Australian Institute of Conveyancers (NSW Division)
RISK MANAGEMENT SELF-ASSESSMENTS
Introduction and the Risk Management Program:
The Australian Institute of Conveyancers NSW Division (the Institute) first introduced the Risk Management Program in the year 2000. At the time, it was introduced as a tool to assist members in the running of their files and practice to reduce the stresses of day-to-day file and business management and to help reduce the likelihood of a professional indemnity claim.
The program was updated in 2005 and made mandatory for all Business Owner Members wishing to receive the Institute’s member discount on the PI insurance policy. Originally, the program required a mandatory annual inspection of the participating member’s business. By 2010, the membership had increased to the point where mandatory annual physical inspections were no longer possible and the program was changed to allow for a mandatory annual online self-assessment together with random physical inspections.
To meet the requirements of the program, a business owner member must be able to show: • a reasonable knowledge of risk management procedures (as evidenced by the annual online self- assessment and any physical assessment conducted on the conveyancer’s business), • that a risk management program has been put in place; and • all staff members are familiar with and are uniformly following the risk management procedures set down by the business owner.
The program also requires that the business owner’s files be conducted at least in the manner set out in the guidance manual (as discussed below) where it is practical to do so. Of course, this does not prevent members from putting further risk management procedures in place. The guidance manual recommendations should at best be viewed as minimal risk management guidelines and procedures. If you have one or more procedures in place that you consider to be as good if not better risk management practice, then that is acceptable. The manual is intended as a guide only, and is not intended to set procedures in concrete that cannot be altered or enhanced.
The Self-Assessment Guidance Manual:
The Self-Assessment Guidance Manual comprises three parts:
1. This overview of the program and the self-assessment 2. An overview of the requirements conveyancers is required to meet under legislation in both the maintaining of their licence and the running of a conveyancing business; and 3. The original Search Guidance Manual (the guidance manual).
The guidance manual was devised: • to provide conveyancers with a risk management tool which, if implemented, will help reduce the number of professional indemnity claims on the Policy; • to introduce a continuous and measurable improvement system to a member’s business; • to help members provide top quality professional advice and service to their clients; • to assist in the identification and improvement to the internal procedures, systems and corporate policies of a member’s business; • to assist in the provision of a system of minimum standards maintenance and compliance; and • to provide a structured framework for on‐the‐job‐training in a helpful, constructive way enabling maximum return for dollars spent on training and continuous professional development.
By implementing the systems suggested by the guidance manual, a conveyancer is less likely to suffer a professional indemnity claim, and should a claim be made, the affected member and the insurers will be better equipped to defend that claim.
Business owners should ensure that each employee involved with conveyancing transactions should have access to and follow the guidance manual or such other office procedures implemented in place of those recommended by the guidance manual.
It is understood that there may be certain occasions or circumstances where the procedures suggested in the guidance manual are not practical. In such circumstances, the member is expected exercise common sense in exercising the best practice permitted by the circumstances.
Who can Participate
Business Owner Members participating in the program must satisfactorily complete the online risk management self-assessment by 31 May each year. Satisfactory completion requires that both parts of the assessment are completed and a minimum pass mark of 85% is obtained in Part 2.
The participating member must be financial
The self-assessment is only available to financial members. To be considered financial, the member must have paid his/her membership fee in full in advance for the membership year commencing 1 April in the calendar year current at the time of carrying out the assessment and have no other moneys outstanding to the Institute. Membership fees cannot be paid by instalments.
Anyone who is not a financial member of the Institute is not eligible to participate in the program and is therefore not eligible for the member premium rate negotiated with the professional indemnity insurers on behalf of its members. The full premium rate payable where the risk management program is not completed or the member chooses not to participate, is the member rate plus 50%.
Members who are not financial as at 1 April in the current year may contact the Institute to make a request to complete the assessment immediately following payment of membership fees for the relevant year. Such request will not be unreasonably refused provided all matters considered necessary by the Institute to complete membership have been complied with.
Failure to achieve an 85% pass mark Members are entitled to make three attempts to achieve the 85% pass mark in Part 2 of the online self- assessment. If the 85% pass mark is not achieved by the end of the third attempt, the member will not be entitled to the member’s rate negotiated for members on their Professional Indemnity Insurance and a loading will be added to their premium. The loading will be determined by the insurance company but is recommended to be 50% of the negotiated member rate.
The self-assessment is intended indicate the level of the member’s awareness of risk management and the need to follow risk management procedures. If the member fails to achieve the 85% pass mark after 3 attempts, a physical assessment of member’s files and business may be carried out by a person appointed by the Institute’s Risk Management Committee.
If the results of the physical assessment are not satisfactory, the matter will be referred to the Institute’s Risk Management Committee for consideration and any or all the following actions may be taken: • A meeting between the member and the committee arranged to discuss any issues raised by the physical assessment. • A requirement for attendance at one or more seminars by the member • A senior conveyancer appointed to attend on the member for tuition and mentoring • Withdrawal of membership NB: Withdrawal of membership is regarded as a last resort, resolved on only where there appears to be no way to remedy or assist the member to implement reasonable risk management procedures. Where membership is withdrawn, a report will be made to the Institute's insurers for their consideration as to whether they will continue to offer insurance, and if so whether to further load the premiums or take whatever further action the insurers may deem necessary.
Member’s right to appeal If the member considers that the conduct or result of the assessment was not fair or reasonable the member may lodge an appeal with the NSW Division Council. The decision of the NSW Division Council regarding any appeal is final.
INTERPRETATION: The above is an outline of the risk management program conducted by the Institute. All matters that need to be determined or ruled on will be done by the Risk Management Committee and/or the Council of the NSW Division of the Institute. The decisions of the Council and or Risk Management committee shall be final and binding on all members.
Some facts about the AICNSW Professional Indemnity Insurance policy.
Cover: $5m in respect of any one claim and $10m in the aggregate for all claims in any year.
Premiums: are based on gross turnover of fees each financial year with a minimum premium determined annually.
Excess on each $5000.00 or $10,000.00 if you act(ed) for both parties to the transaction. claim:
Run‐Off Cover: Conveyancers who cease to practice are covered for claims without having to continue paying premiums.
Policy is non‐ Because of the nature of the policy and the provision of run‐off cover, once cancellable: initiated the policy cannot be cancelled.
Australian Institute of Conveyancers NSW Division
Risk Management Self-Assessment Manual
The Risk Management Self-Assessment must be completed annually by Business Owner members of the Institute. This document sets out the guidelines for the assessment and the minimum risk management procedures that members should have in place. It also briefly sets out details of the Institute’s Professional Indemnity Insurance. SECTION 1: TRUST ACCOUNTS
Regardless of whether a conveyancer conducts a trust account or not they should be aware of basic trust account requirements. For this reason, some questions on trust accounting are included in the online self-assessment.
Trust account requirements are found in Conveyancers Licensing Act 2003, Part 5 ss 52 - 74 and auditing requirements in ss 75 - 80. Further requirements can be found in the Conveyancers Licensing Regulation 2015 Part 5, ss 15 - 30.
Extracted below are the relevant sections from CLR 2015
Conveyancers Licensing Regulation 2015
Division 2 Trust accounts
21 Banking of trust money A licensee who receives trust money must pay it into the licensee’s trust account: (a) before the end of the next banking day after the day of its receipt, if that is practicable, or (b) if that is not practicable, as soon as practicable after that day. Maximum penalty: 40 penalty units in the case of a corporation or 20 penalty units in any other case.
22 Receipts for trust money (1) A licensee must cause a receipt to be prepared in accordance with this clause immediately after the licensee receives trust money for or on behalf of any person. (2) The following particulars must be shown on each receipt: (a) the date of issue, (b) the number of the receipt, (c) the name of the licensee, or (if appropriate) the business name under which the licensee conducts the conveyancing business, and the words “Trust Account”, (d) the name of the person from whom the payment was received, (e) the name and ledger reference number of the person on whose behalf the payment was made, (f) particulars sufficient to identify the transaction in respect of which the money was paid, Page | 5 (g) the amount of money received and whether (or the extent to which) it was paid in cash or by cheque, by electronic funds transfer or otherwise. (3) A copy of the particulars shown on the receipt must be made simultaneously: (a) on the machine-numbered duplicate form provided in the trust receipt book (if the receipt is issued from that book), or (b) in the cash book (if the receipt is issued otherwise than from the trust receipt book). (4) Receipts must be prepared in the numerical order of the series to which they belong. (5) The original of a receipt must be issued, on demand, to the person from whom the trust money is received. (6) A licensee must retain: (a) any original receipt that is not issued to the person from whom the trust money is received, and (b) any original receipt that is cancelled after it is prepared, and (c) duplicate receipts (except in the case of receipts referred to in subclause (3) (b)). Maximum penalty: 40 penalty units in the case of a corporation or 20 penalty units in any other case.
23 Payment of trust money (1) A licensee must ensure that trust money is not drawn from the licensee’s trust account otherwise than by cheque or electronic funds transfer in accordance with this clause (including the record keeping requirements of this clause). Maximum penalty: 40 penalty units in the case of a corporation or 20 penalty units in any other case. (2) Each cheque must: (a) be machine numbered in series, and (b) be marked “not negotiable”, and (c) not be payable to cash, and (d) contain the name of the licensee, or (if appropriate) the business name under which the licensee conducts the conveyancing business, and the words “Trust Account”, and (e) be signed by the licensee or another person authorised by or under clause 29 to sign the cheque. (3) The licensee must ensure that cheques are drawn in the numerical order of the series to which they belong and that for each cheque a record is kept of:
Page | 6 (a) the number and date of issue, the payee and the amount of the cheque, and (b) details identifying the ledger account to be debited and the name and ledger reference number of the person on whose behalf the cheque was drawn, and (c) the reason for which the cheque was drawn. (4) The licensee must ensure that a record of the following is kept in relation to each electronic funds transfer: (a) the name of the person effecting the transfer and, if the transfer is effected under the direction of some other person or under an authority delegated under clause 29, the name of the person under whose direction or delegation the transfer is effected, (b) the reference number or other particulars sufficient to identify the transfer, the date of the transfer, the payee and the amount transferred to or from each ledger account, (c) details identifying the ledger accounts to be debited and the name and ledger reference number of each person on whose behalf the transfer was made, (d) particulars of the reason for the transfer.
24 Trust deposits (1) A licensee who makes a deposit of money to the licensee’s trust account must ensure: (a) that the relevant deposit book or other written deposit record is produced to the bank when the deposit is made, and (b) that the following particulars are entered in the book or record: (i) the date of the deposit, (ii) the amount of the deposit, (iii) whether the deposit consists of cheques, notes or coins, (iv) if cheques are included in the deposit, the name of the drawer, the name and branch of the bank on which the cheque is drawn and the amount of each cheque, and (c) that a duplicate of the particulars of each deposit is retained by the licensee.
Maximum penalty: 40 penalty units in the case of a corporation or 20 penalty units in any other case.
(2) This clause does not apply to a deposit of money made directly to a licensee’s trust account (except a deposit made by the licensee), electronically or otherwise.
