meet twice yearly to receive a report from the Fund Managers, Macquarie Counsellors, as to fund activity. With the Government interest in Superannuation evolving so too did our structure. On July 8, 1987, I was appointed a Foundation Governor of the REIA Superannuation Fund Pty Ltd, which was the new Trustee for the REIA Superannuation Fund. My co-governors at the time were Kris Callaghan (Chair), Micheal Forsyth, Russell Jackson Phil Roberts (Fund Secretary) and Bill Woolcock. Superannuation was often referred to as ‘golden handcuffs’ as the process of drip-feed vesting was used as a tool to retain employees.
I was elected to the Board from October 2001 for a four-year term. There followed a series of subsequent elections where I was able to remain on the Board.
On 1 July, 1975, I became a member of the ‘Real Estate and Stock Institute of Australia Superannuation Fund for Directors and Employees’. Real Estate remuneration is often ‘lumpy’ and superannuation, apart from the forcedsaving attributes, was a way to help average that income. I encouraged senior colleagues in my office to join me.
The advent of accumulation funds such as the REIA fund was innovative and members were generally fully vested Superannuationimmediately.legislation amounted to no more than a handful of pages in the Income Tax Assessment Act, which set the conditions for tax exemption – there was no Superannuation Guarantee (SG) or SIS legislation. In the private sector, lump sum reasonable benefit limits (RBLs) were in place and managed through a short ATO circular.
Bernard Corser OAM Medal of the Order of Australia in the general Division. REIV Member since November, 1982. Brad Teal OAM Medal of the Order of Australia in the general Division for service to sport and the community.
Queen’s HonoursBirthdayList
36 | The esTaTe agenT – August 2022
Membership Vale Ian McDonald Ian became a licensed agent in 1969, joining the REIV a few months later, becoming a Fellow of the Real Estate Institute of Australia in 1972 and remaining an REIV Member for nearly 53 years in all. Ian was serious about real estate and committed to keeping on the front foot and actively used REIV services to that end. But he also gave back to the REIV, the wider membership and real estate profession by getting involved, both locally and centrally. Over the past 20 years alone, he served on the Best Practice, Ethics, Legislation and Documentation, Estate Agency and Arbitration and Professional standards Committees. He also served on the REIV Members’ Council, became a Board Director in 2013 and was elected as the REIV President for the 2014/15 year. At the same time, Ian also represented the REIV on the Estate Agents Council for three years from 2012.
Fond farewells
Congratulations to two REIV Members who were each awarded an OAM in the 2022 Queen’s Birthday Honours List.
REIV Member since April, 1982.
Zigismunds (Zig) Inge AM Passed away in June, 2022.
REIV Member since 1963 and a licensed agent since 1957.
The esTaTe agenT – August 2022 | 37 Membership Milestones We congratulate the Members who completed important milestone May-August,AnniversariesMembershipduring2022. 50 yeArs Edmond Anderson David rathgeber Lewis roth 40 yeArs Kevin Connolly John Lowe Garry Nash 30 yeArs Darryn Arnold Robert Bath Jeremy Charlton Campbell Cooney Christopher Curtain Wojciech Kubiak Kaye Lazenby Harry Lew Adrian Lo Giudice Douglas Lougoon William Lyall Christopher Martin Mark McDonald Brett simpson 20 yeArs Simon Bartaby Andrew Bendell Daniel Bullen Kenneth Chappell Daniel Cole Andrew Crotty Angela Davidson Ryan Di Natale Mark el-Khalil John FitzGerald Gary Foat Mark Forytarz Adrian Gnoato Richard Goodman Ian James Helen Kichakov Peter Kladouris Okan Kocuk Paula Matlock Tim Mitchell James Paynter Mark Pearman Nicolas Poulios Leor samuel John saurini Jeremy Tyrrell Stephen Varga Michael Williams Matthew young 10 yeArs Anastasios Adgemis Don Almonte Breanna Attard Morag Atwell Justin Balsillie