Identify Legal and Ethical Requirements Assignment PDF

ASSESSMENT
Identify Legal and Ethical Requirements of Property Sales to
Complete Agency Work (CPPDSM4008A)
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CPPDSM4008A_AS_v1.5 © April 2017 Kaplan Education Pty Limited

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CPPDSM4008A_AS_v1.5 Page 2 of 18

Before you begin
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Requirements of Property Sales to Complete Agency Work (CPPDSM4008A)’, located on your eLearning
platform. You may also be required to conduct some independent research.
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‘Not yet competent’ and resubmissions
Should your assessment be marked as ‘not yet competent’ you will be given an additional opportunity
to amend your responses so that you can demonstrate your competency to the required level.
Further resubmissions to this can be requested at a fee.
When resubmitting:
• you must address the assessor’s feedback in your amended responses
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quality and nature of your changes.
Units of competency
This assessment is your opportunity to demonstrate your competency in the following unit:
CPPDSM4008A Identify Legal and Ethical Requirements of Property Sales to Complete Agency Work
Assessment activities
The activities contained in this document are outlined below.
Part 1: Short answer questions
• This section consists of 14 short-answer questions
• Question 1, 3, 4, 5, 6, 9, 13 & 14 consist of multiple parts
Part 2: Case study
• This section consists of 4 parts
• Each part is based on the provided scenario
Part 3: Work project
• This section consists of 3 parts
• Part A requires that you attend an open for inspection and write a short report.
• Part B consists of 2 questions
• Part C requires that you complete a sales agency agreement for the sale of a property. Use the details
provided to you to complete the agreement. You may also assume or use hypothetical information
which has not been provided to you, to complete the agency authority to act/agency agreement.
We are here to help
If you have any questions about this assessment you can email us at [e-mail]. You can
expect an answer from one of our technical advisers or student support staff.
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Part 1: Short-answer questions
Question 1
Briefly explain each of the following titles to land (i.e. land tenure ship):
(a) Free hold
Free hold or generally known as free hold land is a property which is free of any form of hold other than
that of the owner. Thus a person who has a free hold title enjoys free ownership for life and such title may
be utilized for any reason whatsoever in compliance of law.
(b) Lease hold
Leasehold or a lease hold estate is a form of ownership in relation to a temporary right to hold a property
or a land in which a tenant or a lessee has a right in the property by a title provided by the landlord or the
lessor. Even where right to the real property are not held by the tenant a property held on lease is
regarded as a personal property. In this situation the right to remain and use a property is bought by a
party from the owner.
(c) Torrens Title
Torrens Title is a land transfer or a land registration system in which a register is created and maintained by
a state which is a concrete evidence of title in relation to the person who is recorded on the register as the
owner or proprietor of the property and along with other forms of interest recorded on the register. Those
interests which are not guaranteed are known as paramount interest. Through the registration of a
transfer of title rather than deeds ownership of land is transferred.
(d) Strata Title
Strata title is a form of ownership by which a person is provided ownership title in specific parts of a
property such as an apartment and shared ownership in other common parts of the property such as stairs
or drive way via a separate legal entity termed as owners corporation or strata company depending upon
the state or territory or the type of schemes. The system initiated fifty years ago in Australia
Question 2
Describe three (3) methods that you personally might use to prospect for new listings as a salesperson.
There are various methods from which a sales person may choose for the purpose of prospecting for new
listings. The three methods which I may personally use for prospecting new listings are as follows:
 Online leads: there are various sites which provided online leads in relation to clients including
facebook. Through these websites both buyer and seller leads are generated. In this system there
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website provide information about the people who are looking to purchase a property.
 Door Knocking or Cold Calling: whether or not this method is a hit depends upon the personality of
the agent. As I have a personality to back up cold contacts I prefer this method for the purpose of
prospecting new listing.
 Direct mailing: if this method is properly carried out it can be very effective. I would prefer sending
Dold and listed postcards in relation to a new listing. Neighbours of the listing can be invited
through mails to the listing which not only ensure a face to face meeting but also showcase the
listing.
Question 3
When you are listing a property you will need to be able to explain the different methods of sale available
to a seller, as well as the advantages and disadvantages of each, so that the seller can assess the best
method of sale for their situation.
(a) Using this table below, explain each of the three(3) common methods of sale shown below and
provide an example for each of a type of property or type of client circumstances that would be
suited to each of the method of sales. Complete the table below to ensure you have covered all parts
of this question.
Method of sale Your description of this type of sale method
Your example of type of property/client
circumstances suited to sale by this sale method
Private Treaty This is a agreement between the buyer and
seller in relation to the sale of a property
where the price in relation to the property is
directly negotiated between the purchaser
and vender or their agents.
