Real Estate CPD Assessment: Legislation, Ethics, and Trust Accounts

This assignment is a comprehensive exploration of real estate practices, focusing on legislation, ethical considerations, and trust account management. It begins with an overview of how agents can interpret and apply legislation, including common mistakes and consequences of misinterpretation. The assignment then delves into state legislation applicable to property sales, management, licensing, and agent conduct, including the role of regulators in enforcing compliance. Key concepts such as the principal-agent relationship, rules of conduct, and codes of practice are examined. Furthermore, the assignment covers the importance of understanding and adhering to legislation, techniques for accessing current versions, and tracking changes. It also addresses primary sources of law, definitions of key legal terms, and the role of government and industry bodies in providing advice to agents. The assignment extends to trust account management, detailing regulatory requirements for opening, maintaining, and closing accounts, as well as record-keeping systems, security, and reconciliation processes. Responsibilities and limitations of various roles within the agency are clarified, along with procedures for addressing overdrawn accounts or fraud. The assignment also touches upon relevant Commonwealth and State legislation regarding privacy, fair trading, and anti-discrimination, culminating in an analysis of ethical practices and risk management. Additionally, the assignment includes practical components such as reading legislation, developing induction documents, and analyzing transactions, reinforcing the importance of compliance and ethical conduct in real estate.

CPD Assessment

Table of Contents
PART 1............................................................................................................................................6
1.1. Explain how an agent would find help to read and interpret legislation.........................6
1.2. What common mistakes are made when reading parts of legislation?............................6
1.3. What consequences could there be for misinterpreting legislation?...............................6
QUESTION 2...................................................................................................................................6
2.1. Research state legislation that is applicable to real estate for property sales, property
management, licensing and agents conduct. Complete the table...........................................6
2.2. Explain the role that the regulator has in administering the legislation. Include how they
enforce compliance and any penalties that may apply for breaches......................................8
QUESTION 3...................................................................................................................................8
3.1. In real estate the principal/ agency relationship is unique to real estate. Explain the term
“principal” and the basis of the relationship that the agent/agency has with the principal....8
3.2. Explain the relationship between the agency with the following:...................................8
QUESTION 4...................................................................................................................................9
4.1. Explain the basic principles for reading legislation........................................................9
4.2. Explain the difference between a Rule of Conduct contained in legislation and a Code of
Practice...................................................................................................................................9
QUESTION 5.................................................................................................................................10
5.1. Explain your responsibility for understanding and adhering to legislation...................10
5.2. Explain techniques used to access current versions of the legislation and the importance
of keeping up to date with legislation and ensuring the legislation you are accessing is
current/point in time legislation?..........................................................................................10
5.3. What techniques would you use to track changes and amendments to legislation?.....10
QUESTION 6.................................................................................................................................10
6.1. Explain the categories of primary sources of law and how the laws are made.............10
6.2. Give a definition of the following:................................................................................10
Question 7......................................................................................................................................11
7.1.Research and give an overview of government and industry bodies that provide advice to
agents on legislation and legislative changes.......................................................................11

7.2. How could these bodies assist if you had concerns about the practices of the agency or an
agent?....................................................................................................................................11
3.Explain the process used to examine and record an investigation of any discrepancies
between application of personal and agency practices and legislation................................11
Question 8......................................................................................................................................11
Explain the purpose of a real estate trust account and any regulative requirements there are for
opening, maintaining and closing a real estate trust account. .............................................11
What record keeping systems would you implement to establish an accurate and efficient trust
account management system?..............................................................................................12
If an agency is using an electronic trust accounting system, what requirements under
legislation is there?...............................................................................................................12
How would an agency ensure the security and confidentiality of the trust account records?12
QUESTION 10...............................................................................................................................12
Legislation requires the trust account to be reconciled at the end of each month. Explain the
end of month processing for a real estate trust account........................................................12
What would happen if the reconciliation did not balance? How would we locate the
inaccuracies?.........................................................................................................................12
Explain the requirements for auditing the trust account.......................................................12
QUESTION 11...............................................................................................................................12
Explain the responsibilities and limitations of the following roles in relation to the trust
account:.................................................................................................................................12
Your role...............................................................................................................................12
Persons who are making entries into the trust account.........................................................13
Persons who are preparing withdrawals from the trust account...........................................13
Licensee in charge / person in effective control...................................................................13
QUESTION 12...............................................................................................................................13
What are the responsibilities of the licensee or person in effective control if the trust account
becomes overdrawn or if they discover some sort of fraud?................................................13
How will this impact the agency? What could be the outcome of an investigation into
fraudulent activities?............................................................................................................13
How will the agency’s clients react to this information?.....................................................13

