CPPREP4002 – Access and interpret ethical practice in real estate (Release 1)

Case Studies

Case Studies

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 CPPREP4002 – Access and interpret ethical practice in real estate (Release 1)
Case Studies

What you need to do:

As you have already learned from the previous unit CPPREP4003 - Access and
interpret legislation in real estate (Release 1), accessing, reading, interpreting and
applying legislation is an integral part of your role in real estate practice.

For the following assessment task, you will once again be required to access, read,
interpret and apply legislation.

Read each case study below and respond to the questions considering which
legislation (name of Act or Regulation) is being breached in each scenario. Refer to
the relevant Acts and regulations of legislation that are directly and indirectly relevant
to each scenario and ensure you refer to the sections of legislation that you
interpreted and applied to each case study.

There are multiple sections of legislation that are relevant in some of the
questions.

Examples of legislation you will need to consider includes but is not limited to
Commonwealth legislation such as;
● Privacy Act 1988 (Cth)

● Competition and Consumer Act 2010 (Cth)

You will also need to refer to the legislation relevant to your state or territory as
covered in Learner Guide CPPREP4003.

You are required to answer all questions correctly. If correct, you will see
‘Satisfactory’ written in your grades section next to the assessment name. If
incorrect, you will see ‘Not Satisfactory’. After grading your working, the assessor
will provide you with a Record of Results to identify any skills gaps and feedback
regarding any required re-submissions.
How to Submit your Assessment:
Upload your completed document into your learner portal as per the instructions with
the assessment task.

You can drag and drop the file into the window or use the add file icon in the top left
of the submission window and select the file you wish to upload by using the
browse/choose file option.

Click on “finish attempt” to submit it for grading.

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 CPPREP4002 – Access and interpret ethical practice in real estate (Release 1)
Case Studies

Case study 1
Chris is the principal Licensee at City Real Estate. He has built the agency over
the last six years and he has established a strong client base and reputation within
the local region. He has several experienced employed sales agents and agents
holding their registration certificate working for the agency.
Bethany has been working as administration manager for City Real Estate since its
inception and has worked closely with Chris to build the business. She displays a
keen interest in the real estate industry and over the years has developed an
excellent working knowledge of various aspects of an agent’s role. She has
decided to undertake training to obtain her registration certificate.
Chris was recently offered a teaching position at a local TAFE. As a result, he is
spending less time in the office, sometimes not coming into the office for days in a
row. He is confident that the staff will continue to provide excellent service.
Last week one of the agents responsible for property management resigned and
Chris has asked Bethany to conduct some urgent rental property inspections and
prepare the condition reports.

a)
Which section(s) of the legislation have been breached under the relevant Act. You
must name the legislation and relevant section in your answer.

This breaches the Property Occupations Act 2014. In section 97 Acting as a

property agent & section 100 Acting as a resident letting agent.

b)

What advice would you give Bethany and Chris?

I would advise Chris of the legal repercussions of allowing someone to work
unlicensed and advise him to seek alternative methods of hosting the property
inspections. For example, putting out an Ad to allow people that hold the correct
qualification to apply for the newly open position.

I would inform Bethany of the legal implications that come with preparing rental
property inspections and preparing condition reports with no license. I would
suggest that if she wants to engage in the real estate industry, that she
immediately works at trying to attain the correct licence.

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Case Studies

c)
How will any breach of the Act impact on Bethany’s eligibility to obtain her
registration certificate?
As a result of breaching the Act, Bethany may be unable to obtain her registration
certificate as well as the possibility of being disqualified from ever being able to
obtain the licence. As well as this, paying the fine associated with the breach of the
Act.