This is one of the most common way of sale
and for example the seller must chose this
method when there are not many buyers
Auction This is a form of sale methods where there
are many buyers who make bid for a
property. The buyer who makes the highest
bid gets to buy the property. The bid has to
be made over the minimum value set by the
seller
For example This method is suitable in
relation to commercial properties
Tender Tender is a process by which several offers
are invited by the seller in relation to the
property. The seller evaluates all the
received offers and decides to sell the
property to the person making the best offer.
For example This method is also suitable for
commercial properties where the seller has
time in hand to sell the property
(b) Complete the table below by listing one (1) advantage and one (1) disadvantage for each method of
sale (from the agents or vendors viewpoint):
Method of sale One advantage of this method of sale One disadvantage of this method of sale
Private Treaty The pace of the sale process can be
determined by the seller in this method
Due to less exposure the price received may
not be as high as compared to other
methods
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Method of sale One advantage of this method of sale One disadvantage of this method of sale
Auction Best price can be achieved in relation to a
property which is sold by an auction and it
can be more than the expectation of the
seller
Fee needs to be paid to the solicitor and the
person auctioning the property. Expenditure
also needs to be incurred for setting up an
auction
Tender The price of a property is kept secret and
thus there will be no rumours or complaints
about high or over price.
The process is time consuming as the bind
received by the tender may be
unsatisfactory
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Question 4
(a) What is the purpose of a marketing plan for a property for sale?
The property which has been listed for sale is marketed for the purpose of capturing attention as well as
creating interest with the buyers. The benefits it provides to the agency is that the business itself is
promoted through marketing. In the market place the agency is recognized as active. He sale of property is
catalysed through a marketing plan
(b) Describe at least three (3) things that should be contained in a marketing plan for a property for sale.
The three things which are contained in a marketing plan includes
Target buyer for property – these are those persons who may be interested in purchasing the property and
therefore focus needs to be put on them
Position of the property in the market – this means analysing the other similar property at similar price in
the area which the potential buyers may pursued
Suggested marketing activities- The include advertisement plans and other forms of promotion
Question 5
(a) Name the authority that registers land title in your state.
Land Use Victoria registers Land Titles in my state Victoria
(b) List two (2) things that are contained on a certificate of title to land and why is it important for you to
check this information against the agency authority to act/agency agreement?
Item contained in Certificate of Title Why is it important to check this item against the authority to act/agency
agreement?
1. It contains interests such as
caveats or mortgages
Checking this item would ensure that there are no encumbrances on
the property
2. Name of the registered
proprietor
Checking this item would provide protection against fraud
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Question 6
(a) Explain why having effective communication skills is so important when working as a real estate sales
representative.
Real estate is also known as a people business and the way in which representatives communicate may
make a significant impact in their success. The purpose is to help people purchase and sell their property
and they can only be provided a good experience through a positive attitude and comprehensive
communication skills. These skills also enhance convincing power which is of much importance here.
(b) List three (3) different interpersonal communication techniques that you might use when addressing
client concerns and dealing with conflict in a real estate sales role. Provide a practical example of
when or how you would use each of these each of these techniques.
The three interpersonal communication techniques include
1. Listen without any judgment which will help the other person to communicate freely.
2. Ask for repetitions if the other person was not coherent
3. Try to understand the grey areas and try to understand the meaning and intention of the parties.
Question 7
Explain the basic process for receiving, handling and paying out monies if the agent holds the sales deposit
in trust as a stakeholder.
When Trust money is received a receipt needs to be provided
Trust money needs to be deposited in the trust account through the use of deposit forms
All payment details have to be recorded
Register of trust checks needs to be maintained
Cash receipt journal and cash payment journals have to be maintained.
There has to be an order on agent to take care of the monies who shall handle them. The agent forwards
the details to the vendor and then manages the contractual obligation of the vendor.
Question 8
Name and briefly explain the two (2) different ways a property can be owned under free hold tenure
(also known as fee simple tenure), if it is owned by two or more people.
In free hold tenure property can be owned by two or more people through
Joint tenancy – In this case parties own a property jointly and upon the death of a party the title moves to
the other party
Tenancy in common- in this case each owner has a different and separate transferable interest
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Question 9
(a) What documentation is required from the vendor prior to completing an agency authority to
act/agency agreement on behalf of a vendor/seller? (HINT: consider documentation required from
the vendor before signing the authority/agreement. This relates to ID and verification of
owners/property)
The documentation which is required prior to completing an agency authority to act/agency agreement on
behalf of a vendor is the proof of ownership such as the land title certificate
(b) What specific legislative requirements apply in your state for an agency authority to act/agency
agreement to be deemed as valid? (HINT: consider any warnings/prompts that must be explained to
the vendor. What must the agent do regarding the selling price, commission?)
