A series of payments made to an agent before the settlement of a property deal, which were described as ‘consultancy fees’, have landed two well-established Perth real estate agents reprimands and fines of $4,000 each.
Helen Limnios, a licensed real estate agent who owned and operated the Limnios Property Group and was the person in control of the business, consented to orders that she be reprimanded and fined $4,000 by the State Administrative Tribunal (SAT) for contravening the Code of Conduct for Agents and Sales Representatives for failing to adequately supervise the agency.
Dimitrios Athanasios 'James' Limnios, a licensed real estate agent, who was employed as a sales representative of Limnios Property Group, but was not an owner of the business, also consented to orders that he be reprimanded and fined $4,000 by the SAT for contravening the Code of Conduct by failing to exercise adequate skill, care and diligence.
'James' Limnios had arranged for remuneration prior to settlement of real estate transactions by way of 'consultancy' agreements in relation to a number of developments between 2004 and 2006.
These payments were for services which included services to be provided under the selling agreement with Limnios Property Group.
Allegations of wrongdoing by Athanasios Limnios (Senior), a business partner and co-owner of Limnios Property Group and against the company Limnios Special Projects Pty Ltd were withdrawn.
The Real Estate and Business Agents Act 1978 (WA) prohibits real estate agents demanding, receiving, or holding any commission or other remuneration in their capacity as real estate agents, prior to settlement of the transaction.
The Code of Conduct for Agents and Sales Representatives requires real estate agents who are in bona fide control of a licensed agency business to adequately supervise the business.
Commissioner for Consumer Protection Anne Driscoll said that in this case there had been multiple instances of payments being made in advance of settlement and this practice is illegal.
“The purpose of this prohibition is to ensure that sellers cannot be pressured into agreeing to early release of payments in the midst of negotiations for a transaction, and a blanket ban on early payments of commission and remuneration was Parliament's preferred way to achieve that,” Ms Driscoll said.
"While the purchasers' funds were safely held in trust, the agents involved in this arrangement were in breach of regulations that are aimed at controlling property transactions in this State and these types of arrangements are unlawful.
"It's essential that all agents involved in property sales and the handling of funds arising from those transactions comply fully with every aspect of the law and ensure that commissions are paid only upon settlement of the property. Even experienced and reputable agents must ensure that they understand and observe their obligations.
"Prior to this case, Limnios Property Group and Helen Limnios have operated in Western Australia as licensed real estate agents for more than 30 years without facing any disciplinary proceedings of any description. And 'James' Limnios has been a licensed real estate agent for more than 20 years with no previous disciplinary proceedings against him.
"While reimbursement of 'out of pocket' expenses such as advertising costs actually incurred, or costs relating to the preparation of 'for sale' signs, is allowed, it is prohibited under the Act to receive remuneration for the services provided by an agent in their capacity as agent, even if they are described as 'consultancy fees'.
"Real estate agents should recognise that disciplinary action is a risk if they enter into similar arrangements, and that it does not matter if the agent intended to break the law or not."