4 Relationship between prospective client’s choices about how to sell and licensee’s benefits 10.5 Before a prospective client signs an agency agreement, the licensee must explain to the prospective client how choices that the prospective client may make about how to sell or otherwise dispose of his or her land or business could impact on the individual benefits that the licensee may receive. Agency agreements 10.6Before a prospective client signs an agency agreement, a licensee must explain to the prospective client and set out in writing— (a) the conditions under which commission must be paid and how commission is calculated, including an estimated cost (actual $ amount) of commission payable by the client, based on the appraisal provided under rule 10.2: (b) when the agency agreement ends; (c) how the land or business will be marketed and advertised, including any additional expenses that such advertising and marketing will incur: (d) that the client is not obliged to agree to the additional expenses referred to in rule 10.6(c): (e) that further information on agency agreements and contractual documents is available from the Authority and how to access this information. Disclosure of defects 10.7 A licensee is not required to discover hidden or underlying defects in land but must disclose known defects to a customer. Where it would appear likely to a reasonably competent licensee that land may be subject to hidden or underlying defects4, a licensee must either— (a) obtain confirmation from the client, supported by evidence or expert advice, that the land in question is not subject to defect; or (b) ensure that a customer is informed of any significant potential risk so that the customer can seek expert advice if the customer so chooses. 10.8 A licensee must not continue to act for a client who directs that information of the type referred to in rule 10.7 be withheld. Advertising and marketing 10.9 A licensee must not advertise any land or business on terms that are different from those authorised by the client. Contractual documentation and record keeping 10.10A licensee must submit to the client all offers concerning the grant, sale, or other disposal of any land or business, provided that such offers are in writing. 10.11 If a licensee is employed or engaged by an agent, the licensee must provide the agent with a copy of every written offer that the licensee submits. 10.12An agent must retain, for a period of 12 months, a copy of every written offer submitted. This rule applies regardless of whether the offer was submitted by the agent or by a licensee employed or engaged by the agent and regardless of whether the offer resulted in a transaction. 11 Client and customer care for buyers’ agents 11.1 This rule applies where an agency agreement authorising an agent to undertake real estate agency work for a client in respect of the purchase or other acquisition of land or a business on the client’s behalf (a buyer’s agency agreement) is being entered into, or has been entered into. 11.2 Before a prospective client signs a buyer’s agency agreement, a licensee must explain to the prospective client and set out in writing — 4 For example, houses built within a particular period of time, and of particular materials, are or may be at risk of weathertightness problems. A licensee could reasonably be expected to know of this risk (whether or not a seller directly discloses any weathertightness problems). While a customer is expected to inquire into risks regarding a property and to undertake the necessary inspections and seek advice, the licensee must not simply rely on caveat emptor. This example is provided by way of guidance only and does not limit the range of issues to be taken into account under rule 10.7.
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