Case study 2

Marissa is an agent holding her registration certificate with ABC Real Estate.
Graham is looking to purchase an apartment in an inner-city suburb and has
shown keen interest in a small apartment that Marissa has listed. Graham tells
Marissa that he is “looking for an apartment in a quiet area” as he works night
shift and needs to sleep during the day, especially on weekends.
Marissa is excited because this apartment has been listed for over two months
and she really wants to close the sale before she goes on holiday next month.
However, she knows that the apartment block backs on to a street that has a
church. Each Sunday morning, church bells are rung, and the area can become
quite noisy as people come and go.

Should Marissa tell Graham about the church? Which section of the Act relates to
this situation? Discuss the legal and ethical issues relating to this scenario. What
advice would you give Marissa?

This case study relates to section 212 of the Property Occupations Act 2014. It
would be unethical for Marissa to keep her knowledge of the noise produced by
the church from Graham, as it is falsely representing the listed property. Because
a quite area is important to Graham, I would advise Marissa shows Graham the
property and explains that the nearby church can be quite noisy on a Sunday
morning. With this information, Graham can then make an informed decision to go
through with the property or not.

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Case Studies

Case study 3

Rashid has engaged Rita to sell his property. Rita’s brother, Marco, is looking for
a house in the area and after viewing the house; she believes that the house is
exactly what Marco is looking for. She rings Marco to tell him about the house.

a)
Which section of the Act relates to an agent purchasing property/beneficial interest?
This case study relates to the Property Occupations Act 2014, Section 155

b)
Outline the requirements of the section?
Section 155 Beneficial Interest
This section applies to property placed for sale by a client with a property agent.
(2) If the agent obtains any beneficial interest in the property, they are committing
an offence resulting in the maximum penalty of 200 units or 3 years imprisonment.
(3) If a real state salesperson employed by the property agent commits an offence
where the salesperson obtains beneficial interest in the property the maximum
penalty of 200 units or 3 years imprisonment will be issued.
(4) A property agent or salesperson does not contravene before a contract for the
sale of the property is entered. They need to obtain the clients written
acknowledgment in the approved form outlining that the client is aware of the
property agent or salesperson interested in obtaining a beneficial interest, and
consents to the agent or salesperson that obtain the interest. The agent and
salesperson need to act fairly and honestly in relation to the sale. The client should
be in a good position as the client would be if the property were sold at fair market
value.

c)
Do the requirements of this section apply to Rita’s situation? Explain why/why not.
Any beneficial interest an agent may have in the property must be disclosed to the
parties involved in the transaction. Rita needs to let Rashid know that her brother
Marco might be considering buying the property. If she fails to reveal her interest
Rita may face penalties, fines or the suspension or cancellation of her licence.

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Case Studies

d)
Are there any exemptions to the section requirements? If yes, what are they?
Section 155 Beneficial interest – other than options
Yes -
Subsection (4) A property agent or real estate salesperson does not contravene
subsection (2) or (3) if.
(a) the property agent or real estate salesperson
(i) before a contract for the sale of the property is entered into, obtains
the client’s written acknowledgement in the approved form that the
client—
(A)is aware that the property agent or real estate salesperson is
interested in obtaining a beneficial interest in the property; and
(B)consents to the property agent or real estate salesperson
obtaining the interest; and
(ii) acts fairly and honestly in relation to the sale; and
(b)the client is in substantially as good a position as the client would
be if the property were sold at fair market value.
Note—
A person may make a claim, under the Administration Act, against the fund if the person suffers financial
loss because of a contravention of this section.

e)
What penalties apply for a breach of the section?
The maximum penalty is 200 penalty units or 3 years imprisonment.

f)
What advice would you give Rita in relation to her actions in this matter?
I would advice Rita that she has an obligation to inform her client and other parties
involved that she is in contact with a possible buyer of the property. Rita must get
formal confirmation from her client allowing her to share the knowledge about the
residence before she informs her brother of any opportunity.