It has been provided by Estate Agents Act 1980 that the agent must state the realistic price of the property
to the buyer and they are not entitled to any commission unless an agency agreement is formed between
the vendor and the agent. The agreement has to be signed by the licensed agent and the client and must
contain the terms set out by the regulations. The agent also has to hold an estate’s license and has to hold
an estate’s representative.
Question 10
Describe any conditions and guidelines imposed on you by your state’s regulatory body, Act and
Regulations in relation to giving the seller your estimate of what their property should sell for.
As per the Underquoting guidelines as per the Estate Agents Act 1980 for residential property the agent
must not underquote the price at which the property should sell for. They must provide the seller with a
reasonable estimate.
Question 11
List the contractual documents related to the sale of a property in your state.
The contract must have title documents, drainage diagrams and planning certificates
If a property has a swimming pool it needs
Certificate of compliance
Occupation certificates
Valid certificate of non compliance
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Question 12
Briefly explain the legislative requirements in your state regarding communicating offers from prospective
purchasers to sellers.
These requirements are provided under Estate Agents Act 1980 is that there should be no under quoting of
value of the property.
Question 13
(a) Explain where in your state’s legislation you can locate information about ethical and conduct
standards that apply to the activities of real estate salespeople?
Estate Agents Act 1980 Part IV—Agents and Agents' Representatives provides for information about ethical
and conduct standards that apply to the activities of real estate salespeople
(b) In your own words, explain two (2) of the above ethical and conduct standards
(identified in part (a)) that apply to working in sales.
 The conduct must not be Unfair and Unjust
 The conduct must not be in the breach of the legislation
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Question 14
Name and summarise the sections of your agent state/territory legislation relating to the following areas:
(a) Disclosure of information to prospective purchasers (including disclosure of material fact).
(HINT: Identify and namethe sections of youragent state/territory legislation relating to what an
agent should and should not disclose to potential buyers including disclosure about material facts)
This information is provided under section 19A of the Act which is Duty of disclosure to client and
prospective buyer of land.
The disclosure includes
Any relationship which the agent has with a person whom the buyer is referred
Disclosing all material facts
Any additional consideration derived
(b) Salespeople or agents obtaining a beneficial interest (such as purchasing a sales property for
themselves) and any restrictions imposed, including penalties to agent if they breach these
restrictions.
(HINT: Identify and name the sections of your agent state/territory legislation relating to
beneficial interest - consider what the agent must do if they or a colleague or a relative does want to
buy the property)
These rules are provided under section 68 of the Act.
These include purchasing a sales property for themselves
Act fairly and reasonably
In case they or a colleague or a relative does want to buy the property they must notify so the seller.
Question15
What information would you record in a sales client/customer database and why? List five (5) items.
Identity information – so that a client can be identified
Contact information so that the client can be contracted when needed
Clint History- to remember past interactions
Web account information- for storing username and passwords
Payment information – to keep track of payments
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Part 2: Case study
James is selling his property through ABC Real Estate Pty Ltd where you work as a salesperson.You have the
property listed at $700,000. The agent’s sales fee is 3.3% of the selling price, inclusive of GST.
(a) The agency you are employed in as a salesperson has several prospective buyers interested in the
property. One of them approaches you privately and offers to pay you (personally) $2,000 if you
ensure that they are the successful purchasers of the property, saying that there is no need to let the
agency manager or the client know. Can you legally accept this money, explain why or why not?
What would the possible legal ramifications be if you accepted this money?
No, I cannot legally accept this money as the Act states that an agent has a fiduciary obligation to work in
the best interest of the client and the employer. A failure to do so will result on legal penalties and may also
lead to cancellation of my license.
(b) Buyer A submits an offer of $658,000 which the vendor accepts. At what point is the buyer
committed to purchase (HINT: consider any cooling off requirements in your legislation)?
The period begins when the agreement is signed and ends on the next business day at 5pm.
(c) The property eventually sells for $658,000. What will ABC Real Estate sales fee be equivalent to in
terms of dollars?
The fee will be $21714 @3.3% which is average in Victoria
(d) At what point will ABC Real Estate be eligible to claim sales commission on James’ property?
As per West Property Solutions t/as Century 21 West Property Group v Lewis & Anor [2015] QCATA 42, the
agent will get commission when the sale has completed and the services were effectively the cause of the
sale. The agent has to get the written consent of authority to withdraw the money from the trust account
from the client before money is released from the trust account. This is called order on agent and is
provided by the legal representative of the purchaser.
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Part 3: Work project
Part A
Attend an open for inspection for a property for sale through a real estate agent. Record in your
assessment submission the details of the inspection: address, time, date, real estate agent etc.
Write a short report describing how the agent proceeded with the open for inspection, for example you
should describe:
• How you found out about the Open for Inspection (example, how did the agent market the property).
