Certificate or No Certificate? That is the question.

There has been much debating on who does and does not need to hold a Certificate of Registration under the recently introduced Property & Stock Agents Act 2002. (P&SA Act 23/3/2020). Under the old Property Stock & Business Agents Act 2002, all persons wanting to undertake agency activities were required to hold at least some qualifications, be it a Certificate of registration or license. New changes came into place in March 2020 which sought to clarify who did and did not need to be registered and for good reason, as holding a certificate or license has now become more expensive.

But even today, whilst we have some guidelines in place, nothing is absolute, so caution is still needed. Let’s have a look at what we know and what we are left to interpret.

Firstly, the Property & Stock Agents Act 2002 was changed and introduced new license levels. These changes effectively “watered down” the tasks that could be carried out by a Certificate holder. In effect, the Class 2 agents license replaced the old Certificate of Registration and the new Certificate of Registration effectively became an entry level role, a bit like an apprenticeship, which required supervision and guidance. Hence the new name of an “assistant agent”.

Training packages were also updated simultaneously with the changes in the P&SA Act2002  to ensure industry new comers undertook more study and had greater knowledge and skills before commencing in an office. This meant an increase in training fees and a new (and more expensive) 4 year “Assistant agents’ certificate”. The end result is now a higher entry level cost to industry new comer and more compulsory training as the new rules require the Assistant agent to achieve a Class 2 status within 4 years of being granted their initial registration.

Section 4A (3) of the P&SA Amendment Regulation 2019 sets out the limitations of the Certificate holder:

(3) An assistant real estate agent may exercise the functions described in

paragraphs (c), (d) and (e) of the definition of real estate sale or leasing

functions in section 3A(2) of the Act, but may not in the person’s capacity as

an assistant real estate agent—

(a) enter into a contract for the sale of land, or

(b) enter into an agency agreement or a franchising agreement, or

(c) authorise the withdrawal of money from a trust account.

So, the amendment specifically sets out what the Assistant agent cannot do. This then brings into focus the definition of “real estate sales or leasing functions “from 3A (2) P&SA Act 2002. What can the assistant agent do.?

Subclauses (c)(d) and (e) perhaps give us the best indication of what these real estate functions are:

(c)  acting as agent for inducing or attempting to induce or negotiating with a view to inducing any person to enter into, or to make or accept an offer to enter into, a real estate transaction or a contract for a real estate transaction, or

(d)  acting as agent for the introduction, or arranging for the introduction, of a prospective purchaser, lessee or licensee of land to another licensed agent or to the owner, or the agent of the owner, of land, or

(e)  acting as agent collecting rents payable in respect of any lease of land and otherwise providing property management services in respect of the leasing of any land, or

From the above it appears that the assistant agent can introduce, negotiate and close sales to the point of signing a contract, at which time a Class 1 or Class 2 agent would need to take over proceedings. They would be free to carry out open for inspections or introduce buyers and tenants to properties and sign various property management and leasing documents (but not agency agreements) issue rental receipts, carry out property management services on behalf of the agency and liaise with landlords and tenants. Not withstanding the above, their functions would need to be supervised at which time, the Licensee in charge takes responsibility for their competency (or lack thereof). A Certificate of Registration is therefore needed in each of these above examples.

Fair Trading has attempted to assist explain what is and is not “real estate functions”  by providing examples at the following link: https://www.fairtrading.nsw.gov.au/housing-and-property/property-professionals/licensing-certification-and-qualification/when-a-licence-is-not-required

Upon review, it can be seen from the Fair Trading examples and Clauses 4A (3) and 3A (2) that anyone who carries out administration duties such as reception work, accountancy work and in a supporting capacity for the office is not required to be certified. The issue is, at what point does a staff member cross the threshold and commence acting in line with the definition of “real estate sales and leasing functions”?

Only the Licensee in charge can determine when the above situation has arisen. After all, they must instruct the Assistant agent to carry out their required duties so it is important that the Licensee in charge has in place the following:

  • Have a clear job description for all assistant agents that run parallel to the definition of “real estate sales and leasing” Ensure they obtain a Certificate of Registration prior to starting work.
  • Ensure administration staff understand their support role and that no part of their job description crosses into the definition of “real estate sales and leasing” functions. Ensure their managers do not require extend work tasks that could see them acting in the capacity of a real estate agent.
  • Be aware of the natural upward movement of staff and their acceptance of increased responsibility eg Administrator/Receptionist to Property officer. Review all Assistants agents’ roles at least twice a year.

With the increased cost of entry to our industry and the ongoing training costs for Assistant agents to become Class 2 licensed agents within 4 years, not to mention the extra time required for this mandatory study, it is very important the Licensee in charge understands who does and does not need to be certified and thus does not burden those support staff with unnecessary obligations that are not required, so it is worth the extra time to investigate and implement these recommendations.

Ultimately it is the responsibility of the Licensee in charge to get things right and keep things right. Penalties apply for employees working without the required Certificate of registration. Fair Trading is watching and agents are easily caught out.

Good practise suggests that the business employs staff correctly from outset, ensure that staff stay within their designated role and if they do advance, identify in advance what actions trigger the need for them to obtain the Certificate of Registration.