The purpose of this article is to bring to every resident letting agent an understanding of the need to have an up to date properly completed and signed Form 20a from each letting owner.
Recent activities by the Department of Fair Trading has lead our firm to issue this caution as there have been prosecutions where forms from owners have not been available to show the Department despite the owner fully utilising the agency.
Historically, the Queensland government decided on a new Property Agents and Motor Dealers Act in 2000, parts of which came into force at different times. In particular it provided for a standardised form of letting agent appointment which must be utilised by every letting agent for every owner who wishes to let a property in Queensland. This Form 20 was brought into play in Queensland in June 2001 with a saving provision that existing forms already in place would not need to be replaced until they came to an end. Being a statutory form that must be utilised and a form that has been varied by the government from time to time, different dates apply to the application of the progression of forms that have been applied since 2001. The current form is now known as a Form 20a.
As a result of the concerns of the management rights industry arising from the failure of the form to address its assignability (which is a very common process in management rights when the manager at the complex changes from time to time) the government amended the form to include an automatic right of assignment but only if a further box in an added paragraph was ticked. Prior to that time it was assumed that at law the forms were assignable by an agent based on other laws.
The management rights letting industry has had to comply with this regime even though it does not take into account the practicality and commerciality of the situations which arise where owners frequently fail to sign and return the appropriate Form 20a, despite the owner expecting the letting to continue or where the manager either utilises the incorrect form or does not ensure that all of the relevant parts are completed.
The department can call upon a letting agent at any time to immediately produce not only the Forms 20a for each current letting owner but also for those that have applied to letting activity by the agent in the past. There have been instances where as a result of a failure to provide evidence that owners had provided a Form 20 or a Form 20a (depending on the period of time involved) a prosecution has ensued. Understanding the history of such forms is an important aspect of advice which may need to be given to a resident on site manager should a requirement be issued by the department.
The department’s view is that any complaint from a member of the public over the lack of proper authorisation of a letting agent by the owner, should be fully investigated.
We have seen arguments, which we do not necessarily agree with, where it is put upon the resident manager to refund the commissions earned from letting activity to the owner of the unit for any period not covered by a valid Form 20a. It can be an expensive exercise for the manager to either comply with a requirement for a refund or to test the argument by legal process.
It is particularly important to ensure that when using the current Form 20a the box for the agreement to assignment in part 4 of the form is ticked. This allows automatic assignment when the management rights are sold as opposed to the situation where, if it is not ticked, then either the outgoing manager has to receive the written approval to the assignment from the actual letting owner or the new manager has to obtain a fresh Form 20a covering the period from takeover of the management rights.
Our firm is particularly critical of the way in which the government has handled the transportability of these forms and the obtaining of them in the first place where there is already an operation in place for the manager to be conducting the lettings required for the owner. Bearing in mind that the owner may be the party delaying in signing the form or not cooperating and agreeing to its content but in the meantime receiving the benefits of the letting in the form of rental less commission, it is very unfair that the manager stands to be prosecuted if the owner has not promptly signed and returned a form or not agreed to its assignability.
We strongly suggest that representatives of the management rights industry and particularly ARAMA should take on board a program of educating the government and its senior officers to understand how the system currently works and the inadequacy of the requirements in the act that leave resident managers vulnerable as to prosecution and refund of commissions.
A suggestion for a change to the law from our firm is that a letting owner who has received a Form 20a and who is already receiving rentals less commissions from the resident letting manager shall be bound by the Form 20a whether or not it is signed and returned, unless, the owner has notified the agent that the lot is withdrawn from the manager’s letting pool within 14 days of receipt of the form. This is already adopted in other similar situations in laws and regulations in Queensland where forms of engagement of clients are necessary.
Bearing in mind that the law already allows a letting owner to terminate a letting agency appointment under a Form 20a on giving 90 days notice, without reason, it appears to be an exercise in futility for a manager to have to await the return of a signed Form 20a to know that the manager is acting lawfully in conducting lettings for owners. At the same time, the law should be changed to make assignments automatic when a licensed resident letting agent takes over the existing business of lettings from an outgoing onsite manager on the sale of the management rights and the letting agent’s activity simply continues on under the same arrangements previously accepted by the letting owner.
Martin Punch
Short Punch & Greatorix
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