This article is from the Australian Property Journal archive
THE property industry said proposed changes to the real estate laws in South Australia would allow the state government to access the Agent’s Indemnity Fund and possibly leave consumers with no compensation in cases of professional negligence.
The Agents Indemnity Fund is comprised of interest from agent and covenyancer trust accounts. Money is paid into a trust account when the agent is holding money on behalf a client.
Any interest earned on trust funds is always paid to the Agents Indemnity Fund. According to the 2010-2011 Consumer and Business Services Annual Report, over $91 million in total assets is retained in the fund.
The Real Estate Institute of South Australia’s president Greg Moulton said if the legislation is passed, the Agent’s Indemnity Fund could be accessed by the government for the purposes of “administering the Land Agents Act and the costs of administering the Land and Business (Sale and Conveyancing) Act 1994 in relation to agent or sales representative”.
“This proposal is sending alarm bells through the industry as the Indemnity Fund has always been in place to offer compensation to people who may have suffered financially as a result of illegal actions by a real estate agent or conveyancer and to provide quality information and training to the industry and consumers.
“The Australian Institute of Conveyancers (SA Division) has also expressed concern about the breadth and impact of the proposed amendment. If the Government is able to access this fund for general administration purposes, it may be bled dry and not be able to provide adequate compensation for those who have a genuine need in the future,” he added.
“Whilst the amount in the fund appears high, the last major claim was a class-action relating to a failed mortgage broking firm and it took $13.5 million from the fund. That type of claim was excluded more than a decade ago.
“Put simply, people involved in real estate deserve adequate protection, in case of fraud, and access to quality information which help them through one of the biggest financial purchases of their lives,” he continued.
Moulton said the fund is already classified in the 2012-2013 Budget Papers as revenue.
“Vendors and purchasers already contribute over a billion dollars to state government coffers every year in property taxation and other impositions.
“Now the government wants to take the interest on consumer’s money to fund a government department. Where does it stop?”
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