What legal issues do real estate agents need to consider?

Businesses frequently engage real estate agents to deal with commercial leasing and sales. As such, it is important for both real estate agents and their clients to understand the legal framework of their agreement. This article provides a guideline on the rights and obligations of real estate agents to ensure compliance with the law.


1. Licenced real estate agent

A person or company advertising themselves as an estate agent or acting as one must be qualified to do so. Across Australia, licensing laws are in place to ensure that real estate agents are qualified and do not deceive their clients or mishandle their property. Businesses should ensure they are only dealing with a licenced real estate agent or an authorised agent’s representative. A licensed real estate agent will be responsible for the conduct of their representative.


2. Misleading and deceptive conduct by real estate agents

Real estate agents must not engage in misleading or deceptive conduct to avoid significant penalties under the Australian Consumer Law. Misleading and deceptive conduct includes any advertisements, actions or statements made which would cause a false representation about a property. For example, a photoshopped image of a property or a statement which significantly overvalues the property may be considered misleading and deceptive.


Importantly, the intention of the real estate agent is not taken into consideration when establishing misleading and deceptive conduct. Accordingly, real estate agents should take extra steps to ensure they are accurately representing the relevant property.


Helpful practices for real estate agents to avoid misleading and deceptive conduct include:
  • Using market research to make a reasonable estimate of the property price for advertising
  • Disclosing all relevant information to the client about the property
  • Representing the property accurately in photographs and advertisements
  • Representing the features and location of the property accurately


3. Unfair contract terms in property agreements

Businesses and real estate agents should ensure that there are no unfair terms in their sale or lease agreements. Unfair contract terms are void and may soon be subject to significant penalties under proposed changes to the law. Property agreements should be thoroughly reviewed for any unfair contract terms.


A contract term will be unfair if it satisfies all the conditions below:
  • It would create a significant imbalance in the parties’ rights and obligations under the contract
  • It is not reasonably necessary to protect the legitimate interests of the party who would benefit from the term
  • It would cause detriment to a party, whether financial or otherwise


4. Acting in the best interests of a client

Real estate agents and their representatives must act in the best interests of their clients, unless it would be unlawful to do so.


Acting in the best interests of your client means to:
  • Follow all lawful instructions of the client
  • Disclose relevant information about the transaction to your client
  • Avoid conflicts of interest
  • Keep confidential any information given by the client


A conflict of interest may arise where a real estate agent:
  • Acts for two clients with conflicting interests e.g. landlord and tenant
  • Recommends a business to a client without disclosing their prior personal or commercial interest in that business


Key takeaways

  • Businesses and real estate agents need to be aware of the legal framework surrounding their property agreements.
  • Businesses should only engage a licenced real estate agent or their authorised representative.
  • Real estate agents must not engage in misleading or deceptive conduct, especially regarding property advertising.
  • Property agreements should be reviewed for any unfair contract terms, as these will be void and unenforceable.
  • Real estate agents must act in the best interests of their clients, keep confidentiality and avoid conflicts of interest.


Gladwin Legal are experts in compliance and consumer law. If you require assistance with drafting agreements, reviewing contracts or ensuring legal compliance, please contact us at or 1300 033 934.