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25 Cash book record of trust account transactions (1) A licensee must keep in the cash book, in accordance with this clause, a record of daily receipts and payments of money into and out of the licensee’s trust account. (2) The pages of the cash book must be consecutively numbered. (3) The cash book must show the following: (a) the consecutive numbers of receipts issued or cancelled, (b) the consecutive numbers of cheques drawn or cancelled, (c) in the case of money received or disbursed by means of electronic funds transfer, the consecutive reference numbers or other means of identification of the transfers. (4) The particulars of payments of money into and out of a licensee’s trust account that are required by this clause must be entered in the cash book as soon as is practicable after the receipt or payment of the money concerned. (5) When money required to be paid into the trust account is received, the licensee must enter the following particulars in the cash book: (a) the date of issue of the receipt, (b) the number of the receipt, (c) the name of the person from whom the payment was received, (d) the name and ledger reference number of the person on whose behalf the payment was made, (e) particulars sufficient to identify the transaction in respect of which the money was paid, (f) the amount of money received and whether (or the extent to which) it was paid in cash or by cheque, by electronic funds transfer or otherwise, (g) the date of the deposit of the money to the trust account, (h) the amount of the deposit. (6) When money is paid out of the trust account, the licensee must enter into the cash book the particulars required by clause 23 (3) to be recorded for a cheque or required by clause 23 (4) to be recorded for an electronic funds transfer. (7) At the end of each named month, the licensee must balance the cash book and either: (a) carry forward the balance to the commencement of the next month, or (b) carry forward the balance to a ledger account provided for the purpose. (8) The licensee must, at the end of each named month, prepare a statement reconciling the balance of the licensee’s trust account with the balance of the related cash book.
Page | 8 Maximum penalty: 40 penalty units in the case of a corporation or 20 penalty units in any other case.
26 Journal (1) A licensee must record, in accordance with this clause, in a journal maintained exclusively for the licensee’s trust account, all transfers between accounts in the trust account ledger that are not effected by cheque or electronic funds transfer. (2) The recording must include the following: (a) the date of the transfer, (b) the amount transferred to and from each ledger account, (c) the names of all ledger accounts to be debited or credited, (d) the relevant reference number or other identification, (e) sufficient particulars to identify the transfer and the reason for the transfer. (3) Each transfer, when entered in the journal, is to be numbered consecutively. Maximum penalty: 40 penalty units in the case of a corporation or 20 penalty units in any other case.
27 Trust account ledger (1) A licensee must maintain, in accordance with this clause, a separate ledger account for trust money received on behalf of or paid to each client. (2) The ledger account must include the name of the client, a reference number or other identification and particulars of each transaction affecting trust money. (3) Those particulars must include the following: (a) the date of the transaction, (b) a description of the transaction, (c) particulars sufficient to identify the trust record originating the transaction, (d) the amount of the transaction, (e) the resulting current balance of account arising from the transaction. Maximum penalty: 40 penalty units in the case of a corporation or 20 penalty units in any other case.
28 Trust account ledger trial balance (1) A licensee must, within 21 days after the end of each named month, prepare, in accordance with subclause (2), a trial balance statement of all ledger accounts current as at the end of that month. (2) The trial balance statement must:
Page | 9 (a) specify the month to which it refers and the date of its preparation, and (b) list each ledger account that does not have a zero balance at the end of that month by stating the name of the client, the reference number or other identification and the balance of the account at the end of the month, and (c) show the total of the ledger account balances at the end of that month, and (d) show a comparison between that total and the balance in the cash book reconciled with the balance in the trust account as required by clause 25 (8). Maximum penalty: 40 penalty units in the case of a corporation or 20 penalty units in any other case.
29 Signing of cheques or effecting electronic funds transfers—trust account (1) A licensee that is a corporation or who is a sole proprietor or a partner has authority to sign a cheque (a trust cheque) drawn on, or to effect an electronic funds transfer (a trust EFT) from, the licensee’s trust account. (2) A licensee in charge of a place of business has authority to sign a trust cheque or effect a trust EFT. (3) A licensee who has authority otherwise than as a delegate to sign trust cheques or effect trust EFTs may delegate that authority: (a) if the licensee is a corporation—to one or more directors of the corporation each of whom is a licensee, and to not more than 2 employees at each place of business of the corporation, or (b) if the licensee is a sole proprietor or a partner—to not more than 2 employees at each place of business of the sole proprietor or partnership, or (c) if the licensee is a person in charge of a place of business—to not more than 2 employees at the place of business. (4) The delegation must be in writing and signed by the licensee and the delegate and may be revoked by the delegator by giving written notice of revocation to the delegate. (5) A delegation in force under this clause authorises the delegate to sign trust cheques or effect trust EFTs to which the delegation relates: (a) (except in the case of a delegation by a licensee that is a corporation) only if the delegator is unable to sign the cheque or effect the transfer with due expedition because of his or her being sick or injured or absent for good reason, and (b) subject to such terms and conditions (whether relating to the value of the cheques or transfers or the number of signatories or not) as may be stated in the instrument of delegation.
Page | 10 (6) This clause does not remove any additional prohibition or restriction on the signing of trust cheques or the effecting of trust EFTs made by the constitution or the terms of the partnership agreement of any company or partnership concerned. (7) A licensee who purports to delegate his or her authority to sign a trust cheque or effect a trust EFT otherwise than in accordance with this clause is guilty of an offence. Maximum penalty: 40 penalty units in the case of a corporation or 20 penalty units in any other case. (8) A person who signs a trust cheque or effects a trust EFT purporting to do so as the delegate of a licensee but who has not been authorised to do so in accordance with this clause is guilty of an offence. Maximum penalty: 40 penalty units in the case of a corporation or 20 penalty units in any other case.
30 Account in the name of a licensee (1) A licensee may maintain in his or her trust account ledger an account in his or her name: (a) for the purpose of aggregating in the account, by transfer from other accounts in the trust account ledger, money properly due to the licensee for costs and disbursements, and (b) in respect of money in which the licensee has a personal and beneficial interest as a vendor, purchaser, mortgagor, mortgagee, lessor, lessee or in other like capacity. (2) A licensee must withdraw money held in an account under subclause (1) (a) not later than 21 days after the day on which the money is transferred to the account. (3) A licensee must withdraw money held in an account under subclause (1) (b): (a) at the conclusion of any matter to which the money relates, or (b) if it comprises rent, interest, instalments of principal or other periodic payments—not later than 6 months after the date on which the money was credited to the account. Maximum penalty: 40 penalty units in the case of a corporation or 20 penalty units in any other case.
Page | 11 INFORMATION ON LODGING A TRUST ACCOUNT AUDIT REPORT OR STATUTORY DECLARATION Frequently asked questions
Who must lodge a trust account auditor’s report or statutory declaration? The Conveyancers Licensing Act 2003 administered by Office of Fair Trading, requires all licensees to lodge either a trust account auditor’s report or, where no trust moneys have been held, a statutory declaration to that effect.
Note: Where a conveyancing business is owned by a company, the company licensee must lodge an auditor’s report or statutory declaration (as appropriate), and the licensee director(s) of the company should lodge a statutory declaration that the licensee as an individual held no trust moneys.
Lodgement must be within 3 months of the end of the audit period which is 30 June each year, OR within 3 months of any separate audit period applicable. You still need to lodge even if you ceased trading during the period or only traded for part of the period.
What is the audit period? The audit period for conveyancer’s trust accounts is 1 July to 30 June. (s76 Conveyancers Licensing Act 2003)
When does it have to be lodged by? The last day for lodgement is 30 September each year or within 3 months from the end of the audit period.
How do I know whether to lodge an auditor’s report or a statutory declaration? If you held money on behalf of a client or third party during the audit period, you must engage an auditor and lodge an auditor’s report form.
If you did not hold or receive any money for or on behalf of any person during the audit period, you must lodge a statutory declaration form to this effect.
Who can conduct the audit? The Auditor must be registered with the Australian Securities and Investments Commission (ASIC) or be qualified under s.115(1)(b) of the Act.
Check that an auditor is registered by searching for their details on the ASIC website.
Where do I get the forms? Forms are available for download from the Office of Fair Trading website.
What if I am in partnership with other licensees? Only one licensee in a partnership has to lodge an audit for the partnership.
If you are in partnership or you are the licensee-in-charge of a corporation and you hold a separate licence but you personally did not receive or hold money in a trust account during the audit period, you still need to lodge your own statutory declaration.
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How do I lodge a statutory declaration? Complete the form for either an individual licensee or a corporation before a Justice of the Peace or a solicitor, sign it, have it witnessed, retain a copy and post the form to Fair Trading at the Locked Bag mailing address on the form.
How do I lodge an auditor’s report? The auditor must be a currently registered company auditor. You should tell the auditor the report must be lodged by 30 September and confirm that the auditor will be able to complete the report in time to enable lodgement by the due date, before you engage the auditor.
Give the auditor access to all records and documents relating to money held in a trust account for the audit period, as soon as possible after the end of the audit period. You do not need to wait until you obtain a report form to provide access.
Monitor the progress of your report with the auditor on a regular basis. Do not just leave the report with the auditor and forget about it.
If your auditor cannot complete the report within the agreed timeframe due to some unforeseen circumstance preventing on time lodgement, you should immediately engage another auditor.
Who is responsible for lodging the auditor’s report correctly and by the due date? When the report is completed you should ask your auditor to deliver the report to you so you can lodge it with Fair Trading. Do not rely on your auditor to lodge the report. The Act makes it quite clear that it is the licensee’s responsibility to ensure the report is lodged by the due date. A licensee cannot pass this responsibility on to an auditor or any of the auditor’s employees.
The auditor’s report should be posted to Fair Trading at the Locked Bag address on the form. If it is sent by surface mail, a minimum of four working days should be allowed for delivery.
Can the lodgement deadline be extended? All licensees are required to lodge by the due date. The deadline can be extended but only in exceptional circumstances which existed over a period of time and can be supported by evidence.
Reasons such as not receiving or misplacing forms, being unaware of the requirement to lodge, forgetting to provide access to the auditor, allowing insufficient time for the auditor to complete the report, forgetting to lodge the report, the auditor was too busy to complete the report or the auditor forgot to lodge the report, are not acceptable.
What happens if I don’t lodge the auditor’s report or statutory declaration by the due date? If you do not lodge an auditor’s report or a statutory declaration by the due date or at all, without an acceptable reason, Fair Trading will contact you and take action based on the circumstances, your lodgeement history and any other previous matters.
Action may include issuing a formal caution, a fine of $550 for a late lodged audit by an individual or $1,100 for a corporation. A $1,100 fine applies for a late lodged statutory declaration by an individual or corporation. Prosecution could also occur or disciplinary action taken and a notice to show cause issued which can result in a monetary penalty, licence
Page | 13 suspension or cancellation, or disqualification of a person from holding a licence.
If successful prosecution or disciplinary action is taken against a licensee, the result is recorded and made public on Licence Check on the Fair Trading website, www.fairtrading.nsw.gov.au. If you are required to lodge an auditor’s report and fail to lodge, you will not be able to renew your licence.
What do I do if I change my address? If you change your registered address, mailing address or residential address and associated contact numbers, you must send notification to Office of Fair Trading in writing within 14 days.
Failure to notify a change of address can incur a penalty of up to $5,500.
Page | 14 SECTION 2 - CONTINUING PROFESSIONAL DEVELOPMENT (CPD)
A conveyancer must not do conveyancing work unless the conveyancer holds a licence and is protected by professional indemnity insurance cover. It is a condition of the licence that the conveyancer complete a set amount of continuing education each year.
A present, a licensee is required to complete a minimum of 5 points of continuing education in the 12 months from the of issue of the conveyancer’s licence. This can be done by attending seminars or lectures, by presentation of a lecture (provided it is considered of suitable content) or private study of video or audiotapes.
By way of overview, one point is awarded for each one hour of face to face attendance at lectures or seminars and also for the presentation of a lecture. One half of a point is awarded for each hour of study with video or audiotapes.
