MAJOR amendments to the Settlement Agents Act 1981 would strengthen the rights of WA homebuyers and sellers, according to Standish Charter Settlements principal Steve Britten.
MAJOR amendments to the Settlement Agents Act 1981 would strengthen the rights of WA homebuyers and sellers, according to Standish Charter Settlements principal Steve Britten.
The legislation aims to negate problems that could arise if a settlement agent represented both the buyer and seller and ensure customers are more aware of their rights when appointing a settlement agent or solicitor.
Under the changes, the settlement agent’s appointment to act must state that if a conflict of interest arises, the agent cannot continue to act for the client.
The most common conflict arises when the settlement agent acted for both the buyer and the seller.
L.J. Hooker Settlements manager Kelly Sanders said a conflict of interest would automatically occur if settlement did not take place on the due date.
If the settlement was delayed, even for a day, the settlement agent could no longer act for either party and must instruct each client to select another unrelated settlement agent.
Ms Sanders said this change which intended to protect the client, had the potential to cause significant problems.
“For example, by the time the client has selected another agent and the information relating to the transaction is passed on, settlement may be delayed further and the client may be charged penalty interest due to the delay,” she said.
“The client may experience further difficulties if they had arranged to move out of their previous home by the settlement date and were unable to find other accommodation.”
The second change to the Act states that an agent must now have a separate disclosure of interest signed by the client, which details any business relationship the agent had with a real estate agent, real estate representative, developer or financial institution.
Mr Britten said every settlement agent must now have their client sign a special authorisation approval document that clearly outlined the rights of the consumer and the responsibilities for total disclosure by the settlement agent.
“Settlement agents for the first time will be required to give their clients a special authority document which outlines their rights in relation to the appointment of their settlement agent,” Mr Britten said.
“It is important to remember that less than 10 per cent of the settlement agencies in WA are stand-alone independent companies which do not have a business or financial relationship with real estate agents, developers or financial institutions.”
The legislation aims to negate problems that could arise if a settlement agent represented both the buyer and seller and ensure customers are more aware of their rights when appointing a settlement agent or solicitor.
Under the changes, the settlement agent’s appointment to act must state that if a conflict of interest arises, the agent cannot continue to act for the client.
The most common conflict arises when the settlement agent acted for both the buyer and the seller.
L.J. Hooker Settlements manager Kelly Sanders said a conflict of interest would automatically occur if settlement did not take place on the due date.
If the settlement was delayed, even for a day, the settlement agent could no longer act for either party and must instruct each client to select another unrelated settlement agent.
Ms Sanders said this change which intended to protect the client, had the potential to cause significant problems.
“For example, by the time the client has selected another agent and the information relating to the transaction is passed on, settlement may be delayed further and the client may be charged penalty interest due to the delay,” she said.
“The client may experience further difficulties if they had arranged to move out of their previous home by the settlement date and were unable to find other accommodation.”
The second change to the Act states that an agent must now have a separate disclosure of interest signed by the client, which details any business relationship the agent had with a real estate agent, real estate representative, developer or financial institution.
Mr Britten said every settlement agent must now have their client sign a special authorisation approval document that clearly outlined the rights of the consumer and the responsibilities for total disclosure by the settlement agent.
“Settlement agents for the first time will be required to give their clients a special authority document which outlines their rights in relation to the appointment of their settlement agent,” Mr Britten said.
“It is important to remember that less than 10 per cent of the settlement agencies in WA are stand-alone independent companies which do not have a business or financial relationship with real estate agents, developers or financial institutions.”
