"licensing of real estate agents"
Licensing of real estate and business agents Registration of real estate & business sales representatives June 2003 In Western Australia, individuals, partnerships or companies wanting to operate as real estate or business agents are required, by law, to be licensed. To obtain a licence, a number of legal requirements must be satisfied. Similarly, an individual wanting to work in Western Australia as a real estate and business In Western Australia, sales representative must, by law, be registered. To become registered an individual must also meet a number of legal requirements. real estate and business agents must REBA – the licensing and registration authority be licensed and real The Real Estate and Business Agents Supervisory Board (REBA) administers the Western Australian real estate licensing and regulatory systems. REBA is a statutory authority estate and business sales administering the Real Estate and Business Agents Act 1978 (the Act), the Code of Conduct for Agents and Sales Representatives (the Code of Conduct), and the Real Estate representatives must be and Business Agents (General) Regulations 1979 (the Regulations). registered. The key objective of REBA’s licensing/registration system is to ensure that all This fact sheet real estate and business broking industry practitioners have an appropriate set of skills, knowledge and experience, in addition to adequate financial resources, to outlines the licensing carry out their functions effectively. and registration REBA meets monthly to consider applications for real estate and business agents’ licences. requirements for the The REBA Registrar under delegated authority considers applications for registration as a real estate and business real estate and business sales representative. broking industry. Licensing of a real estate and business agent A real estate and business agent can sell and lease private and/or commercial property, and businesses on behalf of clients. Under the Act a licence granted to a real estate and business agent is continuous. However, the licence alone does not give the licensee the right to carry on business as an agent. A licensee must also have a current triennial certificate in order to operate legitimately in the industry. REBA issues successful applicants with a triennial certificate at the time a licence is granted. The triennial certificate is subject to renewal once every three years. Forrest Centre, 219 St Georges Terrace Perth, Western Australia 6000 (hours: 8.30am-5.00pm) Real Estate & Settlement Call Centre: 1300 30 40 64 Admin: 9282 0843 Facsimile: 9282 0869 Email: email@example.com Internet: www.reba.wa.gov.au 2 REBA may grant one of three types of real estate and Requirements for partnerships or firms business agent’s licence: A partnership or firm may also hold a real estate and • a licence for an individual or “natural” person; business agent’s licence. • a licence for a firm or partnership; or To obtain a licence, the individuals and entities constituting • a licence for a body corporate. the partnership or firm must satisfy REBA that: An individual licence is suitable for someone wanting to • they, as well as any other partners/directors of the operate as a sole trader. A firm or partnership licence business (if a partner is another partnership or body will suit a group of individuals in a business partnership. corporate) are of good character and repute, as well Only a company that by definition is incorporated under as fit and proper to hold a licence; and Australian Corporations Law may apply through its • they have access to sufficient assets and financial directors for a body corporate licence. Regardless of the resources enabling them to comply with all the type of licence, the trading name of the agency will need requirements of the Act. to be registered if it is different to the name of the licence holder. In a situation where a partnership or firm applying for a licence is constituted by no more than three persons The Act stipulates that for all types of licence the then at least one partner (or director if a partner is a successful applicant(s) must be “…persons of good body corporate) must be a licensed agent. However, if character and repute and are persons fit…” to be involved the partnership or firm is constituted by more than three with the business of an agency. REBA considers a number persons then at least two of the partners (or directors if of factors in reviewing the character, repute and suitability a partner is a body corporate) must be licensed. of an applicant. Finally, the person responsible for the day-to-day Requirements for individuals operational management of the business (referred to in the Act as the person in bona fide control of the business) REBA reviews applications from individuals to ensure must also be a licensed real estate and business agent. that suitably qualified and experienced people enter the real estate and business broking industry. Appropriate A partnership/firm holding a licence must notify REBA educational qualifications, as well as a National Police of any changes to the business management structure Certificate (NPC) that can be no more than 1 month old, because this type of change could affect the licensing are required before a real estate and business agent’s requirements. licence can be issued. Application forms are available from REBA by phoning licensing staff on (08) 9282 0839. Requirements for bodies corporate The necessary NPC is available through your local police station. A company may also hold a real estate and business agent’s licence. The Act refers to a company as a body Applicants for a real estate and business agent’s individual corporate. licence must also: To obtain a licence, a body corporate must satisfy REBA • be at least 18 years old; that: • have acquired a minimum of two years work experience • all of the directors and managers of the body corporate in the real estate and business broking industry; are persons of good