by SMH | Oct 7, 2022 | Announcements, Management Rights, NSW Management Rights
REAL ESTATE LICENSING AND BUILDING
MANAGERS IN NSW
As you would be aware, there is no licence required to carry out Caretaking duties, but you do need a real estate agent licence to sell, lease or manage real estate on behalf of owners.
Since late 2021, there are now two classes of real estate agent licences in NSW – a Class 2 licence and a Class 1 licence.
CLASS 2 LICENCES
Before you can obtain a Class 2 real estate agent licence in NSW, you must first hold a Certificate of Registration to act as an assistant agent. You also need to hold a Certificate of Registration for at least 12 months, so as to gain experience under the supervision of a licensee.
A Class 2 licence allows you to –
• Act as an agent for a client to sell, buy or exchange property, businesses or professional practices;
• Negotiate with clients and vendors;
• Collect rent, deposits, bond payments and fees related to a lease, licence or contract.
However, Class 2 licence holders are not allowed to open or manage a trust account, or be nominated as a licensee in charge of a business.
To be eligible for a Class 2 licence, you must have –
• Held a certificate of registration as an assistant real estate agent (with or without restriction condition) for at least 12 months; and
• A Certificate IV in Real Estate Practice; and
• Completed work experience requirements for a Class 2 agent over a 12 month period;
OR
• Held a Class 2 restricted real estate agent licence within 12 months of making an application; and
• A Certificate IV in Real Estate Practice; and
• Completed work experience requirements for a Class 2 agent over a 12 month period.
Continuing Professional Development
Class 2 real estate agents must also complete 6 hours of continuing professional development (CPD) learning each year. This includes –
• 3 hours of compulsory CPD topics (these are set by Fair Trading and change every year); and
• 3 hours of elective CPD topics.
CLASS 1 LICENCES
Before you can apply for a Class 1 licence, you need to have held a Class 2 licence for two years. The idea behind this is that the 2 years training will further help build your skills and experience, so that you are ready to take on the additional functions of a Class 1 agent.
A Class 1 licence allows you to do all of the things that a Class 2 agent can do, but also allows you to –
• Act as a Licensee in Charge (LIC);
• Work independently as a sole trader;
• If you are an LIC, open and authorise trust account transactions for the business.
Only a Class 1 agent who is nominated as a licensee-in-charge (LIC) of a business can authorise withdrawals from the business trust account.
Continuing Professional Development
Class 1 real estate agents must complete 9 hours of continuing professional development (CPD) learning each year.
This includes –
• 3 hours of compulsory CPD topics (these are set by Fair Trading and change every year);
• 3 hours of elective CPD topics; and
• 3 hours of business skill topics.
ELIGABILITY TO BE ABLE TO APPLY FOR A LICENCE
To obtain a licence, you must meet the following criteria –
• You are at least 18 years old;
• You are a fit and proper person to hold a licence;
• You have the qualifications required for the licence class you are applying for;
• You have completed the required work experience tasks;
• Your previous licence (or certificate of registration) has not been disqualified;
• Your principal place of business is either in NSW or within 50km of the NSW border;
• You hold a Diploma of Property (Agency Management CPP51119) or Diploma of Property Services (Agency Management CPP50307); and
• You hold a Certificate IV in Real Estate Practice.
Mutual Recognition of Interstate Licences
• If you hold a current and equivalent licence in another state or territory (or New Zealand) you can lodge a form to apply to work in NSW under an equivalent licence.
• The key issue here is that you must hold a current licence in the other state – not just have done the course to qualify to hold that licence.
THE MANAGEMENT RIGHTS INDUSTRY FAVOUR – THE ON-SITE RESIDENTIAL PROPERTY MANAGERS LICENCE
The Australian Residents Accommodation Managers Association (ARAMA) pushed hard for this licence category.
An On-Site Residential Property Managers licence allows you to act as an agent –
• For giving possession of residential premises under a lease, licence or other contract;
• For collecting bonds, deposits, rents, fees or other charges in connection with any such lease, licence or other contract.
Note – This licence does not allow you to act as an agent for the purposes of selling real estate.
