The Supreme Court of Victoria has recently held that real estate agents are not "agents" for the purposes of property transactions.
The Facts
In the Supreme Court decision of Eng Kiat Tan and Cheng Lo v Thomas Russell [2016] VSC 93, Eng Kiat Tan and Cheng Lo signed a contract of sale of real estate to purchase a residential property from Thomas Russell for the purchase price of $4,480,000.
Under section 31 of the Sale of Land Act 1962, a purchaser of residential land can terminate the contract of sale and the vendor must return most of the money paid under the contract. For this provision to take effect, notice must be given to the vendor "or his agent" at the address for service of the vendor detailed in the contract "or the address of his agent" within three clear business days after the purchaser signed the contract.
In this case, the purchasers gave the termination notice under section 31 to the vendor's real estate agent within three clear business days of signing the contract.
The vendor refused to accept that the contract had been terminated and would not refund the deposit. The vendor then on-sold the property to another buyer for $4,070,000.
The purchasers commenced proceedings against the vendor seeking a return of the deposit, and the vendor counterclaimed for losses suffered in the resale.
The Issue
The Supreme Court held that a vendor's real estate agent is not an "agent" for the purposes of section 31. Further, on the facts of the case, the Court found there was nothing to suggest that the real estate agent had any authority beyond that to market and sell the Property.
As a result, termination notice was not given within three business days and the purchasers were unsuccessful in their claim.
This is consistent with previous rulings of the High Court, wherein it has been held that a real estate agent does not necessarily have the authority to do anything that will affect the legal position of the vendor. For example, real estate agents cannot sign contracts on behalf of their customers. Or they likewise have no legal obligation to collect deposit monies.
Practical Effect
Warning Do not be misled by the title 'agent' of a real estate agent!
When giving any form of notice under the contract of sale of real estate, it is best to serve the notices on the contracting party itself, with a courtesy copy to any 'agent'. Or, alternately, ensure that any 'agent' you are dealing with has the express authority from the vendor or purchaser to receive notices.
How can Sharrock Pitman Legal help me?
To ensure that you comply with all statutory and contractual requirements when buying or selling a property, call Sharrock Pitman Legal today on 1300 205 506 for advice on your legal options.
The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.
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For further information contact
Andre Ong
Andre is a Principal of Sharrock Pitman Legal.
He heads our Property Law Group and is an Accredited Specialist in Property Law (accredited by the Law Institute of Victoria). He also deals with Commercial Law. For further information, contact Andre Ong on his direct line (03) 8561 3317.