The contents of the lectures or the tapes must be of suitable intellect or practical content and deal with the law related to conveyancing or practice management.
Conveyancers are encouraged to complete more than the minimum of 5 hours of continuing education in order to increase their knowledge and competence.
Frequently Asked Questions
Can anyone be exempt from completing the minimum 5 hours continuing education? The Office of Fair Trading may exempt someone from whole or part of the requirement for further education but only in exceptional circumstances.
In what period of the year must continuing education be completed? The conveyancer’s five points must be obtained in the twelve months following the issue of the conveyancer’s licence or such other period specified in the conditions attached to the licence or as advised by the Office of Fair Trading.
What happens if I don't complete the required educational points? As it is a condition of your licence that you obtain the points, you may not qualify for a new licence if you have not met this requirement. You should apply to the Office of Fair Trading for an extension of time to complete the course.
Do I need to keep a record of lectures etc. attended? Yes - When applying for a renewal of licence evidence does not need to be provided, however, the Office of Fair Trading will do spot checks and if you are requested to do so you must provide evidence that you have completed the required course of continuing education. A form for this purpose is available from the Institute;
Do I need to comply with the continuing education requirements if I am overseas or
Page | 15 interstate? Yes - Any conveyancer holding a current licence must complete the required course of continuing education.
What courses are accredited? The Office of Fair Trading does not accredit courses. The courses must, however, be presented by someone qualified in the subject covered, must deal with matters related to conveyancing or practice management, must be related to the immediate or long term needs of the conveyancers professional development and the practice of conveyancing. It is the conveyancer's responsibility to ensure the course is relevant and acceptable for continuing education.
A copy of the Commissioner’s Guidelines is reproduced on the next page.
Page | 16 CONVEYANCERS LICENSING ACT 2003.
COMMISSIONER’S GUIDELINES FOR FURTHER EDUCATION.
1. A licensee with a condition requiring further education to be undertaken must complete 5 points of professional development in the 12 months period following the granting or the renewal of the licence.
2. The professional development must consist of:
- an education program; - a seminar, workshop, lecture, conference or discussion group; - a multimedia or website based program; or - research and preparation of an article published in a legal publication; or - any combination of two or more of the above.
3. The professional development must be of significant intellectual or practical content and must be relevant to conveyancing work.
4. The professional development must be conducted by persons qualified in the subject matter to be covered.
5. A licensed conveyancer is entitled to one point for each of the following:
- one hour of participation in a course of education relevant to conveyancing work;
- one hour of participation in a seminar, workshop, lecture, conference or discussion group;
- one hour spent in the preparation of written or oral material forming part of the formal instruction for a course or program relating to conveyancing work;
- for every 1000 words of an article published in a legal publication or other such publication (up to a maximum of 3 points);
- for every two hours spent on a program of private study of audio or video material that has been developed as part of a conveyancing or legal further education program (up to a maximum of 3 points).
6. In exceptional circumstances a licensee may be exempted from completing part or all of the requirement for further education.
7. A licensed conveyancer must certify that he or she has undertaken 5 points of professional development in the 12 month period immediately prior to applying for renewal of a licence.
Page | 17 SECTION 3: SCOPE OF WORK s.4 Conveyancers Licensing Act 2003 (extracted below) sets out what work a licensed conveyancer is permitted to do.
It can be tempting if you have come from a legal office background to prepare a will, do a probate application, draft a deed, or do any of those things you used to do as a routine part of your legal office training. However, these “small jobs” are legal work as referred to in s4(4) CLA and is not Conveyancing Work as defined in the s.4 and, in the case of a Will, specifically excluded by s.4(3).
Powers of Attorney
The odd man out in the above is the preparation, advice and witnessing or a Power of Attorney.
The Conveyancers Licensing Act permits Licensed Conveyancers to undertake “conveyancing work” which is defined in s. 4 to include “legal work (such as the giving of advice or the preparation, perusal, exchange or registration of documents) that is consequential or ancillary to a conveyancing transaction.
Prior to the Power of Attorney Act 2003, a Licensed Conveyancer was been able to draft or complete a power of attorney if it was required for a conveyancing transaction that the conveyancer had received instructions to act on, but not otherwise.
Now that Licensed Conveyancers, who have completed an approved course can be “prescribed witnesses” under s.19 of the Powers of Attorney Act, there is some confusion as to when a Licensed Conveyancer can prepare an Enduring Power of Attorney.
The Power of Attorney Act 2003 was never intended to alter the scope of the work a Licensed Conveyancer can do under the Conveyancers Licensing Act. Therefore a Licensed Conveyancer can prepare a Power of Attorney under the conditions imposed by the Conveyancers Licensing Act (being consequential or ancillary to a conveyance) and any Conveyancer who has completed an approved course, can prepare, advise, peruse, give advice etc on an Power of Attorney (whether Enduring or not), and witness that power of attorney as a prescribed witness.
However, if a Licensed Conveyancer is approached regarding an Enduring Power of Attorney that is not consequential or ancillary to a conveyancing transaction, then it would appear that they could only do those things listed in s.19 of the Power of Attorney Act (ie witness the principal’s signature, explain to the principal the effect of the Power of Attorney document, and give the certificate under s.19) but could not actually draft the instrument.
Page | 18 Conveyancers Licensing Act 2003 Part 1 Section 4
4. Conveyancing Work
(1) For the purposes of this Act, conveyancing work is legal work carried out in connection with any transaction that creates, varies, transfers or extinguishes a legal or equitable interest in any real or personal property, such as (for example) any of the following transactions: (a) a sale or lease of land, (b) the sale of a business (including the sale of goodwill and stock-in-trade), whether or not a sale or lease of land or any other transaction involving land is involved, (c) the grant of a mortgage or other charge. (2) Without limiting subsection (1), conveyancing work includes: (a) legal work involved in preparing any document (such as an agreement, conveyance, transfer, lease or mortgage) that is necessary to give effect to any such transaction, and (b) legal work (such as the giving of advice or the preparation, perusal, exchange or registration of documents) that is consequential or ancillary to any such transaction, and (c) any other legal work that is prescribed by the regulations as constituting conveyancing work for the purposes of this Act. (3) However, conveyancing work does not include the carrying out of any work for the purpose of: (a) a mortgage on non-residential property where the amount secured by the mortgage exceeds 7 million dollars (with non-residential property being any property that is not residential property for the purposes of Division 8 of Part 4 of the Conveyancing Act 1919), or (b) commencing or maintaining legal proceedings, or (c) establishing a corporation or varying the memorandum or articles of association of a corporation, or (d) creating, varying or extinguishing a trust, or (e) preparing a testamentary instrument, or (f) giving investment or financial advice, or (g) investing money otherwise than as provided for by Division 2 of Part 5, and does not include any work that is prescribed by the regulations as not constituting conveyancing work for the purposes of this Act. (4) In this section: legal work means work that, if done for fee or reward by a person who is not an Australian legal practitioner, would give rise to an offence under Part 2.2 of the Legal Profession Act 2004.
Page | 19 SECTION 4: GENERAL CONDUCT OF LICENSEES
Statutory Requirements:
The Conveyancers Licensing Act 2003 (CLA) and the Conveyancers Licensing Regulation 2015 (CLR) together set out what is required of any conveyancer wishing to carry out conveyancing work. Whilst all licensees should be familiar with both pieces of legislation we have extracted below are the following sections: - Part 3 CLA (ss 26-33) – General Conduct of Licensees - Sch 3 CLR – Rules of Conduct - S35 CLA - Advertisement to include information about licensee - Division 5 (ss.36-41) – Disclosure of costs and other matters
It is strongly recommended that all conveyancers be familiarize themselves closely with these provisions.
Page | 20 Conveyancers Licensing Act 2003 Part 3 – General Conduct of Licensees 26 Sharing of receipts with unqualified persons (1) A licensee must not share the receipts of a conveyancing business with another person unless: (a) the other person is a licensee, or (b) the sharing of those receipts with that other person is approved by the Director-General and does not contravene the provisions of any regulation under this section. Maximum penalty: 200 penalty units in the case of a corporation or 100 penalty units in any other case. (2) An approval may not be given under this section unless the Director-General is satisfied that the sharing of the receipts of the conveyancing business in accordance with the approval: (a) will not result in a person other than a licensee gaining control of the business, and (b) will not adversely affect the independent conduct of the licensee’s business or give rise to a conflict between the interests of the licensee and the interests of any of the licensee’s clients. (3) This section does not prevent a party to a transaction from recovering from any other person the costs of conveyancing work carried out by a licensee who is employed by the party under a contract of service. (4) The regulations may make provision for or with respect to restricting the circumstances in which a licensee may share the receipts of a conveyancing business with another person who is not a licensee.
27 Partnerships (1) A licensee must not be in partnership with another person unless: (a) the other person is a licensee, or (b) the partnership with that other person is approved by the Director-General and does not contravene the provisions of any regulation under this section. Maximum penalty: 200 penalty units in the case of a corporation or 100 penalty units in any other case. (2) An approval for a partnership may not be given under this section unless the Director- General is satisfied that the business of the partnership concerned will include conveyancing business. (3) An approval may not be given for a partnership with a person who is the holder of a licence or certificate of registration under the Property, Stock and Business Agents Act 2002. (4) The regulations may make provision for or with respect to restricting the classes of persons (other than licensees) with whom a licensee may be in partnership. (5) The following provisions apply in respect of a partnership in which a licensee is a member:
Page | 21 (a) a partner who is not a licensee is not guilty of an offence under Part 2.2 of the Legal Profession Act 2004 merely because the partner conducts business of the partnership that is conveyancing business, (b) a partner who is not a licensee is not guilty of an offence under Part 2.2 of the Legal Profession Act 2004 merely because the partner receives any fee, gain or reward for business of the partnership that is conveyancing business, (c) a partner who is not a licensee is not guilty of an offence under Part 2.2 of the Legal Profession Act 2004 merely because the partner holds out, advertises or represents himself or herself as a member of a partnership conducting conveyancing business, (d) a partner who is a licensee does not contravene this Part merely because the partner shares with any other partner the receipts of business of the partnership that is conveyancing business, (e) Division 2 of Part 5 (Trust money), Part 7 (Claims arising from failure to account) and Part 8 (Management and receivership) apply, subject to the regulations, as if each partner who is not a licensee were a licensee. Those provisions so apply in connection with any business of the partnership (whether or not it is conveyancing business).
28 Conduct of other businesses (1) The regulations may prohibit a licensee who conducts a conveyancing business, or who is employed in the conduct of a conveyancing business, from conducting, or being employed in the conduct of, any other business or class of businesses. (2) A licensee must not conduct any business, or be employed in the conduct of any business, in contravention of the regulations under this section. Maximum penalty: 200 penalty units in the case of a corporation or 100 penalty units in any other case.
Division 3 Employees 29 Employment of disqualified persons A licensee must not, in connection with his or her conveyancing business, employ or pay a person whom the licensee knows to be a disqualified person. (1) Subsection (1) does not apply in relation to a person who is employed or paid in accordance with leave given by the Director-General. (2) If the Director-General refuses an application by a person for leave under this section, the person may apply to the Administrative Decisions Tribunal for a review of the decision. (3) Leave given under this section may be limited as to time or given subject to specified conditions. (4) A disqualified person must not seek employment or payment in connection with a licensee’s conveyancing business unless he or she has informed the licensee of the fact of his or her disqualification. Maximum penalty (subsection (5)): 50 penalty units.
Page | 22 30 Liability of licensee for acts of employees A licensee who employs a person at any place of business of the licensee is responsible, in tort and in contract, for anything done or not done by the person: (a) within the scope of the employee’s authority, or (b) for the benefit, or the purported or intended benefit, of the licensee or the licensee’s business.