The NSW Government recognised that On-site Residential Property Managers work or live in the unit or apartment complex they are responsible for. Given their unique working arrangements, this form of licence is treated as a Class 1 real estate agent licence in NSW, allowing the manager to let units and operate a trust account.
Most importantly, this form of licence means that you don’t have to first hold a Certificate of Registration or Class 2 licence, thereby cutting out effectively 3 years of having to work in the real estate industry, before becoming eligible to let and operate a trust account.
However, you must have completed the Certificate IV in Real Estate Practice and continuing professional development (CPD) requirements apply.
Refining the Educational Requirements for the On-site Residential Property Managers Licence
ARAMA has pointed out to the NSW Government that the current educational requirements of a Certificate IV in Real Estate Practice is a gross overkill for obtaining an On Site Residential Managers Licence. This course includes educating licensees on duties that they are not allowed to perform under the On Site Residential Managers Licence – such as selling real estate selling!
Hopefully, common sense will soon apply and the education requirement for this form of licence will be limited to all the licensee is allowed to do – i.e. let units and operate a trust account!
Article Written by Col Myers of Small Myers Hughes Lawyers
Liability limited by a scheme approved under Professional Standards Legislation
Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice.
by SMH | Sep 14, 2022 | Announcements, Strata Law
CAN A BODY CORPORATE DEDUCT MONEY FROM A CARETAKER’S REMUNERATION?
It depends on the terms of the caretaking agreement.
Caretaking Agreement
Some caretaking agreements allow the body corporate to recover the costs of rectifying a default of the caretaker by deducting the costs incurred from the caretaker’s remuneration.
If this type of clause is in a caretaking agreement, the body corporate must usually do 3 things before it can deduct money from a caretaker’s remuneration:
1. Prove that there is a default (eg that the caretaker did not clean the pool or common foyer area);
2. Do something to fix that default (eg hire a cleaner to clean the pool or common foyer area); and
3. Incur costs to rectify the default (eg the cleaner charges $330.00 to perform the cleaning duties usually performed by the caretaker).
In this scenario, the amount that may be deducted would be limited to the costs incurred and not an amount to represent general compensation or damages to the body corporate.
Repudiation
If there is no such clause in the caretaking agreement, the body corporate may breach the caretaking agreement if it decides to deduct the caretaker’s remuneration.
That is because the body corporate has a contractual obligation to pay the caretaker remuneration, and a failure to pay the full remuneration can show an intention to not be bound by the terms of the caretaking agreement.
At law, this is called repudiatory conduct.
This repudiatory conduct, if accepted by the caretaker, entitles the caretaker to sue the body corporate for damages for breach of contract.
Depending on the nature of the caretaking agreement and the repudiatory conduct, the amount of damages that can be recovered from the body corporate can amount to hundreds of thousands of dollars.
What to do?
If your bodies corporate are having issues with their caretaker, there may be other ways to address the problem. Those other avenues should be explored. If deducting the caretaker’s remuneration is desired, the body corporate must only do so within the bounds of the caretaking agreement to avoid the risk of a potentially expensive damages claim.
Liability limited by a scheme approved under Professional Standards Legislation
Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice.
by SMH | Aug 31, 2022 | Announcements, General Management Rights, Management Rights
WHAT NOT TO DO AS A BUILDING MANAGER
BACKGROUND
A recent decision of the NSW Civil and Administrative Tribunal (NCAT) has provided Owners Corporations in NSW with what is now seen as a more “risk free” pathway to terminate a Building Management Agreement.
Until recently, if an Owners Corporation was not satisfied with the performance of its Building Manager, it has been usual practice that the Owners Corporation would commence legal action to terminate the Agreement, by alleging that the Building Manager was in substantial breach of one or more of the Agreement terms – or failed to satisfactorily perform the building management duties under the Agreement.
The danger however with this approach has always been that if the Court later decides that the Building Manager was not in substantial breach of the Agreement, the Owners Corporation is then liable to pay substantial damages to the Building Manager for the wrongful termination of the Building Management Agreement.
SECTION 72 OF THE STRATA SCHEMES MANAGEMENT ACT 2015
1. an order terminating the Agreement,
2. an order requiring the payment of compensation to a party to the Agreement,
3. an order varying the term, or varying or declaring void, any of the conditions of the Agreement,
4. an order that a party to the Agreement take any action or not take any action under the Agreement, or
5. an order dismissing the application.