• How the real estate salesperson conducted the Open for Inspection.
• What marketing materials if any were available at the Open for Inspection?
• What is the most common method of sale of residential properties in this area and why do you believe
this is the case?
• Note any Work Health Safety issues eg: fragile or valuable items, risks to physical safety of agents such
as trip hazards
Property details
Address <type your answer here>
Date <type your answer here> Time <type your answer here>
Real Estate agent <type your answer here>
Report
<type your answer here>
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Part B
Using the property you are currently living in (whether you own it or lease it):
(a) Suggest the best method of selling the property including your reasoning.
The best method for selling the property I currently live In would be an auction. This is because through the
use of this method I would be able to get the best price for the property further there would be no cooling
off period.
(b) What marketing strategies would you think should be used to market this property, including your
reasoning?
The property would be best marketed through social media as there are many buyers in the locality who
use such platforms for purchasing properties. Local advertisement can also be initiated for the purpose of
marketing as it would target the local buyers.
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Part C
(a) Complete anauthority to act/agency agreement for sale of this property.
Date of listing preparation and appointment:
Use date you are completing this assessment
Vendor Details
Vendor Name: Ms Rashid Nagarajan
Vendor Address: 14/16 Vendor Lane, Vendorville 1234
VendorContact: Phone: [phone], Fax: [phone]
Vendor Solicitor details:
Solicitor Name: Rowland and Company Lawyers (Attention: Mr. Richard Hadwood)
Solicitor Address: Suite 10, Regis Tower, Park Rd, Somewhere
Solicitor ABN: 12567-776
Solicitor Contact Email: [e-mail], Phone: [phone] , Fax:[phone]
Property being listed for sale:
Property Address: 123 Dunmore Terrace, Somewhere
Property Details: This property is a 3 bedroom brick home with a single lock up garage.
The home is listed on the council search as a single detached residential
dwelling.
Property Description: Lot 2 on Deposited Plan 18907, County Stanley, Parish Somewhere.
Sale method: Private Treaty
Agent details:
Agent Name: ABC Real Estate Pty Ltd
Trading as: Trusty Real Estate
Agency Address: Shop 2/ 15 Park St, Busy Town
Contact: Phone: [phone], Fax: [phone]
Agent ABN: 24561
Corporation License No.: 12345678
Salesperson details:
Salesperson Name: You are the salesperson. Insert your name.
Registration number: 5554- 6621. This is your salesperson registration number.
You are authorised as a salesperson to sign off an agency agreement on behalf of the agency.
Estimated selling price: $680,000 to 700,000
Listing Price: The owner’s instructed listing price is $735,000.
Fees: $9090.90
Type of listing:The vendors have agreed to list the property as an exclusive agency for 60 days from
the date of appointment. They have also agreed to retain the agent’s service with an open listing if
the property does not sell within the 60 days.
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Start date of authority: Use the date on which you are completing this agreement.
Expenses:The vendor has agreed to invest $3,500 in advertising and promotion. They are also happy
for the agent to charge them the cost of a title search. This is estimated at around $15.50.
Agent Disclosure:The agent will be receiving a rebate from the Local Gazette newspaper. The rebate
will be a payment of approximately $300 for the advertising placed for this property.
Consumer Guide: Has been provided to the client on XX/XX/20XX (date will be before or on the date
the agreement is signed (date that this assessment is completed)).
Advertising and Marketing: Marketing program has been prepared and is attached to Agreement.
Special instruction: There is a security alarm located in the property. Security alarm must be turned
off immediately prior to inspections and then turned on again at the end of each inspection.
Please see security code details in agency key cupboard.
Conjunctions: Agent is to refer back to client before agreeing to conjunct.
You may assume or use hypothetical information which hasnot been provided to you above,
to complete the agreement.
(Please note: generally the agent WOULD NOT sign theagreement on behalf of a vendor. For training
purposes only, this question requires you to include mock signatures to demonstrate thatyou know where
relevant parties would sign)
(b) After this agreement has been completed and signed by the parties, where would this agreement
need to be stored and how would you ensure client privacy and confidentiality, given the amount of
personal information in the documents.
The agreement needs to be safely stored with the client as well as the agent as they both must have copies
of the agreement. In relation to the agreement the agent must ensure that its kept safely and any leak of
information which compromises the confidentiality of the agreement may lead to the breach of privacy
law. No party other than the parties to the agreement may have access to the agreement
(c) A prospective buyer is interested in the property as an investment. They ask you [the sales agent] if
you think it will provide them with a good secure future investment income? What should you say?
In relation to this situation I can provide the advice but such advice must be informed and based on
evidence and must have been made in good faith.
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END OF ASSESSMENT
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