31 Licensee to keep records of certain employees (1) A licensee must make and keep a record of the name and residential address of each employee that the licensee employs as a conveyancer. (2) The licensee must keep the record for at least 3 years after the person ceases to be an employee. (3) The licensee must keep the record in the form of a register of employees and that register must be kept at the place of business of the licensee at which the employee is employed or at such other place as the Director- General may approve. Maximum penalty: 50 penalty units.
32 Duty of licensee to notify disqualification of employee A licensee must notify the Director-General in writing within 7 days after becoming aware that a person employed by the licensee has become a disqualified person. Maximum penalty: 50 penalty units.
33 Employees required to notify disqualification A person employed by a licensee must notify the licensee within 7 days after the person becomes a disqualified person. Maximum penalty: 50 penalty units.
Page | 23 RULES OF CONDUCT
Schedule 3 Conveyancers Licensing Regulation 2006 (Clause 8)
1. Knowledge of Act and this Regulation A licensee must have a knowledge and understanding of the Act and this Regulation, and such other laws as may be necessary to enable the licensee to exercise his or her functions as a conveyancer lawfully. 2. Honesty, fairness and professionalism A licensee must act honestly, fairly and professionally with all parties in a transaction. A licensee must not misinform or otherwise mislead or deceive any parties in negotiations or a transaction. 3. Skill, care and diligence A licensee must exercise reasonable skill, care and diligence. 4. Fiduciary obligations A licensee must comply with the fiduciary obligations arising from the licensee’s activities as a conveyancer. 5. To undertake only work within competence A licensee must not accept instructions to act as a conveyancer unless the licensee is competent to perform the conveyancing work concerned. 6. To perform work promptly A licensee must only accept instructions to act as a conveyancer if he or she reasonably expects to be able to carry out the conveyancing work concerned reasonably promptly. 7. To act in client’s best interests A licensee must act in the client’s best interest at all times unless it would be contrary to the Act or this Regulation or otherwise unlawful to do so. 8. To communicate regularly with client A licensee must communicate regularly with a client to ensure that the client is kept up to date with the progress of the client’s matter. 9. To act in accordance with client’s instructions A licensee must act in accordance with a client’s instructions unless it would be contrary to the Act or this Regulation or otherwise unlawful to do so. 10. To confirm client’s oral instructions in writing A licensee must ensure that oral instructions (other than those of a trivial nature) received from a client are confirmed with the client in writing as soon as possible after they are received. 11. Conflicts of interest A licensee must not accept instructions to act, or continue to act, as a conveyancer for a
Page | 24 client if doing so would place the licensee’s interests in conflict with the client’s interests. 12. Acting for more than one party to a transaction (a) A licensee may only act for more than one party to a transaction if the licensee discloses in writing to each party that the licensee is intending to act for the others, and each party consents in writing to the licensee so acting. (b) If a licensee who is acting for more than one party cannot continue to act for all of the parties without acting in a manner contrary to the interests of one or more of them, the licensee must cease to act for all of the parties. (c) The disclosure referred to in subclause (1) must indicate that, as a consequence of acting for more than one party to the transaction: (i) the licensee may be prevented from: (ii) disclosing to each party all information within the licensee’s knowledge that is relevant to the transaction, and (iii) giving advice to one party that is contrary to the interests of the other, and (d) the licensee will cease to act for all parties if the licensee would, otherwise, be obliged to act in a manner contrary to the interests of one or more of them. 13. Confidentiality A licensee must not, at any time, use or disclose any confidential information obtained while acting on behalf of a client unless: (a) the client authorises disclosure, or (b) the licensee is permitted or compelled by law to disclose the information. 14. Noting of instructions, enquiries and telephone conversations (a) A licensee must make a written record of the following communications (other than those of a trivial nature): (i) all instructions received from the licensee’s clients and advice given, (ii) all telephone conversations made or received in connection with conveyancing work, (iii) all enquiries made in connection with conveyancing work and responses given. (b) The record must be in the form of a file note and be kept on the file of the client to whom the conveyancing work relates. (c) The record must be retained for at least six years after it is made. (d) A record required to be kept under this rule may be maintained in electronic form, provided it can be produced in a permanent legible form in the English language. 15. Referral to service provider (a) A licensee who refers a client or prospective client to a service provider must not falsely represent to the client or prospective client that the service provider is independent of the licensee. (b) A service provider is considered to be independent of a licensee if: (i) the licensee receives no rebate, discount, commission or benefit for referring a client or customer to the service provider, and
Page | 25 (ii) the licensee does not have a personal or commercial relationship with the service provider. (c) The following are examples of a personal or commercial relationship: (i) a family relationship, (ii) a business relationship, (iii) a fiduciary relationship, (iv) a relationship in which one person is accustomed, or obliged, to act in accordance with the directions, instructions or wishes of the other person. (d) If the service provider is not independent of the licensee, the licensee must disclose to the client or prospective client: (i) the nature of any relationship, whether personal or commercial, the licensee has with the service provider, and (ii) the nature and value of any rebate, discount, commission or benefit the licensee may receive, or expects to receive, by referring the client or prospective client to the service provider. (e) In this rule: (f) service provider means a person who provides a service in relation to a conveyancing transaction (for example, a building inspector, pest inspector, valuer, surveyor, insurer, mortgage originator, mortgage broker or another licensee). 16. Inducements A licensee must not offer to provide to any other person any gift, favour or benefit, whether monetary or otherwise, in order to induce any third person to engage the services of the licensee as conveyancer in respect of any matter. 17. Soliciting through false or misleading advertisements or communications (a) A licensee must not solicit clients or customers through advertisements or other communications that the licensee knows or should know are false or misleading. (b) A licensee must not include any matter (including any statement, slogan or logo) on stationery or business cards used in connection with conveyancing work that the licensee knows or should know is false or misleading. 18. Termination of licensee’s services A licensee must complete the conveyancing work in respect of which the licensee has accepted instructions to act for a client unless: (a) the licensee and the client have otherwise agreed, or (b) the client terminates the services of the licensee, or (c) the licensee terminates the provision of services to the client by giving 14 days written notice to the client. 19. Transfer of conveyancing work If: (a) a licensee ceases to act for a client before completing the conveyancing work in respect of which the licensee has accepted instructions to act for a client, and
Page | 26 (b) the client instructs another licensee or a solicitor to take over the conduct of the client’s conveyancing work, the first-mentioned licensee must, within 14 days after receipt of a direction in writing from the client, deliver to the second-mentioned licensee or the solicitor all relevant documents to which the client is entitled and any information that is necessary for the proper conduct of the client’s conveyancing work. 20. Transfer of conveyancing business (a) If a licensee intends to transfer the whole or part of the licensee’s conveyancing business (including clients’ work in progress) to another licensee or a solicitor, the first-mentioned licensee must give each client 14 days written notice of the following: (i) the intended transfer of documents to the licensee or solicitor acquiring the business, unless a contrary direction is received from the client, (ii) the client’s right to give to the first-mentioned licensee a contrary direction in relation to the conduct of the client’s affairs and the delivery of the client’s documents. (b) If the licensee holds money on behalf of the client in trust, the notice referred to in subclause (1) must also advise the client of the following: (i) the balance of money held on the client’s behalf, (ii) the licensee’s intention to transfer the relevant account to the licensee or solicitor acquiring the business, unless advised by the client to the contrary, (iii) the client’s right to give to the first-mentioned licensee a contrary direction as to the manner in which the licensee should deal with the account on the client’s behalf. (c) Nothing in this rule limits the operation of any other legislative provisions applicable to the trust money held by the licensee. 21. Conducting another business (a) A licensee who engages in the conduct of another business concurrently with the conduct of the licensee’s conveyancing business must ensure the following: (i) that the other business is not of such a nature that the licensee’s involvement in it would be likely to impair, or conflict with, the licensee’s duties to clients in the conduct of the conveyancing business, (ii) that separate and independent files, records and accounts are maintained in respect of the conveyancing business and of the other business, (iii) that the licensee ceases to act for a client of the conveyancing business if the licensee’s interest in the other business is likely to conflict with the client’s interests. (b) A licensee is taken to be engaged in the conduct of another business if the licensee, or an associate: (i) is entitled, at law or in equity, to an interest in the assets of the business which is significant or of relatively substantial value, or (ii) exercises any material control over the conduct and operation of the business, or (iii) has an entitlement to a share of the income of the business which is substantial,
Page | 27 having regard to the total income which is derived from the business. 22. Independence of licensee advising on loan or security documents (a) A licensee must provide competent, independent and disinterested advice in advising a proposed signatory to documents creating a loan or a security interest (loan or security documents). (b) The licensee must not act for the lender in the transaction to which the loan or security documents relate. (c) The licensee must not advise a proposed signatory to loan or security documents in any circumstances where the interests of any signatory or proposed signatory to the documents conflict with those of the licensee or with those of any other client of the licensee. 23. Advising proposed signatories on loan or security documents (a) A licensee must advise a proposed signatory to documents creating a loan or security interest (loan or security documents) of those matters that the licensee, in exercising the professional skill and judgment called for in the circumstances of the particular case, considers appropriate. (b) Without limiting the generality of subclause (1), when advising a proposed signatory who is to be a borrower or a security provider referred to as a borrower in loan or security documents (the borrower), the licensee must, where applicable, advise the borrower of the following: (i) that by signing the documents the borrower will be liable for regular payments of interest and repayment of the amount of the loan at the due date, (ii) that if the borrower fails to make any payment on time, the lender can charge a higher rate of interest, and the lender’s costs of rectifying that failure, (iii) that if the borrower fails to comply with any of the terms and conditions of the loan including the obligations to pay principal or interest: (1) the lender can sue the borrower personally, and (2) the lender may take possession of the borrower’s property and, after notice, sell it to recover the amount owing together with interest and other costs including conveyancer’s costs, the costs of selling the property and the costs of maintaining the property, and (3) if the proceeds of sale of the borrower’s property are insufficient to satisfy the debt to the lender, the lender can sue the borrower for the deficit, (iv) that if the National Credit Code applies, additional obligations, rights and remedies may apply as set out in the loan documents. (c) A licensee giving independent advice to a proposed borrower must obtain the borrower’s written acknowledgment of the independent advice. (d) Without limiting the generality of subclause (1), when advising a proposed signatory who is to be a third party mortgagor, guarantor, surety mortgagor or indemnifier providing security for the borrower (the guarantor), the licensee must, where applicable, advise the guarantor of the following: (i) that if the borrower fails to make any payment on time, the guarantor will be liable to remedy that failure, and that could involve the guarantor in payment to the
Page | 28 lender of all amounts owed by the borrower to the lender including principal, interest, default interest and the lender’s costs of rectifying the default, (ii) that if the guarantor fails to remedy any failure by the borrower to comply with the terms and conditions of the loan in any way, including the obligation to pay principal, interest, default interest, or other charges: (1) the lender can sue the guarantor personally, and (2) the lender can take possession of the guarantor’s property secured to the lender and, after notice, sell it to recover the amount owing together with interest and other costs including conveyancer’s costs, the costs of selling the property and the costs of maintaining the property, and (3) if the proceeds of sale of the guarantor’s property are insufficient to satisfy the debt to the lender, the lender can sue the guarantor for the deficit, (iii) if the guarantor is a proposed signatory to documents under which the guarantor’s liability can be increased, of that fact and the extent of the possible increase, and of any restriction or limitation of the guarantor’s rights or obligations in relation to the security and any other party to the documents, (iv) that the lender can exercise the lender’s rights against the guarantor even if the lender has not pursued the borrower, (v) that the liability of the guarantor is limited to a specified sum, or is unlimited (whichever is the case) and may be affected by cross guarantees, (vi) that if the National Credit Code applies, additional obligations, rights and remedies may apply as set out in the loan documents. (e) A licensee giving independent advice to a proposed guarantor must obtain the guarantor’s written acknowledgment of the independent advice. (f) In any case, a licensee advising a proposed signatory (whether a proposed borrower or a proposed guarantor) must advise the proposed signatory of the following: (i) that the licensee does not profess any qualification to give financial advice, (ii) that if the proposed signatory has any questions about any financial aspect of the transaction or the loan or security documents, the proposed signatory should consult an accountant or other financial counsellor of the proposed signatory’s choice before signing the documents. (g) In this clause: National Credit Code means the National Credit Code as set out in Schedule 1 to the National Consumer Credit Protection Act 2009 of the Commonwealth.
