As a Real Estate Agent, Am I Engaging in Misleading and Deceptive Conduct?

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Table of Contents

• Defining Misleading and Deceptive Conduct
• Intention 
• Statements About the Future
• Silence
• Additional State Professional Obligations
• Key Takeaways
• Frequently Asked Questions

As an individual or company engaging in the business of buying and selling property, you have additional obligations towards your clients related to your professional obligations as a real estate agent. You should be aware that by facilitating the buying and selling of goods or services, you have obligations under the Australian Consumer Law (ACL). One of those obligations includes not engaging in misleading or deceptive conduct. This article will set out the forms of conduct that could be considered misleading or deceptive and the ramifications if you are found to be engaging in such conduct.

Defining Misleading and Deceptive Conduct

The ACL prohibits you from engaging in conduct that is ‘misleading or deceptive or is likely to mislead or deceive.’ Conduct, in this context, refers to a broad range of actions, including statements, advertisements, or any representations you make to the customer.

Representations include information given in the following forms:

• the online listing for the property;
• any physical materials such as the ‘for sale’ display or any brochures/pamphlets handed to the customers;
• any photos of the exterior/interior of the property; and
• any verbal or written information that directly passes from you or a representative of your business to the customer.

When considering whether your materials may be misleading or deceptive, you should ask what impression a reasonable person would form about the property if they saw your representation. 

To avoid engaging in potentially misleading or deceptive conduct, you should always do the following:

• disclose all information to potential buyers that would be relevant to their purchase of the property;
• advertise the selling price based on a reasonable estimate. You should be able to substantiate your justification for the estimate, usually by reference to market research;
• ensure any photographs or diagrams represent an accurate image of the property; and
• ensure that all representations about the location or features of the property are true and correct.

Intention 

The intention is irrelevant when determining whether you have engaged in misleading or deceptive conduct. This means that even if you did not intend to make a misleading representation about a property, you might still be engaging in misleading or deceptive conduct.

You should therefore exercise a degree of caution when representing the property. Always ensure that you can substantiate any claims you plan to advertise regarding a property’s features. 

Statements About the Future

Statements about a property’s future can also be considered misleading or deceptive. If you wish to make statements about the property’s future, you should ensure you have reasonable grounds to make such statements. Suppose you have reasonable grounds to suspect that a property’s future is uncertain or could significantly affect a person’s decision to purchase a property. In that case, you should make the purchaser aware of such a fact.

Silence

Whilst misleading and deceptive conduct typically refers to active statements or representations, silence or non-disclosure of information may also be considered misleading and deceptive. 

Situations may arise where there is an obligation on the real estate agent to disclose certain information, such as:

• state-specific legislation requires the disclosure of particular information to buyers;
• facts about the property that would reasonably be of concern to the buyer and are not readily apparent;
• circumstance changes that render a previously made representation false; or
• a buyer explicitly asks the agent for information.

If you are unsure whether you should disclose particular information to a buyer, consider whether a reasonable person would have a mistaken impression of a property if they were not made aware of such information.

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Additional State Professional Obligations

Some states also impose specific obligations on real estate agents to avoid misleading and deceptive conduct. For example, in NSW, the Property and Stock Agents Act 2002 (NSW) prohibits an agent from making misleading or deceptive representations that would induce a person to enter into a contract. The law also imposes a civil penalty of up to 200 penalty units if a real estate agent fails to comply with this section.

Each state and territory has its own set of laws, so it is important to be aware of your obligations and the consequences of non-compliance:

Key Takeaways

As a real estate agent, you are placed in a position of trust and responsibility. You, therefore, need to act honestly and professionally towards all aspects of your business, especially when talking to clients and potential customers. 

If you have any concerns regarding your legal obligations as a real estate agent, 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 1800 534 315 or visit our membership page.

Frequently Asked Questions