Conduct Standards

Real estate agents in Queensland must adhere to strict Conduct Standards to ensure transparency and fairness in property transactions. Breaches of these standards can lead to serious consequences for both the agent and their clients, including potential financial losses, legal liabilities, and reputational damage.

While a buyer cannot always rely on a breach of these standards to establish a legal claim against an agent, such breaches often lead to significant repercussions. Knowing the key obligations that agents must uphold can help both buyers and sellers understand their rights in real estate transactions.

Key Conduct Standards for Real Estate Agents

1. Disclosing Multiple Agent Listings
   A seller may appoint multiple agents to handle an open listing. However, agents must check if other agents have also been appointed. If so, they must provide the seller with a written notice that they could be liable for double commission payments if both agents successfully introduce the buyer. Failing to inform the seller can result in a breach of Conduct Standards and significant financial implications for the seller.
   Read more about a case where this issue arose.

2. Failure to Disclose Critical Information
   Agents are required to disclose material facts that may impact the buyer's decision, such as major structural issues or significant changes in property conditions. Failure to disclose key information, such as the loss of a major tenant in a commercial property, can be considered a serious breach of Conduct Standards. In one case, a seller’s failure to disclose a marquee tenant's departure led to significant financial consequences.
   Learn more about this case.

3. Keeping Sellers Informed
   Real estate agents are obligated to keep their clients, particularly sellers, informed about all material developments related to the sale. This includes offers, buyer interest, and any potential issues that could affect the sale. Failure to do so can result in compensation claims against the agent. For example, one agent's failure to keep a seller updated led to a court awarding the seller $25,000 in damages.
   Read about this case here.

4. Undisclosed Price Rebates
   Agents involved in undisclosed price rebates between buyers and sellers may be committing fraud, particularly when such rebates are hidden from the buyer’s lender. This type of misconduct can lead to significant legal exposure for the agent, and in some cases, criminal charges may apply. Agents must always disclose such arrangements to avoid violating Conduct Standards.
   Learn more about this potential risk.

How Agents Can Avoid Breaching Conduct Standards

To avoid breaches and the associated liability, agents should adopt the following practices:

• Full Disclosure
  Always disclose all relevant information to buyers and sellers. Material facts such as property defects, changes in tenancy, or any issues related to the title must be communicated clearly and promptly.

• Written Notifications
  Ensure that all important communications, such as the risks of double commission payments in open listings, are provided to clients in writing. This protects both the agent and the client in the event of a dispute.

• Regular Client Updates
  Keep sellers informed at every stage of the sale process, including new offers, buyer interest, and any complications. Documentation of these updates can help defend against future claims of negligence.

• Avoid Price Rebates Without Full Disclosure
  Be transparent about any price rebates and ensure they are disclosed to all relevant parties, including lenders. Any hidden rebates could result in fraud charges and serious financial penalties.

FAQs: Common Questions About Conduct Standards

1. Can a buyer file a lawsuit if an agent breaches Conduct Standards?
While a buyer may not always have direct grounds to sue based on Conduct Standards alone, they may pursue legal action if the breach leads to misleading conduct or financial loss. For example, failure to disclose key information could form the basis for a lawsuit.

2. How can sellers protect themselves from paying double commission on an open listing?
Sellers should ensure that all agents disclose whether other agents are involved and request a written statement that clarifies the risks. This reduces the chances of unexpected commission payments.

3. What happens if an agent fails to inform a seller about key developments?
If an agent fails to keep a seller informed, the seller may file a claim for damages, as seen in cases where sellers were awarded compensation for not being updated on important matters.

4. How serious are undisclosed price rebates?
Undisclosed price rebates can be considered fraud, especially if they affect the buyer’s lender. Agents involved in such practices face significant legal risks, including criminal liability.

Agents who fail to comply with Conduct Standards expose themselves to potential liability and damage to their reputation. By ensuring that all information is disclosed, keeping clients informed, and avoiding any deceptive practices, agents can avoid breaches and maintain trust in their professional relationships.