Page | 29 Division 4 Advertisements and representations
35 Advertisement to include information about licensee A licensee must not publish or cause to be published (in a newspaper or otherwise) an advertisement relating to or in connection with the licensee’s business unless the advertisement includes the following:
(a) if the licensee is an individual carrying on business in the licensee's own name and is not a member of a partnership--the licensee's name, (b) if the licensee is an individual carrying on business under a business name registered under any Act relating to the registration of business names--either the licensee's name or that business name, (c) if the licensee carries on business as a member of a partnership--either the licensee's name or the name of the partnership, or the name under which the partnership is registered under any Act relating to the registration of business names, (d) if the licensee is a corporation and the corporation is carrying on business in its own name--the name of the corporation, (e) if the licensee is a corporation and the corporation is carrying on business under a business name registered under any Act relating to the registration of business names- - either its own name or that business name, (f) the number of the licence.
Division 5 Disclosure of costs and other matters 36 Obligation to disclose costs and other matters to clients (1) A licensee must disclose to a client in accordance with this Division the basis of the costs for conveyancing work to be carried out for the client by the licensee and any conflict or beneficial interest of a kind required to be disclosed by the regulations. Maximum penalty: 200 penalty units in the case of a corporation or 100 penalty units in any other case. (2) The following matters are to be disclosed to the client: (a) the amount of the costs, if known, (b) if the amount of the costs is not known, the basis of calculating the costs, (c) the billing arrangements, (d) the client’s rights under Part 4 in relation to the hearing of disputes about the fees by the Tribunal, (e) any conflict or beneficial interest of a kind required to be disclosed by the regulations, (f) any other matter required to be disclosed by the regulations.
Page | 30 37 When disclosure to be made (1) A disclosure under this Division is to be made before or when the licensee is retained to carry out the conveyancing work concerned, unless this section otherwise provides. (2) If it is not reasonably practicable to make the disclosure before or when the licensee is retained, the disclosure is to be made as soon as practicable after the licensee is so retained.
38 Disclosure to be in writing (1) A disclosure under this Division must be made in writing and be expressed in clear plain language. (2) The disclosure may be made separately or in a costs agreement or in any other contract relating to the carrying out by the licensee of the conveyancing work concerned.
41 Effect of non-disclosure of matters related to basis of costs (1) If a licensee fails to make a disclosure to a client in accordance with this Division of the matters required to be disclosed by section 36 in relation to costs, the client need not pay the costs of the conveyancing work. (2) A licensee who fails to make a disclosure in accordance with this Division of the matters required to be disclosed by section 36 in relation to costs may not maintain proceedings for the recovery of the costs.
Goods and services tax (GST) – fees & disbursements
All costs disclosed should state whether they are on a GST inclusive or exclusive basis and it should be described clearly so that there can be no confusion as to on what basis the costs are calculated. It is advisable to disclose what the total GST component is when disclosing costs on a GST exclusive basis.
GST is payable on all fees charged by a licensed conveyancer.
GST is payable on disbursements unless the licensed conveyancer is paying for that disbursement as an agent for the client. The licensed conveyancer is an agent when the disbursement is paid on behalf of the client and the goods or services are supplied to the client and not the licensed conveyancer. It is suggested that the tax invoice should be addressed to the client so that it is made clear that payment by the conveyancer is made as an agent for the client.
If the goods or services are supplied to the licensed conveyancer in order to provide a service to the client then GST is payable by the client, this is applicable whether the goods and or services are itemised separately on the conveyancers account or included in the overall fee. An example of this is the purchase of a sewer diagram or S.149 zoning certificate in order to prepare a contract for sale of land. As the certificates are purchased in order to provide a service to the client GST is payable on those certificates. This applies even though the actual purchase from the Council or Water authority may not have had a GST charge applied when purchased by the conveyancer.
Page | 31 If the licensee’s account sets out a separate charge for such things as Sundries, postage faxes etc. GST is payable on those charges.
It is essential that all GST is charged, when applicable, as any tax audit will require any unpaid GST to be paid and the payment is the liability of the business proprietor, the client cannot be billed separately for GST that has not been collected. e.g. if GST has not been charged for S.149 certificates then a tax audit can require that GST be paid by the business proprietor on all those certificates where GST was not collected.
The following is an extract from GST Ruling 2000/37 in regard to Principal and Agency relationships that determine whether GST is payable or not on disbursements.
GST Ruling 2000/37 Agency relationship and disbursements
48. Agents may incur expenses on a client matter both as an agent of the client and as a principal in the ordinary course of providing their services to the client. For example, in most cases, even though agreements between solicitors and clients may not use the term agent or agency, it is clear that the clients have authorised the solicitors to act on their behalf in the particular matter. When the solicitor acts as an agent for the client, the general law of agency applies so that the solicitor is 'standing in the shoes' of the client.
49. If a disbursement is made by a solicitor and incurred in the solicitor's capacity as a paying agent for a particular client, then no GST is payable by the solicitor on the subsequent reimbursement by the client. This is because the goods or services to which the disbursement relates are supplied to the client, not to the solicitor, by a third party. Also, the reimbursement forms no part of the consideration payable by the client for the supply of services by the solicitor. However, if goods or services are supplied to the solicitor to enable the solicitor to perform services supplied to the client, GST is payable by the solicitor on any reimbursement by the client of expenses incurred on those goods or services, whether the reimbursement is separately itemised or included as part of the solicitor's overall fee. This is because the reimbursement is part of the consideration payable by the client for services supplied by the solicitor.
50. The following are examples of common fees and charges, for which a client is liable, that may be paid for by a solicitor as a paying agent of the client. If the solicitor makes the payment, GST is not payable on the subsequent reimbursement by the client to the solicitor for:
* application fees; * registration fees; * court fees; * barrister's fees when the barrister is engaged by the client; * incorporation fees; * most fees in connection with registering and maintaining the status of particular legal relationships such as companies, partnerships, societies or associations; * fines, penalties, stamp duty and taxes; and * probate fees.
Page | 32 51. The following are examples of common disbursements that, depending upon the contractual arrangements between the client and the solicitor, can be incurred by a solicitor and then reimbursed by a client as part of the consideration payable for legal services provided to the client by the solicitor. If the following disbursements are incurred by a solicitor, GST is payable on the subsequent reimbursement by the client to the solicitor:
* search fees; * municipal search fee (eg rates; zoning; permits); * birth/death/marriage certificate fees; * barrister's fees when the barrister is engaged by the solicitor; * witness fees; * fees for recording court proceedings; * service of document fees; * fees for expert report or attendance in court; and * fees to obtain court transcript.
52. The above GST treatment of disbursements is consistent with the income tax treatment of disbursements as explained in Taxation Ruling TR 97/6.
53. The following are examples of costs that a solicitor may incur in carrying on the business of providing a legal service to the client. GST is payable on any subsequent payment by the client to the solicitor for the supply of the legal service for:
* telephone expenses; * postage expenses; * photocopying expenses; * courier expenses; * word processing expenses; and * travel expenses of the solicitor and staff.
Example 10
54. A law firm acting for a client charges the client for costs incurred in providing a legal service and receives a fee for its professional services. The firm acts as a paying agent for the client with respect to the outgoings which the client is legally obliged to pay (such as the payment of land taxes and court costs) for supplies made to it. However, an agency relationship generally does not apply to those circumstances where the law firm provides a legal service for a client, pays for taxable supplies on its own behalf and then charges the client for those expenses (such as photocopying and telephone calls).
Page | 33 FILE MANAGEMENT TIPS
These tips are suggestions only and while recommended as good risk management procedures they do not necessarily form part of the risk management assessment.
□ Use checklists so that anyone looking at the file can see immediately what tasks have been completed and what needs to happen next. This way a routine step cannot be overlooked.
□ Identification of every client is now mandatory for all conveyancing transactions and copies of identifying documents should be kept in a safe place. Identity fraud is an ever-increasing problem and the storage of your client’s identity documents should not be taken lightly.
□ Always use a formal instruction sheet when taking instructions and ensure that it is completed in full. Review your instruction sheets from time to time to ensure that they cover any recent changes in legislation.
□ Always check with vendor clients that the sale proceeds will comfortably cover all debts and expenses including any loan to be paid out, the agent’s commission, outstanding rates and taxes, not to mention your own fees. This will prevent the possibility of mortgagees refusing to settle when sale proceeds do not meet the client’s indebtedness.
□ Make sure a costs agreement is given to the client before the transaction proceeds or immediately instructions are received. Failure to do so may mean that you don’t get paid.
□ Make sure all expenses are advised to the client before you proceed to act. If some expenses are not known at the commencements of the matter, advise estimates or how they will be calculated. This will help prevent misunderstandings and problems arising later regarding payment of your account.
□ GST implications associated with the conveyancing transaction should be discussed, where applicable, before preparing or entering into a contract and ensure that the contract reflects the true position as your client understands it to be.
□ Confirm all inclusions and exclusions listed in the contract with the client – be specific
□ If you are advised there is no mortgage on title, ask your client to bring in the certificate of title for your inspection before you proceed further so that you know the client has the original. An application for a replacement is a complicated and costly procedure.
□ Make sure the client understands the terminology to be used during the transaction, (eg: exchange, settlement, vacant possession, bank cheque) – do not assume the client understands what may seem like simple terminology and phrases.
□ Confirm everything in writing as the matter progresses, this way the client is kept informed and there is evidence if something happens at a later date and the client denies/forgets receiving your advises.
□ Use emails where appropriate and copy in the client or the agent or other, as the case may be, so that everyone is informed of what is being said, what the replies are and how the transaction is proceeding.
□ Ask the addressee for acknowledgement of receipt of emails □ Unless your office system allows for electronic filing a hard copy of all emails should be kept on the file.
□ Email is becoming popular and is a convenient and fast method of communication. Be careful you do not breach copyright, especially when attaching documents e.g. the contract for sale of land
□ Make sure all outgoing emails carry a disclaimer
□ Update title searches immediately after exchange and preferably just before exchange – this will alert you to anything registered after the date of the search shown on the contract. It will make it easier to sort out problems if they come to light well before the settlement day.
□ Checking settlement figures with the client before settlement will prevent any confusion or concerns after settlement proceeds have been disbursed or received.
□ If the deposit is paid by way of a deposit guarantee clearly mark the outside of the file – both sale and purchase files – so that you know the full price must be paid at settlement and adjustments made for agents’ commissions etc.
□ Make sure the client knows what is expected of them during the transaction and make sure they know what you will be doing and when.
