DR

Legislation and Compliance Notes

Law Definition

  • Law: Statute, ordinance, or regulation enacted by a legislative branch or decree.

  • Natural law: Based on common understanding of what is right, not statute.

  • Statute law: Laws made by Parliament; includes Acts and delegated legislation.

  • Common law: Inherited, unwritten law recorded as case law from judges' decisions.

Common Law Principles

  • Life: Right to life, cannot endanger or force actions without lawful reason.

  • Liberty: Right to freedom from unlawful detention.

  • Freedom of action: Act as wished unless prohibited by law; cannot be forced without legal compulsion.

  • Use of property: Entitled to own and use property unless breaking the law.

  • Privacy: Right to privacy; no entry without consent or legal injunction.

Other Categories of Law

  • Equity Law: Remedies when legal remedy is insufficient; at the court's discretion.

  • Contract Law: Enforces agreements where substantial agreement exists and parties intend to be legally bound.

  • Role of Judges: Declare existing common law; Parliament makes legislation or authorizes it.

Why Legislation Is Needed

  • More efficient for changing laws to meet modern requirements.

  • The Australian Constitution is the supreme law.

  • Commonwealth law overrides State/Territory law if inconsistent.

  • The Constitution provides a framework for national government but lacks a 'Bill of Rights'.

Simplification and Drafting of Legislation

  • Simplification: Laws should be clear and unambiguous for public understanding.

  • Drafting: Plain English style with simple language, flow charts, and readers' guides.

Interpreting Legislation

  • Promotes brevity, consistency, standard definitions, and general rules.

How Law Is Made

  • Three levels of government: Commonwealth, State/Territory, and Local.

  • Parliament makes/changes laws; government initiates ‘rules’ to regulate laws.

  • New laws are introduced or changed for various reasons, including new governments or public opinion.

Progress of a Bill

  • Readings: A Bill is considered by Parliament in stages.

  • Second reading stage: Main debate.

  • Committee stages: Detailed consideration.

  • Royal Assent: Approved by the monarch or representative, becoming an Act.

Acts and Regulations

  • Act: Legislation passed by Parliament, amended only by another Act, sets out broad principles.

  • Regulations: Subsidiary legislation published in the Government Gazette, detailing Act application; amended by notice in Gazette.

  • An Act becomes law when it comes into force or is proclaimed to commence.

Role of Regulators

  • NSW Fair Trading: Administers property services industry legislation, manages consumer laws.

  • ACCC: Promotes competition and fair trade, regulates infrastructure services.

  • ASIC: Regulates corporate, markets, and financial services.

Understanding the Framework of an Act

  • Title: Acts are identified by a long title describing the purpose and a short title for easier recognition.

  • Long Title: Indicates the scope and purpose of the Act.

  • Short Title: Short Name, year of enactment and chronological number of Act.

  • Preamble/Table of Provisions: An index which provides an aid to reading.

  • Headings, Sections, Subsections, Paragraphs: The numbered sections in the Act.

  • Marginal Notes: Brief indication of matters dealt with in the section.

  • Footnotes: References to the principal Act.

  • Definitions: Provides definitions set out in dictionaries and schedules.

  • Tables & Diagrams: Organise large volume of information and communication complex information.

  • Penalties: Breach of sections is punishable by a penalty not exceeding the specified maximum amount.

Interpretation of Legislation

  • Words without meaning are not used in legislation.

Basic principles:

  • Act to be read as a whole; sections in sequence.

  • Words presumed consistent; interpreted ordinarily.

  • Technical words given technical meaning.

Reading Rules & Wording Conventions

  • "Deemed": judged or concluded; extends meaning.

  • "Must": imperative requirement.

  • "May": possibility, opportunity, or permission.

  • "Should": duty, propriety, or expediency.

  • Ambiguity requires principled interpretation.

General Rules of Statutory Interpretation

  • Plain Meaning Rule:

    • If the meaning of the Act is plain, it is to be given that plain meaning.

  • Golden Rule:

    • An Act must be read in such as manner so as to avoid a result of manifest absurdity or injustice.

  • Mischief Rule:

    • Discovering meaning (When was the state of law before the Act, what was the issue, what resolves it?).

  • Purpose Approach:

    • Statement of principle containing the purpose of that legislation.