character and repute, as well as fit • have access to sufficient assets and financial resources and proper to hold a licence; and enabling them to comply with all the requirements of • the body corporate has access to sufficient financial the Act; and resources enabling it to comply with all the requirements • understand fully the duties and obligations imposed of the Act. upon agents by the Act. Regional Offices Great Southern (08) 9842 8366 South-West (08) 9722 2888 Mid-West (08) 9964 5644 TTY: (08) 9282 0800 Goldfields/Esperance (08) 9021 5966 Quality of Service Feedback Line: 1800 30 40 59 North-West (08) 9185 0900 3 Any licensed real estate and business agent from another In a situation where a company has no more than Australian State or Territory considering operating as an three directors then at least one of them must be a agent in Western Australia may call the REBA Licensing licensed real estate and business agent. However, staff on (08) 9282 0839 to obtain further advice. where there are more than three directors of the company then at least two of them must be A real estate and business agent’s key licensed. responsibilities There is enormous responsibility placed upon real estate The final requirement is that the person responsible for the and business agents because of the nature of their work day-to-day operational management of the business (ie in and the large sums of money they deal with. Agents must bona fide control of the agency) must also be a licensed ensure that: agent. • there is adequate supervision of the agency’s staff; A company holding a licence must notify REBA of and any changes to the business management structure • an agency’s trust accounting procedures are wholly because this type of change could affect the licensing consistent with the Act. requirements. Supervision Meetings and formal hearings At least 14 days prior to REBA meeting to consider licence An important element of supervision specified in applications, the names of all applicants are published in the Act is that every partnership/firm and company the Saturday edition of The West Australian. Anyone who must have a licensed person in bona fide control of has any objections to an applicant receiving a licence the agency. has up to 14 days after the date of publication to lodge a written objection with REBA. The person in bona fide control is responsible for ensuring that the operations of the business are conducted in The Registrar has the discretionary powers to have an accordance with the Act, the Regulations and the Code applicant interviewed by REBA members. In situations of Conduct. where there is doubt that an applicant for a licence meets all the requirements of the Act or there is an objection, The supervisory responsibilities of licensees or persons REBA may consider the application in a Formal Hearing. in bona fide control of an agency are outlined in Section In a Formal Hearing, the applicant has the opportunity 132 of the Act and Clause 6 of the Code of Conduct. to personally put their position before REBA. Applicants Supervisory responsibilities include the need to: may choose to be represented at the Formal Hearing by • “constantly supervise and control” the work of all a lawyer. unlicensed persons; Mutual recognition • give “substantial time and attention” to the business; and Real estate and business agents licensed in other • ensure that the managers of all branch offices of the Australian States or Territories (except South Australia business also give substantial time and attention to the and Victoria) may apply to have their status recognised business of their branch operation. by REBA, in accordance with the Mutual Recognition (Western Australia) Act 2001. Applicants may be required to attend a REBA Formal Hearing before a licence is issued. 4 REBA considers the supervisory responsibility of in the real estate and business broking industry. REBA a licensed real estate and business agent to be an closely monitors the compliance of agents in respect to essential component in reducing the potential risk of error the legislative trust accounting requirements, and takes in transactions, and ensuring compliance with the Act, firm action whenever any irregularity is detected, however Regulations and Code of Conduct. Mistakes that could minor. be made by sales representatives or other employees are more likely to be avoided when a licensed agent is closely Auditor independence monitoring all the work of the agency. Auditor independence is an important issue that must be Trust accounting procedures uppermost in the minds of agents and their auditors. Trust accounting is the general term that refers to the Under the Act, all agents must appoint an auditor to audit accounting records and practices required under the their trust accounts. REBA recognises that an agent’s Act to enable agents to properly account for trust money performance in the management of a trust account is under their control. a prime indicator of an agent’s compliance practices generally. Hence, REBA places significant reliance on The Act and the Regulations require the strict maintenance the audit report in monitoring the compliance of agents. of a formal set of accounting records that can show at any Clearly, the credibility of the audit report is impacted time the state of a real estate and business agent’s trust by both the actual and perceived independence of the account(s). auditor. A copy of the publication Real estate trust accounting: Under the Act, auditors must immediately inform REBA a reference manual is available on the REBA website of any close relationship through blood, marriage or a de www.reba.wa.gov.au or by contacting REBA at: facto partner, as well as any business dealings they have or have had, with any agent whose trust accounts they REBA have been appointed to audit. Locked Bag 14 Cloisters Square, Perth WA 6850 The term “business dealings” includes any dealings Telephone: 9282 0843 auditors (or any employees, partners, etc, of their