□ When the documents are lodged for registration by a mortgagee order a title search 6 – 8 weeks after settlement. If the transfer etc has not been lodged advise your client so they can follow up with their lender. If it has been registered provide the client with a copy showing their names as the proprietors. This is a good PR exercise and also a good risk management exercise if there is a problem with registration of documents.
□ Respond to enquiries, telephone messages, correspondence, complaints etc immediately
□ The majority of complaints received about conveyancers relates to either lack of communication or poor communication. A lot of claims on our PI insurance could have been avoided with better communication between conveyancer and client.
□ Have a register for recording office absentees
□ Date stamp all incoming mail
A GUIDANCE MANUAL FOR LICENSED PROPERTY CONVEYANCERS Version 2 Edition 1
S L D EA G O L
R S I E
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S K C I V MA ER N A S E G M E N T
CONTENTS INTRODUCTION TO SEARCH ...... 4 LICENCE TERMS AND CONDITIONS ...... 5 ACKNOWLEDGEMENTS ...... 6 PURPOSES OF THE GUIDANCE MANUAL ...... 7 HOW TO USE THE GUIDANCE MANUAL ...... 8
1 GENERAL CONVEYANCING PROCEDURES 9
1.1 SURVIVAL TECHNIQUES ...... 9 1.1.1 Take File Notes ...... 9 1.1.2 Keep The Client Informed ...... 9 1.1.3 Errors And Omissions Circumstances ...... 9
2 GUIDANCE IN ACTION - IN THE OFFICE 10
2.1 Absences ...... 11 2.2 Correspondence ...... 11 2.2.1 Incoming 11 2.2.2 Distribution System ...... 11 2.2.3 Outgoing 11 2.3 Facsimiles ...... 11 2.3.1 Receiving 11 2.3.2 Sending 12 2.4 E-Mail 12 2.5 Telephone Calls ...... 13 2.6 Telephone Messages ...... 13 2.7 Client Identification ...... 13
3 GUIDANCE IN ACTION - IN YOUR CLIENTS' FILES 14
3.1 File Maintenance ...... 15 3.1.1 Client Data ...... 15 3.1.2 Filing System ...... 15 3.1.3 Computer System ...... 15
4 GUIDANCE IN ACTION - ACTING FOR THE VENDOR 16
4.1 Contract Issue ...... 16 4.2 Pre-Exchange ...... 16 4.3 Contracts Exchanged By The Real Estate Agent With A Cooling Off Period .17 4.4 Following Exchange Of Contracts ...... 17 4.5 Mid-Transaction ...... 17 4.6 Pre-Settlement ...... 18 4.7 For Settlement ...... 18 4.8 Following Settlement ...... 18
5 GUIDANCE IN ACTION - ACTING FOR THE PURCHASER 19
5.1 Pre-Exchange ...... 19 5.2 Contracts Exchanged By The Real Estate Agent With A Cooling Off Period . .19 5.3 Following Exchange and/or Cooling Off Period ...... 20 5.4 Pre-Settlement ...... 21 5.5 For Settlement ...... 21 5.6 Following Settlement ...... 22
6 ARCHIVING OF FILES AND DOCUMENTS 24
7 IS IT IN WRITING? 25
7.1 Write 25 7.2 Read 25 7.3 Respond ...... 25
8 CONVEYANCERS LICENCING ACT AND REGULATIONS 26
9 THE USE OF PRECEDENTS 27
10 SPONSOR'S STATEMENT 28
INDEX 29
NOTES 31
APPENDIX A 32
APPENDIX B 33
INTRODUCTION TO
To ensure the highest possible standards, Members of the Australian Institute of Conveyancers - New South Wales Division Limited are bound by a Code Of Conduct. They are required each year to undertake five hours Continuing Professional Development (CPD) as required under the New South Wales Conveyancers Licensing Act. The introduction of a guidance system of management is an extension of this and other quality related issues. As the name implies this Guidance Manual is designed to assist conveyancers in their daily activities. Although some of the processes are identical whether acting for the Vendor or the Purchaser, the Guidance Manual contains separate sections for each of these functions.
The achievement of high quality standards is a continuous process, an on-going journey with no fixed point of arrival.
4 LICENCE TERMS AND CONDITIONS Licence - In exchange for payment of your Professional Indemnity insurance premium, Gold Seal Risk Management Pty Limited ABN 72 100 972 294 grants you a non-exclusive, non- transferable right to use the Search Guidance Manual for Licensed Property Conveyancers ("Search"). You may use, adapt (and reproduce) Search in connection with the internal management and administration of your business activities and in the course of providing conveyancing services to your clients. Unless authorised in writing by Gold Seal, you may not reproduce any part of the Search for sale or incorporation in any product or service intended for sale or supply to third parties. You are not entitled to copy, modify, adapt, translate, reverse engineer, decompile, disassemble or create derivative works based on Search (except to load in your computer or net- work for use pursuant to this Licence) By opening and using Search you accept these Licence Terms and Conditions. You agree and acknowledge that all intellectual property rights of any type in Search are owned by Gold Seal I.P. Pty Limited ABN 80 105 158 790; and distributed by Gold Seal Risk Management Services Pty Limited pursuant to a licence from Gold Seal I.P. Pty Limited. Disclaimer - The Search Guidance Manual is only a guide, not a blueprint. Its purpose is to prompt and assist licensed conveyancers to develop their own procedures and quality standards. Nothing in Search should be taken to mean or imply that any particular procedure or quality standard is satisfactory or appropriate (or unsatisfactory or inappropriate). No person should rely upon Search in lieu of obtaining professional advice on his or her own situation or on any particular procedure or standard. The authors, editors and publishers make no representation, and give no warranty, express or implied, as to the accuracy or completeness of Search or any part of it. Limitation of Liability - Except as provided below, all express and implied conditions, warranties and liabilities (including liability for negligence) regarding the condition, completeness, accuracy, suitability, quality or title to the Search Guidance Manual are negated and excluded. You acknowledge and agree that we are under no liability to you or any third party in respect of any loss or damage, including consequential loss or damage, however caused, whether by negligence or otherwise which may be suffered or arise as a result of your use of Search. Nothing in these terms excludes, restricts or modifies any condition, warranty, right or remedy which is conferred on you by the Trade Practices Act 1974 or any other consumer legislation as amended (the Acts). If we breach any condition or warranty that has been implied by the Acts, our liability for that breach will be limited to our choice of: • In the case of supply of goods the replacement of the goods or the supply of equivalent goods, the repair of goods, the payment of the cost of replacing the goods, or the payment of the cost of having the goods repaired; and • In the case of the provision of services, the re-supply of the services, or the payment of the cost of having the services re-supplied.
Law -This Licence and Terms and Conditions are governed by New South Wales Law.
5
ACKNOWLEDGEMENTS We would also like to acknowledge and thank: Salisbury Payne Tinslay Pty Ltd, insurance brokers to the Institute's professional indemnity facility. Colin Turnell of Endeavour Conveyancing Services for the time he has devoted to helping the author in developing his knowledge of conveyancing procedures and in proof reading the first version of this manual. With respect to this second edition we thank Alan West Chief Executive Officer of the Australian Institute of Conveyancers NSW Division and the sub-committee of the Division for their efforts in drafting the changes to this edition. These acknowledgements are by no means exhaustive and we would like to express special thanks to all those organisations and people who gave their time and effort so unstintingly to the compilation of this Guide.
6 PURPOSES OF THE GUIDANCE MANUAL • To assist conveyancers with a risk management tool, the use of which will help to reduce the number of possible professional indemnity claims.
• To introduce a continuous and measurable improvement system to our business.
• To help Members provide top quality professional advice and service to clients.
• To assist in the identification and improvement of Member Firms' internal company procedures, systems and corporate policies.
• To assist in the provision of a system of minimum standards maintenance and compli- ance.
• To provide a structured framework for on-job-training in a helpful, constructive way enabling maximum return for dollars spent on training and Continuous Professional Development (CPD).
This MANUAL is part of our profession's commitment to the self-regulatory process and presents a significant opportunity for Member Firms to review and up-date their systems.
7 HOW TO USE THE GUIDANCE MANUAL It is recommended each Member firm appoint a person to assume responsibility for the implementation of procedures and their on-going maintenance. The Institute will attempt to provide notification of important legislative changes which will affect conveyancing procedures. However, it is intended that this Manual be periodically reviewed and revised editions published.
Where a particular procedure needs to be defined or varied to suit local circumstances, the recommendation is highlighted in black with white relief type and an exclamation mark as illustrated here.
8 1 GENERAL CONVEYANCING PROCEDURES Throughout this Guidance Manual we have high-lighted certain 'Tips' and 'Traps'. These risk management Survival Techniques are brief reminders with each aspect being expanded in the Sections which follow. Take the time to keep up with legislative changes and industry developments. Encourage staff and colleagues to obtain appropriate qualifications. 1.1 SURVIVAL TECHNIQUES 1.1.1 Take File Notes Record all telephone calls and take file notes that are timed, dated and summarise the dis- cussion. Where relevant, confirm the telephone call/instruction/confirmation back to the client IN WRITING. 1.1.2 Keep The Client Informed At all times ensure the client knows what is happening. 1.1.3 Errors And Omissions Circumstances If you think something has occurred or been done which could lead to a claim arising then do something. It won't go away and the quicker it is dealt with the better. Report all poten- tial situations to your insurance brokers or P.I. insurer and seek legal advice if in doubt.
9 2 GUIDANCE IN ACTION - IN THE OFFICE In this Section of the Manual we take a brief look at office procedures, but obviously, the many aspects of internal management and discipline need to be established by each firm. 2.1 Absences
(a) A system for the recording of absences from the office needs to be established.
(b) Knowing the whereabouts of the team helps everyone, but especially your clients. Ensure even temporary absences are recorded (so someone knows where you are) - who knows what emergencies may arise? (c) In addition, you have an obligation to keep staff records of annual leave, sick leave and so on. 2.2 Correspondence 2.2.1 Incoming (a) All incoming mail should be time and date stamped. This includes correspondence, faxes, telexes, hand or courier deliveries and any communication provided to employ- ees when visiting clients. (b) The correspondence should be sorted, distributed and attended to within 24 hours of receipt (or sooner if urgent) and a response issued within 48 hours. 2.2.2 Distribution System
As instructions would vary from office to office Members should document their own requirements.
2.2.3 Outgoing (a) All communications should leave the office on the day prepared.
(b) Each Member office needs to define and document their own requirements.
2.3 Facsimiles In many offices the use of facsimile transmissions has almost replaced the sending of letters through the mail and unless we put proper procedures around their receipt and sending, we could leave ourselves exposed to all sorts of problems. It would be wise to seek external advice regarding the wording of confidentiality and disclaimer clauses used as headers or footers. 2.3.1 Receiving Because facsimiles on sensitive paper fade rapidly, especially if exposed to light, all incoming faxes should be photocopied upon receipt. If receiving on a plain paper facsimile machine it is suggested a coloured paper is used. This assists in distinguishing facsimiles from other papers.
10 2.3.2 Sending (a) A transmission record slip should be retained with all outgoing faxes. (b) Where an important matter is being conveyed to a client or another party ensure the facsimile is also posted through the mail.
(c) In order to differentiate between ordinary faxes and those conveying important information it is suggested an internal procedure be estab- lished. For example, the fax may be prepared as a letter and indicated with the words, 'and via facsimile transmission (insert fax number).
If using a fax to transmit important information ensure you request the addressee stamp, sign and return in case you ever need to prove receipt.
