When acting for a client in the sale of residential property in Australia, real estate agents must have various mandatory documents and disclosures to ensure legal compliance and transparency. These requirements can vary across states and territories, so it is essential to be aware of the specific regulations in the area where the property is located. This article sets out the mandatory documents and disclosures required for a real estate agent when acting for a client in the sale of residential property in Australia.
This factsheet provides an overview of a real estate agent’s professional obligations.
1. Agency Agreement
As an agent, you must create a written agency agreement whenever you agree to offer services to a client. It is crucial to make sure the agreement is prepared, signed, and delivered according to the law.
An agency agreement should, at minimum, state the:
- scope of services;
- amount of fees for commissions the client must pay for the services;
- conditions under which you can receive payment, typically upon the property’s sale;
- date when you can receive payment; and
- origin and the approximate sum of all rebates, discounts, and commissions that the agent will potentially receive in relation to the expenses the client is responsible for under the agreement.
Additionally, in the agreement, you can ask a client to pay for expenses relating to:
- advertising;
- auctioneer’s fee;
- cleaning;
- decorating; or
- landscaping.
The agency agreement needs to clearly mention the commission amounts or estimated figures for these services, and the client is entitled to negotiate regarding who should cover these amounts.
2. Contract for the Sale of Land
A property owner cannot sell a residential property without a contract for the sale of land. The contract for the sale of land is included amongst other mandatory documents since it outlines the terms and conditions of the sale, including the:
- sale price;
- settlement date;
- property details; and
- any special conditions.
The relevant state and territory law will prescribe the documents you must affix to the contract. For example, in NSW, this includes such documents as:
- title search or property certificate, which confirms the seller’s legal ownership of the property and identifies any encumbrances or restrictions on the property’s title;
- zoning information, including the zoning certificate issued by the local council, where applicable;
- drainage diagrams; and
- planning certificate that the local council issues and any documents related to the property’s easements, land use restrictions, or covenants.
3. Records and Record-Keeping
When selling residential property, real estate agents must maintain written records of and disclose to potential buyers any pre-purchase property inspection reports that they are aware of. You must document these records in a form that an authorised officer can inspect at any reasonable time.
In NSW, the law requires agents to:
- acquire such documents when they can be ‘reasonably obtained’; and
- keep these documents for three years.
This includes:
- property inspection reports, such as those relating to building and pest checks;
- reports concerning strata schemes (i.e. ‘strata searches’) if relevant; and
- other relevant documents.
4. Vendor Disclosure Documents
Certain states also require additional disclosure documents to be made available by the seller or agent to the potential buyer in a residential property sale. Such examples include, but are not limited to, the following:
| State and Territory | Disclosure Document Rules |
| Victoria | The agent must provide the buyer with a due diligence checklist. A due diligence checklist assists buyers in identifying any property issues that could impose restrictions or obligations on them if they decide to purchase it. Agents must also provide a section 32 vendor’s statement, which provides information about the property, including: + details of zoning; + planning information; + the mortgages; + improvements; + easements; + planning controls; + rates; and + taxes. |
| Australian Capital Territory | The agent must provide the buyer with a disclosure statement, which includes: + an Energy Efficiency Rating Statement; + a Building and Compliance Inspection report (and invoice); + an Asbestos Advice and Assessment Report; + a Pest Inspection Report (and invoice); and + the Crown Lease of the land, which sets out the conditions of how the land is held and can be used. |
| South Australia | The agent must prepare and provide the buyer with a ‘Form 1’ document, which includes: + cooling off rights for the buyer; + any limitations on title, such as encumbrances; + zoning rates; and + development plans and approvals. |
Queensland, Western Australia, Tasmania and Northern Territory do not require any mandatory seller disclosure statements when selling property. However, it is essential to note that agents must generally:
- find out pertinent or ‘material’ facts relating to the property; and
- make such information available to the potential buyer, either in the property sale contract or separately.
Key Takeaways
Prior to engaging in any sale of residential property, real estate agents should have a comprehensive understanding of the mandatory documents that they must provide when representing a client. Being well-informed about these essential requirements ensures both legal compliance and transparency, making the transaction smoother for all parties involved.
If you are considering starting a real estate agency or if you have an agency and have questions regarding your disclosure obligations, our experienced real estate lawyers can assist 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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