What is beneficial interest ??

Rosy Sullivan

Over the past few months, during our CPD courses, we have been discussing the Supervision Guidelines that were issued by the Commissioner of Fair Trading.  As one of the requirements of the Guidelines based on section 49 of the Property, Stock and Business Agents Act 2002, the issue of “obtaining beneficial interest in property” has been a hot topic of conversation.

Whilst it is very straight forward in the Act in relation to the requirements, many agents have forgotten that it is a regular requirement.  Forgetting to do this may well lose you the commission that you have worked so hard to achieve.  Consumers expect their agent to undertake his or her duties fairly and openly to achieve the best result for them.  This is why the Act prohibits agents from obtaining or being connected to the obtaining of beneficial interest.

Very simply, section 49 of the Act states that a real estate agent or a salesperson (an agent), when acting for a person in the sale of a property, must not obtain a beneficial interest in the property that they have been contracted to sell.  The first thing we need to consider is what is “beneficial interest”.  Beneficial interest can be best described as gaining some reward (usually monetary) from the purchase of property or obtaining an option to purchase property.  

Those of you reading this who are mortgage brokers and financial planners already understand the need for disclosure to clients.  So, I hear all of you agents asking, what does this mean for us?  The Act requires agents to undertake three steps:


  1. disclose any beneficial interest in writing to the property owner.  In reality, this means that if any member of staff of the agency or any close relative of any member of staff of the agency wishes to purchase a property that the agency is marketing for sale – they must disclose to the property owner this intention to purchase in writing.  A close relative is defined in the Act as a spouse or de facto partner, child, grandchild, sibling, parent or grandparent.  It also includes the disclosure in relation to anyone with whom you have a business relationship, such as a mortgage broker, tradesperson, insurance broker etc.
  2.  the agent must act fairly and reasonably in relation to the sale of  the property.
  3. the agent is not to receive any commission in relation to the transaction, unless approved in writing by the property owner.

So how do we achieve this?  NSW Fair Trading have a disclosure statement on their website which is the form that needs to be completed and given to the property owner.  The link for the form is:

http://www.fairtrading.nsw.gov.au/biz_re...

Please ensure that you and your colleagues identify any beneficial interest issue that may arise in the sale of a property, and that the necessary disclosure form is completed accurately.  You deserve to get paid your commission – make sure you keep it.


www.acop.edu.au