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The Real Estate Institute of Victoria is expected to pay over $500,000 in damages after providing agents with a flawed sales contract.
The REIV has been ordered by the County Court to pay an agent who had lost his commission after using a non-compliant Executive Sales Authority (ESA) form to sell a property in Plumpton on Melbourne’s western fringe.
Consumer Affairs Victoria could be brought into the legal dispute as it had approved of the contracts that failed to comply with the Estate Agents Act.
The non-compliant form was exposed by a County Court ruling against a Ray White St Albans agent in 2017 who had unsuccessfully sued the vendors for a $385,000 commission following an $8.8 million sale of a six-hectare industrial site.
The court ruled that the shortened ESA used by the agent included an amendment on the commissions statement and rebates that did not comply with the Act.
The REIV at the time said that it was not the sole producer of the documents and agents always need to comply with the law.
“The REIV is not the sole producer of authority documents. All real estate agents in Victoria should ensure that all authority documents they are using of whatever form and from whatever source comply with the law,” a statement from the REIV said.
Ray White said that the recent County Court case was not against their St Albans agent who exposed the non-compliant form.
“It was not our agent awarded damages, but it does set a good precedent for us,” Ray White said.
SLF Lawyers partner John Gdanski wrote to Consumer Affairs Victoria and the REIV and said that he received a memorandum of advice that claimed both CAV and the REIV had breached their legal obligations.
“To put the allegation at its simplest, whomever approved the form on behalf of the director (CAV) did not properly read the Estate Agents Act. Further, whomever at the REIV had responsibility for preparing the pro forma did not properly read the Estate Agents Act either,” the memorandum of advice stated.
The Victorian government has advised the REIV that it will amend the Estate Agents Act to protect agent commissions and to ensure agents who followed their regulatory responsibilities in good faith are paid for their work.
The REIV in a statement said that the government announcement was a win for the industry and should be introduced to parliament soon.
“This is an excellent result for the REIV, its members and the real estate profession and a significant win for the REIV. The legislative fix being worked through is likely to be introduced into parliament in the next few weeks,” the statement said.
However, Mr Gdanski expected that more vendors would come forward to recoup commissions before the government’s retrospective changes.
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