“Every day, Real Estate Agents, whether in Property Management or Sales, are involved in activities, transactions and negotiations that are subject to the Property Stock and Business Agents Act 2002.

Many of the different sections in the Act and clauses in the regulations are intertwined, and although most agents would be aware that a breach of the Rules of Conduct may be subject to a statutory penalty of up to $5500.

However, many are unaware that a breach of the Rules of Conduct may also constitute a breach of another section of the Act or Regulations, or a breach of Fair Trading or Trades Practices legislation. “

Schedule 1 of the Rules of conduct (PSBA Regulations 2003) lists the 19 rules for all licensees and registered persons.

Below is Rule #2

Fiduciary Obligations: An agent must comply with the fiduciary obligations arising as an agent.

Common Law Obligations

Common law is unwritten law that has derived from the traditional laws of England. It relies on precedent, which means that common law has been established by decisions previously made by the courts, whether they are Australian, British courts or from other common-law-based countries such as the USA and Canada.

Agents have two types of common law duties and obligations in their relationship with the principal:

• Fiduciary obligations of trust and confidence; and
• Contractual duties and obligations

Fiduciary Obligations

Members of many professions (eg doctors, architects, lawyers, and real estate agents) have received specialised training and possess credentials and expertise in their
particular field.

In many cases they (including those in the real estate industry) may have a licence to
practice a profession from which others are barred.

These professionals are often placed in positions of trust with respect to those who
avail themselves of their services, and are often deemed to owe fiduciary duties to their clients within the scope of their engagement.

Fiduciary obligations are those obligations that are based on trust.

Most professions are subject to specific codes of conduct prescribed by authorities
and may be subject to additional penalties.

A fiduciary duty is the highest standard of care possible. A fiduciary is expected to be
extremely loyal to the person to whom they owe the duty (the “principal”): they must not put their personal interests before the duty, and must not profit from their position as a fiduciary, unless the principal consents.

The fiduciary relationship is highlighted by good faith, loyalty and trust, requires a strict standard of behaviour.

The test, when determining whether someone has met their contractual or fiduciary duty is:

What would a reasonable person expect?

• Comply with the princpal’s instructions
• Perform in accordance with their contractual duties
• Act in good faith in the principal’s best interest
• Exercise due care, skill and diligence in the performance of duties
• Preserve confidentiality
• Act with integrity in regard to the principal’s money
• Never act deceptively
• Never mislead or misrepresent any party to a transaction
• Follow the principal’s instructions and fulfil obligations under the contract
• Be responsible personally, even where you have delegated authority
• Meet legal requirements when acting for the principal

If you, as an agent, don’t live up to these expectations and your client suffers loss as a result, he or she can claim compensation from you.

Related Information

Real Estate Licence Courses