The section further states that NCAT may make an order under this section on any of the following grounds:
(a) that the Building Manager has refused or failed to perform the Agreement, or has performed it unsatisfactorily,
(b) that charges payable by the Owners Corporation under the Agreement are unfair,
(c) that the Building Manager failed to disclose that he had a direct or indirect pecuniary interest in the strata scheme, or was connected to the developer, and
(d) that the Agreement is, in the circumstances of the case, otherwise harsh, oppressive, unconscionable or unreasonable.
THE CASE
The strata plan in this matter was registered in January 2001 and covered two buildings in Ultimo, Sydney that were originally developed by Meriton. In October 2000, Meriton sold the caretaker management rights to a building management company which has had control of those rights since that time. However, for whatever reason, the Owners Corporation did not receive a full copy of the Building Management Agreement until 2020!
When the Owners Corporation eventually reviewed the Building Management Agreement, they discovered that the Agreement only provided for annual increases in management fees in accordance with the CPI. The building manager however, had been charging annual increases of 5% – since October 2000.
The Owners Corporation was also dissatisfied with the performance of the Building Manager and ultimately commenced proceedings in NCAT, seeking an order that the Building Management Agreement be terminated pursuant to s72 of the Act. Specifically, the Owners Corporation sought an order on the basis of several parts of s72, including:
• that the Building Manager had performed the Agreement unsatisfactorily;
• that the charges payable by the Owners Corporation under the Agreement were unfair;
• that the Building Management Agreement was, in the circumstances of the case, harsh, oppressive, unconscionable, or unreasonable.
WHAT THE BUILDING MANAGER DIDN’T DO
On my reading of the case, the Building Manager made a lot of mistakes that would have been avoided, if they had read and understood their Agreement.
For example, the Building Manager:
1. refused to provide the Owners Corporation access to CCTV footage;
2. failed to provide keys when requested by the secretary of the Owners Corporation;
3. failed to provide the Owners Corporation with a proper copy of the Building Management Agreement until 2020;
4. had been charging the Owners Corporation based on 5% annual increases, instead of the CPI increases as specified in the Building Management Agreement;
5. allowed the principal of the Building Management company to be a member of the strata committee, although prohibited under the Building Management Agreement;
6. allowed its employee to improperly commence and pursue Supreme Court proceedings in the name of the Owners Corporation, attempting to prevent the 2020 AGM from going ahead, without proper authority or instructions; and
7. had, through the conduct of the principal and employees of the Building Manager prior to the 2020 AGM, falsely represented that the AGM had been cancelled, which conduct was allegedly borne out of a desire to control the Owners Corporation, rather than to serve the Owners Corporation, as required by the Building Management Agreement.
THE DECISION
The finding in this case was that the Building Manager had failed to perform the relevant Agreement satisfactorily, and that the Building Management Agreement, in the circumstances of the case, was harsh, oppressive, unreasonable or unconscionable.
TAKEAWAYS
• This sounds really basic, but always have a 100% understanding of what your duties are under your Building Management Agreement and don’t deviate from the performance of those duties.
• Although not relevant to this case:
(a) Diarise your option exercise dates and don’t miss them. If you are one day late, you lose the ability to exercise the option (and later options) and your remaining term falls away.
(b) Stay in regular touch with your owners by way of a newsletter. Let them know the good things that you do at the complex and remember, you only need 51% of those owners that vote at a meeting of the Owners Corporation (or Body Corporate) to extend the term of your Building Management Agreement.
(c) Wherever possible, maintain good lines of communication with your committee and strata manager.
Article Written by Col Myers of Small Myers Hughes Lawyers
Liability limited by a scheme approved under Professional Standards Legislation
Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice.
by SMH | Aug 16, 2022 | Announcements
On 26 July 2022, Col Myers was recognised as a Life Member from ARAMA “With appreciation and gratitude for dedication and distinguished service to ARAMA and its Members”. Congratulations Col
by SMH | Aug 3, 2022 | Announcements, Management Rights, NSW Management Rights
NSW COVID-19 MEASURES FOR STRATA AND
COMMUNITY SCHEMES EXTENDED
The NSW Department of Fair Trading has recently announced that the State Government has extended its temporary COVID-19 emergency measures for strata and community schemes to 29 September 2022.
