The Commissioner of Consumer and Business Services in South Australia has issued an important alert about the risk of defective Form 1’s in cases where Real Estate Agents have the wrong person signing Part D Certificate of Vendor Statements.

Defective Form 1’s can be extremely costly to Agents and vendors by giving purchaser the potential ability to “cool off” at any time up until settlement, rather than just within the statutory, two-day period.

The Commissioner has set out a very clear interpretation of the regulations, including clarity about how Real Estate Agents can authorise others to sign Part D Certificates on their behalf.

Through our sister company, Eckermann Forms, we have this covered as we have an agreement that all Agents sign, thus allowing us to sign Part D of the Form 1.

What the Commissioner says about signing the Part D Certificate

My summary of the key reminders captured in the update from commissioner Dini Soulio, are as follows:

  • The Part D certificate of the Form 1 Vendor’s Statement for the sale of land (Form 1), prescribed by the Land and Business (Sale and Conveyancing) Regulations 2010, requires a land agent to certify that the responses to the inquiries made pursuant to section 9 of the Land and Business (Sale and Conveyancing) Act 1994 (LABSAC Act), confirm the completeness and accuracy of the particulars set out in the schedule to the statement.
  • Many Agents are advising vendors to authorise their Conveyancer or Lawyer to prepare the Form 1 and are mistakenly then also asking the Conveyancer or Lawyer to sign Part D on the agent’s behalf,
  • In such cases, unless there is an agreement between the Agent and the Form 1 preparer, this is the wrong person signing the Part D Certificate, which may result in a defective Form 1 and could also potentially lead to disciplinary action.

It is worth noting that the Commissioner has not only been clear that Real Estate Agents are the ones who should certify, but has also clarified the safe and prudent way agents can authorise a third party like Eckermann Forms to act and sign on their behalf.

Outsourcing Form 1 preparation AND signing the Part D Certificate in compliance with the regulations

Through our sister company, Eckermann Forms, we prepare Form 1s for real estate agents every day.

Furthermore, our strict protocols ensure the Real Estate Agents we work with are following the letter and the spirit of the law.

In fact, from the day we started, we have always made sure we have a direct agreement in place with agents before we prepare Form 1s for them.

This is precisely what the Commissioner is calling for and Eckermann Forms already have it covered.

Our position has always been that if there is no direct agreement with the Agent, then the Form 1 preparer cannot sign Part D, whether or not they are acting for the vendor in the conveyancing.

I am sure most Real Estate Agents will be aware of the requirements outlined above but I thank the Commissioner for his clarification because no one in this industry ever wants to risk a defective Form 1.

 

Image: Fountain pen by Toshiyuki IMAI via Flickr. CC BY-SA 2.0