2.4 E-Mail (a) Electronic communication has grown rapidly and people tend to think that once they have sent an e-mail the recipient has seen it. This is obviously not the case. It is necessary to check mail at least six times per day. (b) If the document attached is subject to copyright or publication restrictions the owners' approval should be obtained prior to passing it on to third parties (c) Ensure you have robust firewall and virus protection installed on IT systems. Your system maintenance advisors should be able to best advise you for your particular circumstances. Ensure the programmes are up-dated on a regular basis with up-dates being down-loaded via the internet. Staff should be warned to watch for any attachment with e-mail from unsolicited or unknown sources. Suspicious attachments should not be opened without checking the source or running virus protection. (d) There is a need to be careful about what is transmitted as electronic messages and attached documents are discoverable documents. No defamatory, libellous or rude language should be used nor any comment that if scrutinised by any person or a court of law could be actionable or implicate the Member in any litigation. Staff should be advised that disciplinary action, including dismissal could result from a breach of this guideline. (e) Where the system is networked a system of passwords will be necessary. Staff should not send an e-mail from other than their own PC. (f) E-mail messages must always identify the sender. CAPITAL LETTERS should not be used other than for headings or emphasis. (g) Incoming, outgoing and sent e-mails should be kept live for at least 90 days prior to being archived. Unwanted messages should be deleted carefully and frequently. (h) Some software provides for a 'Return Receipt' utility under Delivery Options and evidence retained on the relevant file. (i) Unless the office system provides full electronic filing and archiving a hard copy of all incoming messages should be made, the request actioned and then filed on the relevant file. (j) Never send any confidential information to parties other than the intended recipient
11 and do not breach copyright.
12 (k) It is recommended that all outgoing e-mails carry a disclaimer along the following lines: Employee name and company details e-mail address: ############ The information contained in this message and attachment(s) is intended for the exclusive use of the intended addressee(s). If you receive this email by error, you are not authorised to read, reproduce, use, disclose or disseminate this information. While any attachments have been checked for viruses, you should relay on your own virus checking programmes. To assist us in contacting you, we have stored your name and email address and any other contact information you have provided to us in our contact databases. Click HERE if you wish to tell us if your contact details change, you wish to be removed from our database or if you do not want us to communicate with you by email. (l) It is suggested that Members also use a pale colour-coded paper for e-mail printouts as the paper will stand out better on desks and in files. 2.5 Telephone Calls (a) The Institute recommends the use of a Telephone Log Book, or duplicate message pad.
It cannot be overstated how important it is to record a brief summary of every incoming and outgoing telephone call and to RETAIN the hand-written file notes which are taken during the course of a conversation.
(b) Ban scrappy pieces of paper. Always use a system which is quick, efficient and pro- vides easy follow-up in order to mark off when the instruction or task is completed.
(c) It is highly recommended each Member prepare an in-house standing instruction to ensure a Log Book is maintained, file notes are properly taken and kept.
2.6 Telephone Messages
A proper system for the recording and distribution of telephone messages needs to be in place.
(a) All telephone messages should be timed and dated. (b) The caller's name and return telephone number should always be obtained. (c) If it is not possible to return all messages soon after received, ensure a responsible person rings back to check the urgency or offer assistance if required. 2.7 Client Identification (a) All clients should be identified, unless they are personally known to the member. (b) Identification should be made preferably by photo ID (drivers licence) and one other form of identification. (c) Extra care should be taken when a vendor is selling and there is no mortgage to discharge. (d) Extra care should be taken when residential property is being mortgaged to finance a business loan. Make sure the spouse not involved in the business is identified and is aware of the consequences of the mortgage.
13 (e) Keep a record of all identification documents, a photocopy of the identification kept on the file is preferable.
14 minimum procedures we need to consider and observe. Despite technology this is still a paper business and even the 'on-line' system documentation needs to be carefully considered. Obviously, it is not practical in this Guidance Manual to look at every permuta- tion but do remember the need for written confirmations. 3.1 File Maintenance
REMEMBER!! CLEAN FILES CLEAN DESKS 3.1.1 Client Data
(a) Each Member needs to establish a filing system common to all their operations. This way staff can fill-in, go on holidays and everyone knows where to look to find client data.
(b) File papers every day; keep up-to-date and tidy. Besides reflecting a professional approach, this discipline is good management practice. Looking for missing paper-work is also the most time-wasting and tedious of tasks.
Your files could be called into court or subpoenaed at any time. 3.1.2 Filing System When establishing a filing system the following requirements should be considered: (a) Separate files - A separate file should be maintained for every client and for every transaction. (b) Order of papers - Papers and documents should be filed in chronological order and securely clipped in the file. (c) Colour Coding - Different coloured files should be used for Vendor transactions and Purchaser transactions. 3.1.3 Computer System Ensure that the client details are entered in your client data base.
15 4 GUIDANCE IN ACTION - ACTING FOR THE VENDOR In this section of the Manual we look at the processes involved from the initial client con- tact through to the actions required after the settlement has been completed. 4.1 Contract Issue This stage of the process commences with the initial contact from the client and is conclud- ed when the contract document has been prepared and forwarded to the real estate agent. (a) The first contact from the client is usually by telephone. All initial instructions should be taken and recorded on an instruction sheet. (b) It is preferable to have an appointment with the client wherever possible. An instruc- tion sheet should be prepared and used in every instance. In this way all information is captured in a manner that all staff can follow. (c) Within 48 hours a confirming letter should be sent to the client together with a Vendor's agreement and an initial cost agreement. (d) Make sure all documentation required for contract preparation is ordered and GST and Land Tax implications are discussed and instructions received. Refer to Appendix A.
Remember to keep a diary record to follow up the various documents.
(e) Within the first week and prior to the property being placed on the market, the con- tract should be prepared using the standard contract form. (f) At least one copy and preferably two copies of the contract should be sent to the real estate agent for marketing purposes and a letter sent to the client confirming this action.
Be careful to send a copy of any document to the client to confirm the accuracy of the information.
4.2 Pre-Exchange The following processes commence upon sale of the property and are completed once the contracts have been exchanged. (a) The real estate agent will advise details once the property has been sold. (b) The Member should complete the contract including details of the Purchaser's, their conveyancer/solicitor, price, settlement terms, special conditions and inclusions/exclusions etc. A copy of the contract should be sent to the Purchaser's conveyancer/solicitor. (c) The Member should telephone or write to the client and make arrangements to sign the contract. It is preferable than an appointment to see the client is made, wherever possible. (d) Any amendments to the contract should be negotiated by the Member with the Purchaser's conveyancer/solicitor and the client's agreement obtained. (e) Exchange of contracts should be arranged by the Member with the Purchaser's
16 conveyancer/solicitor and this will take place at a meeting or by mail - it is always preferable that exchange take place by meeting.
Have you confirmed all instructions including verbal, in writing?
17 4.3 Contracts Exchanged By The Real Estate Agent With A Cooling Off Period (a) These processes are only necessary where the real estate agent conducts the exchange of contracts. (b) Confirmation of the exchange and the cooling off details are to be confirmed in writing to the client by the Member. (c) The Member must diarise the last day of the cooling off period.
A white board with all clients and cooling off dates noted will assist in all staff being aware of critical dates and lessens the chance of those dates expiring without notice.
(d) The Member must check with the real estate agent to ensure the deposit was paid prior to expiration of the cooling off period. (e) Where no agent is involved, the Member can hold the deposit. This must be in a trust account or a controlled money account. (f) The deposit may be made by deposit guarantee in which case the file should be clearly marked to indicate that the full purchase price must be received at settlement. It is recommended that some form of marker or sticker be attached to the front cover of the file.
4.4 Following Exchange Of Contracts At this stage the Member has the following tasks to complete: (a) Notify the real estate agent details of the exchange and the cooling off period (except where the agent arranged the exchange). (b) Attend to the following: (i) Notify the client in writing that exchange has taken place. (ii) Write to the real estate agent enclosing the deposit (unless the agent already holds the deposit). (iii) Write to the Mortgagee requesting a discharge of the mortgage. (iv) Apply for a Section 109 Certificate, if the property is strata titled.
4.5 Mid-Transaction (a) The Member should reply to the Purchaser's requisitions on title when received, con- firming the replies with the clients' instructions and enclose the Section 109 Certificate if the property is strata titled. (b) Arrangements should be made for the client to sign the transfer when received from the Purchaser's conveyancer/solicitor. (c) If the Purchaser is unable to settle on time the Member should discuss this with the Client, and if so instructed, issue a Notice to Complete. (d) Follow up the mortgagee to see that they have everything arranged for settlement.
Time and paperwork are the enemies of our business. Keeping on top of the documentation is crucial. Checklists of tasks to be completed can be helpful.
18 4.6 Pre-Settlement These important processes involve the Member in booking the settlement date and the checking of figures. (a) Confirm to the client the anticipated settlement date - under a standard contract this is 42 days after exchange of contracts. (b) The settlement should be booked with the: (i) Purchaser's conveyancer/solicitor (ii) Discharging Mortgagee (iii) Settlement Agent (if necessary) (c) The settlement adjustment figures should be checked by the Member upon receipt from the Purchaser's conveyancer/solicitor and confirmed with the client. (d) The payout figure should be obtained from the discharging Mortgagee. (e) The Member will provide cheque details to the Purchaser's conveyancer/solicitor. (f) Advice is given to the real estate agent of the anticipated settlement date. (g) Check and double check you have all the documentation RIGHT. (h) Check and double check you have confirmed all details to the client IN WRITING - where practical. Make sure you have the Clients new address and other contact details.
4.7 For Settlement At this stage it is important that clear instructions are given. (a) Settlement instructions are to be prepared for the settlement agent (or the Member's own employee). It is preferable that a standard settlement instruction sheet be used. (b) Obtain the clients instructions on the disposal of sale proceeds. The Member may be asked to bank the proceeds or the client may wish to collect a cheque following set- tlement. (Make sure the client knows that the cheques are returned to you by mail or DX unless settlement is done by an employee). (c) Make sure arrangements have been made in relation to the availability of the keys to the property.
4.8 Following Settlement These are the final steps in the conveyancing process and Members should complete the following steps on the day of the settlement. (a) Telephone the Client and advise that the settlement was completed. (b) Notify the real estate agent of the settlement (preferably by facsimile) and authorise release of the keys to the Purchaser. (c) Send a letter to the Client confirming the settlement, enclosing a final account and the settlement adjustment. (d) Send an Order on Agent to the real estate agent to account for the deposit. NB: (c) and (d) may take place on the day after settlement.
It is suggested that a check be made with council or a title search be made, to confirm that ownership has been transferred to the purchaser and follow up action be taken if this is not the case. This can be done approximately four weeks after settlement.
19 5 GUIDANCE IN ACTION - ACTING FOR THE PURCHASER In this section of the Manual we look at the processes involved from the initial client con- tact through to the actions required after the settlement has been completed. 5.1 Pre-Exchange This stage of the process commences with the initial contact from the client and is conclud- ed when the exchange of contracts has been arranged. (a) The first contact from the client is usually by telephone. It is recommended that an "instruction sheet" be prepared and used in every instance so that the information captured is in a manner that all staff can follow. (b) A confirming letter should be sent to the client together with a Purchaser's agree- ment and an initial cost agreement. (c) Upon receipt of the contract from the Vendor's conveyancer/solicitor the client should be contacted and arrangements made to explain the contract and have it signed. A Section 66W Certificate should be completed where the cooling off period is to be waived. (d) The client's instructions on any amendments to the contract should be obtained, the inclusions checked and details advised to the Vendor's conveyancer/solicitor. (e) It is necessary to receive the client's final instructions and obtain any reports at the client's request, or ensure that the client obtains the reports. If the client does not want some or all of the reports you may have recommended this should be con- firmed in writing. Refer to Appendix B.
