In New South Wales, you must have a corporation licence to run a business that provides agent functions. If you are new to the real estate industry, it is imperative that you understand your legal obligations. Likewise, if you are a real estate industry veteran, you should ensure your knowledge of your legal obligations is current. Several common businesses require a corporation licence. If you run a real estate agency, you need a corporation licence. Likewise, if you run a stock and station agency, you will need a corporation licence. Additionally, if you run a strata management agency, you will need a corporation licence. This article will discuss the requirements your NSW business needs to meet to hold a corporation licence. Additionally, this article will discuss what a corporation licence is and how you can apply for this licence.
What is a Corporation Licence?
A corporation licence allows a business entity to carry out specific activities in the real estate sector. In NSW, the activities covered under this licence include:
- auctioning, selling or leasing of land or property;
- collecting rent from leased properties;
- managing leased properties;
- auctioning rural land or stock; and
- other activities in relation to the owners’ corporation of a strata scheme.
It is important to note that the corporation licence is distinct from individual licences real estate agents hold. Individual licences relate to the qualifications and authority of individual agents. Whereas, a corporation licence pertains to your business as a whole.
Licensee in Charge
Your business must satisfy several requirements before it is eligible for a NSW corporation licence. Most importantly, a business must employ a class 1 licence holder to be the business’s Licensee in Charge (LIC). This position is also referred to as the ‘principal licensee’.
LICs are responsible for the proper supervision of the business they are in charge of. Generally, each office of your business must have a different LIC. This means that despite operating online across Australia, you still must have an LIC for your NSW operations.
Continue reading this article below the formCompliance and Responsibilities
The licensing framework provides a mechanism for accountability in case of any breaches, misconduct, or unethical behaviour. Operating under a NSW corporation licence comes with a set of responsibilities that must be followed. These responsibilities encompass various aspects of the business, including:
- ethical conduct;
- client interactions;
- record-keeping; and
- financial management.
Additionally, training sessions can help ensure your team are aware of any changes to relevant laws and regulations. This in turn fosters a culture of compliance and professionalism within your business.
Eligibility Requirements
A corporation carrying on a business that provides agent functions must meet the following criteria:
1. The Business and Director(s) Must Be Fit and Proper
To hold a corporation licence, you, your fellow directors and your business must be ‘fit and proper’. NSW Fair Trading performs checks including financial and police checks. These checks are designed to determine whether you and your business are fit and proper.
The check includes the requirements that you:
- have not been convicted of a fraud-related offence within the past decade;
- are not presently engaged in any ongoing legal proceedings related to any such offences;
- have not received a conviction under the Property and Stock Agents Act 2002, any associated regulations, or other applicable laws; and
- are not affiliated with, or frequently associate with, individuals belonging to a declared criminal organisation.
2. No Director or Officer of the Business Can Be a Disqualified Person
There are various circumstances where a person may be considered a disqualified person. For instance, a person may be classified as a ‘disqualified person’ if they have:
- any criminal convictions;
- been bankrupt; or
- been a director of a business that has been bankrupt or subject to a winding up order.
3. One of the Directors Must Hold a Licence
One of the business directors must possess a class one or class two licence in the same category of work as the business. For example, let us say you are a director with a stock and station agent licence. If this is the case you cannot apply for a real estate agency business corporation licence.
4. All Relevant Fees Have Been Paid
You must pay for all licence fees, including relevant contributions to the Property Services Compensation Fund. This fund is specifically designed to assist people who have been left out of pocket due to either their agent or conveyancer:
- failing to account for money; or
- not considering other property held in trust.
5. NSW as Principal Place of Business
To qualify for a NSW corporation licence, your registered office or business address must be within NSW. Alternatively, your business may still be eligible if it is located within 50 kilometres of the NSW border.
Process for Obtaining a Corporation Licence
You may apply for a one, three or five-year licence via the Service NSW website. The application can take up to 30 business days to be approved. If you successfully obtain a corporation licence, your licence details will be placed on a public register. At this point, your customers and consumers more broadly can verify your licence credentials.
You should ensure that you renew your licence before it expires. NSW Fair Trading may grant you a three-month extension if you fail to renew your licence in time. If you fail to renew your business’s corporation licence during the extension period, you will need to go through a new application process. At this point, you will receive a new licence number. Crucially, your business cannot trade unless your new application has approval.
This factsheet provides an overview of a real estate agent’s professional obligations.
Key Takeaways
A corporation licence allows your business to carry out specific activities in the real estate sector. To be eligible for a corporation licence, your business must meet several requirements. Arguably the most important requirement is that your business employs a class 1 licence holder to be the LIC. If you and your business meet the remaining eligibility requirements, you should seek to obtain a corporation licence.
If you need help understanding your obligations when operating a business in the real estate sector, contact our experienced real estate lawyers as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
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