State and Territory Laws

  • Make laws covering any area not covered by Commonwealth laws.

  • Commonwealth law overrides inconsistent State law.

Relevant Commonwealth Legislation

  • Australian Consumer Law (ACL):

    • Protects against false, misleading, or deceptive selling practices.

    • includes guarantee consumer rights when buying goods and services

  • Privacy Act 1988 (C’th):

    • Private sector reduce obstacles of electronic commerce of personal information by companies.

NSW Legislation

  • Property and Stock Agents Act 2002

  • Residential Tenancies Act 2010

  • Conveyancing Act 1919

  • Real Property Act 1900

  • Environmental Planning and Assessment Act 1979

  • Strata Schemes Development Act 2015

  • Strata Schemes Management Act 2015

  • Work Health and Safety Act 2011

  • legislative amendments that affect agency practice.

Industry Resources

  • The Real Estate Institute of NSW (REINSW)

    • Access to quality information and research, peer support and opportunities to network, high profile selling avenues, and industry training including the annual conference.

Agency Responsibilities

  • Consumer Protection:

    • Fair business practices ensure that while genuine competition occurs, consumers are protected.

Compliance with Industry Codes

  • REIA encourages the highest standards in real estate practice.

Rules of Conduct

  • The ‘Rules’ of Conduct form part of legislation.

Breaches of the Rules of Conduct

  • Real Estate Agents and their representatives who breach the Rules of Conduct may:

    • Be liable for disciplinary action

    • Face considerable fines

    • Face prosecution in a civil action

Penalties and Personal Liability

  • a court may order a company or person who has made false representations or has engaged in misleading, deceptive or unconscionable conduct to pay a civil penalty.

The Importance of Keeping Up to Date with Legislation

  • Legislation ensures that the public is protected against unfair practices and unscrupulous dealings.

Discrepancies Between Agency Practice and Personal Practice

  • Act, you have a responsibility to ensure that you comply with the rules and regulations, ignorance is no defence in a prosecution.

The Purpose of Trust Accounts

  • Trust money is ‘other people’s money’.

Types of Real Estate Trust Accounts and Trust Money

  • Property Management:

    • Receipt from tenant, rent bond, water usage and other feels and charges, until the end of the month.

  • Property Sales:

    • Receipts relating to the sale of property, deposits, marketing contribution, money paid by the vendor or buyer.

Operation of the Trust Account

  • Account must be maintained in accordance with the Act and Regulations.
    Money to be paid into an established trust account

  • Money received for or on behalf of any person by a licensee in connection with the licensee’s business as a licensee

Opening and closing trust accounts

  • Under the Act an agency that has both sales and property management must operate two separate trust accounts.

Computerised Trust Accounts

  • If the trust account records are kept by a computer system, the Act requires:

    • all records to be compiled in chronological sequence

Security and Integrity of Trust Account

  • A licensee must ensure the safety and reliability of the trust account.
    Trust account audit

  • Auditors must be registered with ACCC.

Trust Account Discrepancies

  • Over drawing the trust account:

    • The licensee must notify the Secretary, in writing, within 5 days of becoming aware that the trust account is overdrawn.

Trust Accounting Cycle

  • Consists of:

    • Source Documents

    • Journals

    • Ledgers

    • Trial Balance

    • Bank Reconciliation

Receipts for Trust Money

Receipts must be issued for all amounts to be paid into the trust account.

Banking of Trust Money

All trust money received must be paid into the trust account before the end of the next banking day or as soon as possible

Disbursement (payments) from the Trust Account

Authority to make payments from the trust account must be in writing from the person entitled to the funds.

Payment of trust money

Payment to EFT and Cheques.

Cashbook

The cashbook is the combination of cash receipts journal and cash payments journal.

Ledger Accounts

The ledger is a recording of money held on behalf of each principal.

Balancing and Reconciling Trust Account

The cashbook must be balanced at the end of every month, this requires adding all the receipts and subtracting all the payments to give a balance at the end of the month.

Bank Reconciliation

The bank reconciliation is prepared to verify the bank statement against the cashbook.

Trial Balance

A trial balance must be done within 21 days after the end of the month.

End of Month Processes Property Management

Balances cashbook, bank reconciliation, statement is sent to the landlord for any payments that have been made on their behalf.