QUESTION 13...............................................................................................................................13
Choose three from the list below. List Commonwealth or State legislation that relates to: 13
Privacy..................................................................................................................................13
Fair trading and consumer protection...................................................................................14
Anti-discrimination and equal opportunity..........................................................................14
QUESTION 14...............................................................................................................................14
Definition of ethical practise and real estate agent work ethically ......................................14
Question 15....................................................................................................................................14
Identify the risks to agent, agency and consumer and comment on the impact to all parties
from the fraudulent activities................................................................................................14
PART 2..........................................................................................................................................15
1 How to read piece of legislation........................................................................................15
2 Access and analyse two pieces of legislation....................................................................16
3. Develop a list of tasks to achieve this responsibility........................................................16
5 Principal-agent problem....................................................................................................16
6. Induction document or guide relating to responsibilities of employees in relation to the trust
account..................................................................................................................................16
7.1 Explain the transaction that took place that resulted in the documents below..............17
7.2 mistakes that have been made in the following transactions:.........................................18
8. Induction document on end of month processing.............................................................18
9. Research the regulators requirements for auditing real estate trust accounts. Give an
overview of why trust accounts should have both internal and external audits...................19
10.2. This would make the transaction become reconciled. the transaction which was edited
will again appear on the current reconciliation. Also the transactions deleted will have to be re
entered..................................................................................................................................19
PART 3..........................................................................................................................................19
1 Using the information gathered in EA1 prepare a handout that you could use during your
presentation. Include diagrams, screenshots etc...................................................................19
2. Complete the document register with 5 different pieces of legislation that relate to real
estate. Include URL and the most recent change to the legislation......................................19

3. Develop a flowchart to show the process for addressing breaches in legislation for personal
and agency practice. ............................................................................................................21
4. Identify key components that are required by legislation................................................21
REFERENCES..............................................................................................................................22

PART 1
1.1. Explain how an agent would find help to read and interpret legislation.
Go onto the link: https://www.legislation.nsw.gov.au/information and select the “Guide
to interpreting NSW legislation. It will direct to another page:
https://www.legislation.nsw.gov.au/file/Guide_to_interpreting_NSW_legislation.pdf
1.2. What common mistakes are made when reading parts of legislation?
There are few common problems which can occur while interpreting the legislations.
They are: Ambiguous words, broad phases, printing or drafting errors, unforeseen developments,
etc.
1.3. What consequences could there be for misinterpreting legislation?
The licence or the certificate will be revoked. Imposition of fines or conditions to
recommend criminal action be undertaken.
QUESTION 2
2.1. Research state legislation that is applicable to real estate for property sales, property
management, licensing and agents conduct. Complete the table

Details Property Sales Property
Management
Licensing
Name Property and Stock
Agents Regulation
2014
Residential
Tenancies Act 2010
No 42
Property and Stock
Agents Regulation
2014
Commencement 1.9.2014 This Act commences
on a day or days to
be appointed by
proclamation.
1.9.2014
Version Current version 1
July 2020 to date
(accessed 13
February 2021 at
8:42)
Current version
11.12.2020 to date
(accessed 13
February 2021 at
8:58)
Current version 1
July 2020 to date
(accessed 13
February 2021 at
8:42)
Part Part 4 Part 3 Part 5 Records
Division Division 1-9 Division 2 Rent and
other payments
Division 1-3
Clause Clause 23 Receipts
for trust money
Clause 36 Rent
Receipts
Clause 33A Records
of property reports to
be kept by real estate
agents
Schedule Schedule 1 General
rules of conduct
applying to all
agents and assistant
agents
Schedule 2
Provisions
consequent on
enactment of this
Act.
Schedule 2 Rules
specific to real estate
agents and assistant
real estate agents
Other information
eg: penalty units
Maximum penalty—
1.40 penalty
units in the
case of a
Th This section
does not apply to the
New South Wales
Land and Housing
Maximum penalty—
 40 penalty
units in the
case of a

corporation,
or
2.20 penalty
units in any
other case.
Corporation or the
Aboriginal Housing
Office.
Maximum penalty-
 10 penalty
units
corporation,
or
 20 penalty
units in any
other case.
2.2. Explain the role that the regulator has in administering the legislation. Include how they
enforce compliance and any penalties that may apply for breaches.
Regulator's role is to manage the laws of consumers and to look after the rights of the
consumers and traders on their rights and responsibilities so the market place is fair. Each state
has its own agency which is responsible for administration and also enforcement of its real estate
legislation. The regulator’s enforcement powers are very broad and if any breach of legislation
occurs the regulator has the power to revoke licenses and certificates, impose fines or conditions
to recommend criminal action be undertaken.
QUESTION 3
3.1. In real estate the principal/ agency relationship is unique to real estate. Explain the term
“principal” and the basis of the relationship that the agent/agency has with the principal.
The principal-agent relationship is an arrangement in which one entity legally appoints
another to act on its behalf. In a principal-agent relationship, the agent acts on behalf of
the principal and should not have a conflict of interest in carrying out the act.
3.2. Explain the relationship between the agency with the following: Vendors/sellers: The vendor is the seller, the person selling the property. The agency
needs to have a trustworthy and professional relationship with vendor and work in the
best interest of their client at all times to ensure the best possible price is achieved in the
shortest time frame. Purchasers/buyers: The purchaser is the buyer, the person buying the property. The
agency needs to have a professional trusting relationship by communicating regularly and
by disclosing any information relating to their services or the property.