This means that strata Owners Corporations and Community Land Associations can continue, until 29 September 2022, to:
• meet and vote electronically, without passing a resolution to authorise this beforehand;
• validly execute documents, without affixing the seal of the Owners Corporation or Association.
The previous temporary measure of allowing certain documents to be sent by email has not been extended because of changes made by the COVID-19 and Other Legislation Amendment (Regulatory Reforms) Act 2022 (the Act) on 24 March 2022. The changes mean that an Owners Corporation and Association can send documents to an email address nominated by a lot owner, lot occupier or another person on the roll.
The Act makes other permanent changes to the strata and community scheme laws on ways of voting and using an electronic seal. These changes are currently expected to start on 30 September 2022, once supporting regulations are made.
The measures allow Owners Corporations and Community Land Associations to continue operating as they have been during 2020 and 2021, until the permanent changes commence.
NSW Strata Scheme Reporting
All strata schemes in NSW will have to report annually to NSW Fair Trading through a new strata portal by 31 December 2022.
The reporting will make it easier to access key strata information, and it will deliver a range of benefits. For example, emergency services will have access to a dedicated contact for each scheme in the event of an emergency.
The Department of Fair Trading will be implementing the portal’s functions in stages. From July 2022, Owners Corporations can register a scheme, set up a profile and access educational webinars. More features will be added in the following months.
Strata communities in NSW can now start to prepare for the reporting now by:
• knowing what information you’ll need to report and where to find it;
• deciding who will do the reporting and who will be the emergency services contact.
Liability limited by a scheme approved under Professional Standards Legislation
Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice.
2022 08 Aug - COVID-19 Measures for Strata and Community Schemes Extended
by SMH | May 27, 2022 | Announcements, Body Corporate, Strata Law
THREE THINGS TO DO IN RESPONSE TO
A VAGUE RECORD COPY REQUEST
Here are two-real life examples:
“I request copies of all correspondence from any unit owner to the body corporate requesting for the program of works relating to the water penetration into unit [XYZ] be undertaken and responses.”
“I request a printout of all payments made to any third party in relation to the program of works”
How can the body corporate comply with those requests within seven days (assuming eligibility, form of request, and payment of fee is satisfied).
Must a body corporate comply with every record request?
The answer is, no.
The trick is knowing which requests fall outside a body corporate’s obligation to avoid adverse action being taken by the requester.
Here are some guiding principles to determine whether a body corporate must comply with a copy request:
- the requester must provide a reasonable degree of specification of the records being requested;
- a request for a particular class or type of document is usually sufficient;
- the requested records must be able to be readily identified by the body corporate based on the request;
- a body corporate is required to perform some search of its records to fulfil a request;
- a body corporate is not required to read through every document to determine whether it has information being requested;
- the records must actually exist in order to have an obligation to provide a copy on request.
Approach
In the first example above, it is unlikely that an adjudicator would order the body corporate to provide the requested documents because:
- the document range is limitless;
- the body corporate would be required to read all correspondence from unit owners to determine whether each correspondence was about the topic of water penetration.
In the second example above:
- if a document existed that compiled payments made to third parties, then it is likely an adjudicator would order a body corporate to provide a copy of that document; however
- if the document did not exist, the body corporate would not be required to read the documents and create a summary of payment information contained in those documents.
Three Things
- Communicate
Ensure that communication is made to the requester (ie that the request has been received or asking for clarification of the records requested), rather than simply not responding, as we find that tends to escalate matters unnecessarily;
- Eligibility
Check that the pre-conditions of a copy record request are satisfied (i.e. Is the requester an ‘interested person’? Is the request in writing? Has the prescribed fee been paid?);
- Inspect
If you or your legal representative considers the record request to be non-compliant, contact the requester and direct them to the option of inspecting the records of the body corporate, whether it be themselves or their agent.
Article Written by Brendan Pitman (27 May 2022)
Liability limited by a scheme approved under Professional Standards Legislation
Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice.
