There has been some confusion and contention in real estate and conveyancing circles over interpretation of the rules governing how agents and conveyancers can and cannot interact with each other in the marketplace.
It is an important area to get clarity on because many inexperienced home buyers and vendors rely on their newfound relationships with real estate agents to guide them through all the steps involved in buying and selling a house, not just the negotiation of terms.
This is why the Eckermann Conveyancers team sought opinion from our sister company, Eckermann Lawyers, so that we could continue operating within the law and we could also help agents clarify their positions.
Penalties facing the real estate agent and the conveyancer
As it stands in Section 29 of the Land and Business (Sale and Conveyancing) Act, Conveyancers or legal practitioners, are not allowed to pay or give a commission, fee or other consideration for gaining referrals of preparing ‘conveyancing instruments’.
In the same act, the reverse applies to real estate agent or persons acting in a ‘prescribed relationship to an agent’, in that that are not allowed to ask for or receive a commission, fee or other consideration for referring the preparation of ‘conveyancing instruments’ to legal practitioners or conveyancers.
In both of these cases, the maximum penalty is $20,000, which explains why many operators in the industry are rightfully nervous of getting their cross-sector relationships wrong.
The legislation also makes it clear that real estate agents cannot make their clients sign anything that forces them to use a particular conveyancer.
But all I want is a good recommendation
As with many situations where particular protocols and rules have been developed to achieve impeccable probity, it can feel frustrating to outsiders who just want a hint or description or a short cut.
And, luckily, our legislation takes this into account.
In situations where an agent recommends a conveyancer based on their opinion that a particular conveyancer provides a great service for a fair fee, then all is fine and above board, provided the agent isn’t being paid money by that conveyancer, nor the agent is forcing their client to use that conveyancer.
We know, from experience, that many real estate agents happily and regularly mention Eckermann Conveyancers when clients ask for recommendations of a good conveyancer in Adelaide or South Australia and we also know this is allowed under legislation because no money is changing hands in the process.
Of course, if you or your friends have been reading these articles for a while, we hope you won’t need to be asking for conveyancer recommendations!
And I believe this is a commonsense situation because I cannot see why consumers should be robbed of the benefit of the knowledge of good real estate agents who know value and reliability when they see it.
Article originally published April 2016