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Case Studies

Case study 4
You need to set the price for a property you have listed for sale by private treaty in all
the marketing materials.
The owners have advised they want $ 850,000 and have signed an agency
agreement to reflect this price.
Consider the following situations and issues and, referring to the relevant legislation,
explain any legal and/or ethical requirements in relation to property sales.

a)
In marketing the price, you, as the agent recommend a price range of Interest over
$750,000 to attract more buyer interest.
It would be unethical to list the sale in the price range that you think is ideal to
attract more buyer interest without the consent from the owners. Because the
owners have signed an agency agreement to reflect $850,000 you must uphold
the owners’ requirements. Neglecting the price that the owners advised and signed
an agreement for would be a breach of section 205 in the Property Occupations
Act 2014.

b)
A young couple Mark and Caitlyn Web showed interest in the property and have
decided they would like to go ahead with their final offer at $ 837,000.

You have referred the buyers to your colleague who is a mortgage broker to help
them with their finance.
As a result of the referral, the mortgage broker pays you a referral fee of 0.03% of
the sale price for the business.

Due to the referral fee received by the agent the mortgage broker is required to
disclose this information to the buyer. Also extending to any third-party benefits as
a result of a sale. The section of legislation accurate to this can be found in Part 3
Subdivision 2.

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Case Studies

c)

You are approached by a potential buyer who wants to buy the property, tear down
the house, build two units and lease them.

He offers $750,000 and tells you that if you can get the vendor to accept this price,
he will use your agency to manage the properties.

What are the possible consequences if you were to agree to the buyer’s proposal?

If an agent participates in a proposal such as the one presented, where the situation
will benefit them, it is breaching the legislation Property Occupations Act 2014
Section 206. Consequences of this impose 1000 penalty units and a maximum of 5
years imprisonment.

d)

You are approached by a potential buyer who makes an offer of $750,000. You
believe that the house will sell for more so you do not pass on the offer to the
vendors. No other buyers come forward to with an interest to make an offer on the
property.

Subsection 2 (A) in legislation Property Occupations Act 2014 Stipulates that the
licensee or real estate salesperson commits a crime if the licensee or salesperson
dishonestly renders an account of the amount knowing it to be false in a material
particular. This carries a penalty of 1000 units or 5 years imprisonment.

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Case Studies

Case study 5

Mr. Smith signed an agreement with agent Thomas Jones of Your Home Real Estate
Pty Ltd and appointed the agency to market his home for sale at 24 Cherrytree Lane,
Manly for an agreed listed price of $899,000.
At an open home you conducted on the weekend Thomas had several groups attend
and asked them to enter their personal details into the open home register which
was left on the kitchen bench for prospective buyers to fill in whilst they were viewing
the property.
During the open home of the property, Thomas advised three different prospective
buyers “It’s listed at $899,000, but I’m pretty sure that an offer of $850,000 will be
accepted, because the owner needs a quick sale.”
After following up with all the buyers on Monday morning he also advised them of
another property that he had listed and invited them to attend a private inspection he
scheduled for the following afternoon.

Discuss the legislative and ethical breaches of this scenario referring to the relevant
sections of Acts and regulations for your state/territory and commonwealth
legislation.

Thomas was not serving the clients best interests because he verbally
misrepresented the property. In addition to violating section 208 of the Property
Occupations Act, this is unethical behaviour on the part of the agent. Thomas is
violating the following subsections:

D) Whether undue influence or pressure was exerted on, or any unfair tactics were
used against, the buyer or the person acting for the buyer by the marketeer in
connection with the marketing of the property; and
(e)the amount for which, and the circumstances under which, the buyer could have
acquired an equivalent or similar property from another person; and
(f)the extent to which the marketeer’s conduct towards the buyer was consistent with
the marketeer’s conduct in similar transactions between the marketeer and other like
buyers.

Furthermore, Thomas is violating the Privacy Act 1988 by leaving private information
on the kitchen bench, which exposes the personal information of potential buyers.
Thomas did not take the reasonable precautions to secure this information.

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Case Studies

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