firms) Fax: 9282 0869 have or have had with their agents, including but not limited to general accountancy, financial advisory and taxation Every agent who holds a triennial certificate is work for the agency. Business dealings also include any required to maintain one or more trust accounts. financial interests shared with the agent, as well as the All trust money must be held in a trust account use by the auditor of any services provided by the agent. in the agent’s name in accordance with REBA’s When in doubt as to whether any business relationship requirements with a prescribed financial institution constitutes a business dealing, auditors should disclose such as a bank, building society or credit union. the relationship to REBA for consideration. REBA will consider each disclosure on a case-by-case Whenever a trust account is opened, closed or amended, basis. Where it is found that an agent-auditor relationship an agent must advise REBA in writing as soon as is is sufficiently significant to warrant the disqualification practicable. All licensed agents are required to lodge of the auditor, REBA will consider a written submission either an audit report or a statutory declaration (as from the auditor as to why they should be retained. appropriate) within three months of the end of each Special consideration will be given to instances where calendar year. REBA conducts a Proactive Compliance disqualification will create hardship or difficulty for the Program whereby agency trust accounts are routinely agent, such as would be the case in some regional inspected. The proper maintenance of trust accounts areas where it may be difficult to engage a completely by agents is essential to maintaining public confidence independent auditor. 5 Costs of a licence Applicants seeking registration as a real estate and business sales representative must: In most cases, the cost of a real estate and business • be at least 18 years old; agent’s licence is made up of an advertising fee, application fee and a Fidelity Guarantee Fund payment. • be a person of suitably good character to hold a The Fidelity Guarantee Fund is used to compensate certificate of registration; and consumers whenever it can be proved that they have lost • have a full understanding of the duties and obligations money because of the fraudulent or criminal behaviour of a real estate and business sales representative as is of a licensed agent. or any of their employees, in the imposed by the Act. undertaking of a real estate transaction. Formal hearings and mutual recognition All applications (except those applying for a licence under Mutual Recognition – see section Formal hearings and As is the case with applications for a real estate and mutual recognition) for a real estate and business agents business agent’s licence, if there is doubt as to whether licence incur a fee of $55 for advertising. The application an applicant seeking registration as a sales representative fee for an individual is $333. For all businesses, whether meets all the legal requirements, or an objection is received, a partnership/firm or body corporate, the application fee REBA may consider the application in a Formal Hearing. is $500. Once again, applicants can choose to be represented at the Formal Hearing by a lawyer. A payment of $150 for the Fidelity Guarantee Fund applies to all licence applications. A real estate and business sales representative from another Australian State or Territory who may be Registration as a sales representative considering working for an agency in Western Australia People wanting to operate in Western Australia as a real may call REBA Licensing staff on (08) 9282 0839 for estate and business sales representative are required advice. by law to be registered with REBA before working in Costs of a certificate of registration the industry. A sales representative must work under the supervision of a licensed real estate and business agent. The cost of applying for a certificate of registration is made up of an application fee and a Fidelity Guarantee The Act requires that all registered sales Fund payment. The Fidelity Guarantee Fund is used to representatives notify the Registrar in writing within compensate consumers whenever it can be proved that 14 days of ceasing or commencing employment they have lost money because of the fraudulent or criminal with a licensed real estate and business agent. behaviour of a licensed real estate and business agent or any of their employees within the context of a real estate transaction. Only individuals can apply for registration as a sales representative. Individuals must meet specific educational Applicants for registration as a real estate and business requirements as well as obtain a National Police Certificate sales representative must pay an application fee of (NPC) that is no more than 3 months old before they can be $132 and a Fidelity Guarantee Fund payment of $45. registered. Application forms are available from REBA by Registration is renewable triennially. phoning licensing staff on (08) 9282 0839. The necessary NPC can be obtained from your local police station. 6 We are available Staff at REBA can handle general inquiries about real estate matters. Telephone 1300 30 40 64 for the cost of a local call from anywhere in the State. Inquiries about real estate licensing matters can be handled by REBA staff on (08) 9282 0839. This fact sheet contains general information that was current at the time of publication. If you have specific inquiries about matters relating to your situation then you are strongly urged to seek independent professional advice. The producers of this publication expressly disclaim any liability arising out of a reader’s reliance on this publication. This publication is available on request in other formats to assist people with special needs. This publication was produced by the Real Estate and Business Agents Supervisory Board with the administrative assistance of the Department of Consumer and Employment Protection.