 Landlords/ lessee: The landlord also known as lessee is the owner of a managed
property. The agency needs to a build trusting, professional relationship by
communicating with the tenant on the landlord behalf and regularly informing the owner
on all issues relating to the management of their property.
 Tenant/ lessor: The tenant also known as lessor is a person paying rent to reside at the
property. The agency needs to have a respectful, amicable relationship with tenant so all
issues relating to tenancy are dealt with professionally and efficiently.
QUESTION 4
4.1. Explain the basic principles for reading legislation.
 Read the Act as a whole
 Read the section in light of Act as a whole
 Sections should be read in sequence
 Words should not be discarded
 Words are presumed to have consistent meanings throughout the whole of the Act
 Words are to be interpreted in accordance with their ordinary and current meaning
 The meaning of the word or phrase will be derived from its context
 Words are to be interpreted in accordance with their common usage
Technical words are to be given their technical meaning.
4.2. Explain the difference between a Rule of Conduct contained in legislation and a Code of
Practice.
Rules of Conduct (Schedule 1 Property Stock and Business Agents regulations) provide
agents with specific guidance on the professional and ethical standards in which the public
expects them to adhere whereas the Code of Practice (REINSW) provides high standards of
ethical practice and principles expected to be upheld by all professional members as well as their
firms and employees, in their details with other members, other real estate agents, their
employees and members of the public.

QUESTION 5
5.1. Explain your responsibility for understanding and adhering to legislation.
Its is responsibility to understand legislations so as to know about own rights and
responsibility. It is important to adhere with legislation as non compliance of it is punishable by
law.
5.2. Explain techniques used to access current versions of the legislation and the importance of
keeping up to date with legislation and ensuring the legislation you are accessing is
current/point in time legislation?
To access the current version of legislation choose a relevant database from database list
which is available in alphabetical order. Search for legislation. It is important that legislation is
updated and accessing of the updated legislation is also important so that there is no error made
while deciding any case.
5.3. What techniques would you use to track changes and amendments to legislation?
 By monitoring websites of regulatory agency.
 Following regulatory agency on social media platform.
 Subscribing to the blogs and newsletters.
 Joining industrial associations.
 Attending conferences.
 Implementing the software compliances.
QUESTION 6
6.1. Explain the categories of primary sources of law and how the laws are made.
There are mainly two sources of law i.e. case laws that are based on the judgements already
delivered by the superior courts and the legislations which are the laws made by the parliament.
6.2. Give a definition of the following:
 Common law: these are the laws which are originated from the decisions already given
by the superior courts in Australia.
 Contract law: this is the law which explains the contractual relations of the party to the
contract.

 Statute law: these are the laws which are made by the parliament of the Australia. These
are passed as a bill and upon confirmation by the two houses of parliament it becomes an
act.
 Equity law: these are the principles in Australia that helps in reaching the court with
decision which is fair and just.
Question 7
7.1.Research and give an overview of government and industry bodies that provide advice to
agents on legislation and legislative changes.
 Primary bodies
 Secondary statutory bodies
 Secondary non statutory bodies
 Other governance relationships
7.2. How could these bodies assist if you had concerns about the practices of the agency or an
agent?
These bodies helps in providing their assistance by giving advice to the agents on any
specific legislations and any changes related to it.
3.Explain the process used to examine and record an investigation of any discrepancies between
application of personal and agency practices and legislation.
It helps to provide all the information and the legislative requirements that is being made and
emphasis on all the attend records as it allows the person to compile and give the practised and
the procedures
Question 8
Explain the purpose of a real estate trust account and any regulative requirements there are for
opening, maintaining and closing a real estate trust account.
The real estate trust account is being created for all the money received by any agent and
that also on behalf of the person who is in real estate transition and it will not use to hold any
money.

What record keeping systems would you implement to establish an accurate and efficient trust
account management system?
trust account handbook can there by be used in order to ensure all the efficient operations
in the trust books and that is kept for full accounting.
If an agency is using an electronic trust accounting system, what requirements under legislation
is there?
In order to create a trust accounting system there will have to be apply all the legal claims
and the legislative rules should be made applicable in order to frame it.
How would an agency ensure the security and confidentiality of the trust account records?
The trust account audit is being made and also the client funds and trust account will be
held in order to maintain the confidentiality.
QUESTION 10
Legislation requires the trust account to be reconciled at the end of each month. Explain the end
of month processing for a real estate trust account.
All the documents will have to maintained in trust account and all the dates should be
mentioned.
What would happen if the reconciliation did not balance? How would we locate the
inaccuracies?
There might be a problem with the previous reconciliation and it can be fixed by
reconciliation discrepancy.
Explain the requirements for auditing the trust account.
It helps in managing the trust money bin the financial year and provides the licensing and
all personal details of licensing.
QUESTION 11
Explain the responsibilities and limitations of the following roles in relation to the trust account:
Your role
They will be a legal owner and tries to perform all the legal assets.