Luke Banitsiotis Danielle Bilson Trevor Bowen Patrick Brady Christopher Burne Shirley Burnell Paul Byrne Andrew Dodd Michael Dolphin Stefan Dzanovski Christine Fraser James Glen David Hill Robert Hill Matthew Jackson Hubert Jahja Mark Kainey Zehra Keller Yu Han Koon Tony Lee Min Lin Stavros Loizides John Lombardo Prince Luckman Achilles Mantsos Simon Mason Gina Mathioulakis Courtney Matthews Carl McCann Mike McNamara Paul Miles John Morrisby Lee Muddle Dominic Nguyen Quoc Nguyen Graham O’Callaghan Cynthia O’Gorman Scott Perry Simon Pintado Mark rosevear Lynne ruscoe Vishal sharda Sadhana smiles Rory somerville Lisa stafford Alexandra starr Peng Tow Paul Tzamalis Ron Wallin Yujian Wang Mark Watson Simon Wood Aaron yeats Davidah Zeldin Weiyong Zhu
38 | The esTaTe agenT – August 2022 Membership Mohd Aarif Ali Aboucham Fadi Abraham John Adgemis Ali Afzal Alicia Airey Matthew Alexander Hakan Ali Girish Arora Annie Atkinson Regina Atkinson Christos Avramopoulos Jason Bailes Ian Ballas Jin Bei Matthew Berg Xiaojie Bie Katy Blackley Candice Blanch Samuel Borner Simone Bowers Luke Braun Simon Brearley Jessica Brindley Bijan Bulobin Andrew Butler Roderick Callins Daniel Caspar Kah Hou Chan Yang Chen Bei Cheng Akash Choudhary Priyanka Chowdary Paul Chwyla Giulia Ciciotti Nathan Clifford Lynne Cole Gerard Cosgrave Jamie Coulthard Damien Crivelli Melita Dacruz Brittany Dalton Gary Dans Harmandeep Dhillon Kylie Donker Clint Donovan Gabrielle Douglas Michael Duffield Jason Dullard Stephen Dullens Jack Dunkley Jordan Dyason Aleisha eadon Carissa earney Jack edgar Timothy egan Alexandra exton Robert evans Suye Fang Elisse Farquhar Angela Fenech Susan Finlayson Siew Sam Fong Adrian Garra Jagmeet Gill Edwin Goh Senarath Gunasekara Ebony Hajilias Brian Hancock Paige Hanley Katie Hanssen Robert Harvey David Hemingway Janssen Heung William Hocking Aife Horsley Paul Howe Sharon Howes Samantha Huntley Antony Jacobson Jaidev Jaidev Vishal Jassal Ashok Jayasinha Ronald Jones Luke Jorgensen Jackson Kalb Kiranpal Kaler Akhilesh Kansal George Karlos Christopher Kavanagh Charlotte Kaye Mark Kefford Mathew Kent Sumit Kishore Isabella Kou-Fu Ashish Kumar Ravinder Kumar Sanjeev Kumar Brooke Lawrance Nhi Le Yinbo Li Yong Li Teck Lim Binxia Liu Angelina Luppino Brodie Lynch Zhigang Ma Shao Mai Himanshu Malhotra Gurwinder Mann David Mark Marcia McKenny Cameron McLellan Muneesh Mehta Shaniah Merrifield Sandra Michael Valerie Mika Megan Miles Julian Millman Steven Mok Cindy Morgan Emily Morgan Isabelle Morgan Jaime Morris William Munro Brendan Mustica Freya Myles Ajay Singh Nain Michael Nardella Sudesh Navaratne An Nguyen Christina Nguyen Nastasha Nurmi Donna Nusser Caroline Nutbean Andre O’Brien Jamie O’Halloran Kevin Paghdar Angelina Papasergi Catherine Parker Patricia Parra Alapkumar Patel Kanan Patel Veenu Pathak Janine Pepyat Garreth Phillips George Polydoros Nadia Polzella Sean Porlier Josie Powell Nikita Powney Priyanka Priyanka Scott Prosser Qiyu Qian Linna Qiang Marco raiti Aaron ralph Diljot randhawa Jagpreet randhawa Katrina rawther Justin ross Navkirat sarai Jodie schickerling Stephanie scoleri Narrim segeal Anil sethi Hamish sethi Prince sethi Dean shipley Harkirat sidhu Vishavdeep sidhu Gavin singh Harmeet singh Harinderjeet singh Jagat singh Kuljit singh Naval singh Nirmal singh Pratap singh Elliott skeoch Chirag soni Christie spargo Marie spinelly John stack George stavrakis Maruthi surapaneni Nicole swemmer Thai Tan Poppy Thompson Bassam Tofaili Anthony Torzillo Varun Vagdhan Nicole Van Den Dungen Brendon Van eyk Karan Vejrani Kiara Ventieri David Villarosa Minh Vu Kerrie Wheeler Cindilea Wilson Ebony Wilson Susan Wilson Matthew Wrigley Ze Qing Wu Muxi yang Morgan young Jian Zhang Xiaojun Zhu From February 1, 2022 to June 30, 2022 we welcomed 209 members to the REIV community. Building new relationships through networking is an important aspect of REIV membership. Please find the time to reach out to the new members. New members