Remember to keep a diary record to follow up the various reports.
(f) The reports when received should be checked and copies given to the client for their perusal and acceptance. (g) Approval of finance needs to be obtained in writing. (h) Deposit cheques are to be collected from the client. (i) Arrangements need to be made with the Vendor's conveyancer/solicitor for the exchange of contracts. 5.2 Contracts Exchanged By The Real Estate Agent With A Cooling Off Period The processes are the same as Pre-Exchange but it is important to ensure that everything is completed within the cooling of period that by law is 5 working days. If necessary the Member may need to negotiate an extension to the cooling off period.
Diarise all cooling off dates. A white board with all clients and cooling off dates noted will assist in all staff being aware of critical dates and lessens the chance of those dates expiring without notice.
20 5.3 Following Exchange and/or Cooling Off Period This important stage involves the obtaining and checking of various documents and the giv- ing of advice to the client. (a) Notify the real estate agent in writing of the exchange of contracts (except where the agent arranged the exchange). (b) The Member must attend to the following: (i) Notify the client in writing that the exchange has taken place and advising details of stamp duty. (ii) Order property enquiries (government departments, councils etc.). (iii) Send title details to the Mortgagee or the Mortgagee's conveyancer/solicitor. (iv) Check Mortgagee security requirements and order anything outstanding. (v) Send Requisitions on Title to the Vendor's conveyancer/solicitor. (vi) Prepare the Transfer making sure that tenancy (purchase in more than one name) is discussed with the client. It is preferable that an advice of the different tenan- cies be given in writing and that the client confirm in writing the tenancy they wish to take. (vii) Order Certificates of Currency for insurance (if the property is strata titled). (c) Check and double check you have all the documentation RIGHT. (d) Check and double check you have confirmed all details to the client IN WRITING. (e) Upon receipt of the mortgage documents attend on the client to explain the doc- uments and have them signed. THE CONVEYANCERS LICENSING ACT PROHIBITS THE GIVING OF FINANCIAL ADVICE. (f) The following actions are required by the Member: (i) Arrange stamping of the contract, transfer and mortgage documents where appropriate. (ii) Send the transfer to the Vendor's conveyancer/solicitor (and the Section 118 Notices if the property is strata titled). (iii) Check replies to the requisitions when received from the Vendor's conveyancer/solicitor. (iv) Ensure that building insurance is arranged by the client effective from settlement date. (v) Send all requirements to the Mortgagee or the Mortgagee's conveyancer/solicitor. (vi) Check all replies to property enquiries.
Have you confirmed all instructions including verbal, in writing?
21 5.4 Pre-Settlement These important processes involve the Member in booking the settlement date and the checking of figures. (a) The proposed settlement date is to be confirmed with the client. (b) The settlement should be booked with the: (i) Vendor's conveyancer/solicitor (ii) Mortgagee or the Mortgagee's conveyancer/solicitor (iii) Settlement agent (where necessary) (iv) Client (c) Each of the following requires attention: (i) Preparation of settlement adjustment figures including update of rating certifi- cates with the appropriate authorities and submission to the Vendor's con- veyancer/solicitor. (ii) Preparing the final statement of account. (iii) Advising the client of their right to a final inspection of the property. (iv) Advising the real estate agent of the settlement date. (d) Completion of the following settlement cheque procedures is necessary: (i) Checking the settlement cheques details advised by the Vendor's conveyancer/solicitor. (ii) Advising the Mortgagee or the Mortgagee's conveyancer/solicitor of the cheque details. (iii) Advising the client of the cheque details including conveyancing fees and obtain cheques from the client. (e) Check that the real estate agent has or will have the keys following settlement.
Be careful to send a copy of any document you have prepared to the client to confirm the accuracy of the information.
5.5 For Settlement The Member must attend to each of the following in this phase of the process. (a) Prepare a Notice of Sale. (b) Prepare an Order on Agent. (c) Order a final search and check that it is in order. (d) Prepare settlement instructions for the settlement agent (or the Member's own employee).
Time and paperwork are the enemies of our business. Keeping on top of the documentation is crucial. Checklists of tasks to be completed can be helpful.
22 5.6 Following Settlement Members must attend to the following final steps in the conveyancing process. The first three should be attended to on the day of the settlement. (a) Notify the real estate agent of the settlement (preferably by facsimile). (b) Telephone the client to advise of the settlement. (c) Send a letter to the client confirming the settlement and the final figures including the final statement of account. NB: (c) may take place on the day after the settlement. (d) Pay outstanding rates, levies and report fees. (e) Forward the Section 118 notice to the Body Corporate (if the property is strata titled). (f) Prepare and submit documents for registration at the Land Titles Office in the case of cash purchases. (g) Arrange for collection of the title deed by the client when received after registration (where appropriate).
Where purchases are financed, it is a good idea and an extra service, to follow up the Titles Office two months after settlement, to ensure that the transfer and the mortgage have been registered.
23 6 ARCHIVING OF FILES AND DOCUMENTS The archiving of records is usually the Cinderella of an organisation but it is an important function requiring proper procedures.
It is recommended each Member firm devise an archival system suitable to their needs and one which is capable of forming part of the normal office routine.
Aspects for consideration would include: • The medium to be adopted, i.e. microfiche, hard copy data, scanning, etc. • Conveyancers should keep files in accordance with any rules that may be in place and in accordance with the Conveyancers Licensing Act and regulations or any other Act that is relevant to the keeping of files handled by a conveyancer. It is suggested that files be kept as long as is practical and in any event for at least a period of 6 years unless and until such time as any rule, Act or regulation determines otherwise. • Files to be destroyed after a fixed period should be stored with the destruction date clearly marked. • Ensure there is a reliable library or catalogue procedure or finding the right box can become a very tedious exercise.
If a file is recovered from archive, be sure the system controls its return to the correct place, otherwise it will be very difficult to re-locate. Rest assured, it will be just that file that is subpoenaed into court!
• When destroying files be very careful - either have them shredded or utilize the ser- vices of firms specialising in document destruction. • Don't overlook those very important Tax, ASIC and Financial documents that need to comply with separate requirements.
24 7 IS IT IN WRITING? The need for constant, effective communication and confirmation cannot be overstated. Increased use of technology has not yet had the effect of doing away with the 'paper war' although the speed of exchange of the paper is much faster with the use of electronic com- munications, hard-copy faxes and other computerised solutions. As the working day seems to become longer and longer, time becomes even more critical. Not only the time to get everything done, but time deadlines and response times. It helps to be organised, to have systems and procedures in place and to ensure everyone in the organisation knows and understands their duties, obligations and responsibilities. Each section of this Guidance Manual constantly recommends the written confirmation of information between the conveyancer and other parties.
Remember the 3 R's of Conveyancing Read, wRite and Respond.
7.1 Write wRITE down all oral instructions, advices and representations by way of a file note and then prepare written confirmation to the appropriate parties. This includes incoming advices, as well as outgoing. If you meet with a client, or another party, keep the hand-written discussion notes on file and then confirm the required actions in writing to all concerned.
Constantly check to ensure the consistency of information on documents.
7.2 Read
Reading is a very important function - read all documents very carefully. Keep up to date with legal changes, financial information, industry journals Always retain a copy of documents on file. Always check and re-check all documents as soon as issued.
7.3 Respond Respond to your clients' communications promptly. Look upon your role as a conveyancer as a service that has been outsourced by your client. Be proactive. If you need information, communicate frequently, particularly if a request goes unanswered.
25 8 CONVEYANCERS LICENCING ACT AND REGULATIONS All members should be aware of the content of the Conveyancers Licensing Act and Regulations. The following are found in the Act and Regulations and while members are required to adhere to these matters, they are also extremely good risk management tips: • Disclosure of Costs - s36 of the Act - Members should always disclose to the client the cost of the transaction before commencing any work on behalf of the client •Records and Book Entries to be in English language - s45S36 of of the the Regs regulations - For obvious reasons this is a good risk management tool and of course an audit under this scheme cannot be undertaken unless all records are in the English language. The following Rules of Conduct are found in Schedule2 3of the Regulations and while members need to adhere to these matters they are also extremely good risk management tips: • Rule 3 - Skill care and diligence - members must exercise reasonable skill, care and diligence in all matters. • Rule 5 - To only undertake work within competence - members should only accept instructions to act in work that they have the knowledge and competence to com- plete. • Rule 6 - To perform work promptly - members should only accept instructions in work they know they can complete reasonably promptly. • Rule 8 - To regularly communicate with client - members will be aware of the needs to proper communication from other parts of this manual, the rules emphasises this risk management function. • Rule 9 - To act in accordance with clients instructions - the need to have clear instructions is paramount and this rule again emphasises the need to act only within the clients instructions and of course need to note in writing all instructions. • Rule 10 - To confirm clients' verbal instructions in writing - this rule confirms the importance of those parts of this manual that stress the need to confirm everything in writing, especially verbal instructions. • Rule 12 - Acting for more than one party to a transaction - this rule sets out the need to have written instructions when acting for more than one party to a transac- tion. It is good risk management not to act for both parties to a transaction, this rule, while not prohibiting this practice, implies that this practice should be avoided. It is recommended that you do not act for both parties to a transaction. • Rule 14 - Noting of instructions, enquiries and telephone conversations - this rule emphasises the need to record all messages and phone calls. The noting of all instructions, enquiries and telephone calls is stressed through out this manual and is of utmost importance in any risk management procedures. • Rule 22 - Independence of licensee advising on loan or security documents - this rule states that advice on mortgage and security documents must be competent, indepen- dent and disinterested and the licensee must not act for the mortgagee and/or where the interests of the licensee or any client of the licensee conflict. This is essential in any risk management procedure. All requirements of the Act and Regulations must be complied with, however, the sections
26 shown above are considered to be of importance in risk management and are emphasised here to show the importance that the regulators place on risk management.
27 9 THE USE OF PRECEDENTS There is benefit to be had in using formal check lists when taking instructions, preparing documents and keeping records of the completion of steps in a conveyancing transaction. The AIC has available certain check lists that may assist members with their risk management procedures. Take advantage of these check lists, they can be used as they are or , if warranted, they can be used as a basis to draft your own check lists to suit your own particular circumstances or style. Check lists are easy to complete and make the management of the file that much easier and assist in minimising errors and omissions.
28 10 SPONSOR'S STATEMENT
Vero is proud to support Search - A Guidance Manual for Licensed Property Conveyancers as part of our on going commitment to assisting in the management of your business and providing protection for your professional indemnity insurance.
29 INDEX
A M Absences from office • 11 Mortgage Documents • 20 Acting for Purchaser • 19 Mortgagee Security Requirements • 20 Acting for Vendor • 16 N Amendments to Contract • 16, 19 Notice of Sale • 21 Approval of Finance • 19 Notice to Complete • 17 Archiving • 24 O B Order On Agent • 18, 21 Building Insurance • 20 Outstanding Rates etc. • 22 Building Over Sewer Letter • 16 P C Payout Figure • 18 Certificates of Currency • 20 Pre-Exchange • 16, 19 Cheque Details • 18, 21 Property Enquiries • 20, 22 Client Data • 13 Purchasers Agreement • 19 Contract • 16, 19 R Contract Issue • 16 Requisitions on Title • 17, 20 Controlled Money Account • 17 Reports • 19 Cooling Off Period • 17, 19, 20 S Correspondence • 11 Section 66W Certificate • 19 D Section 109 Certificate • 17 Deposits • 17, 19 Section 149 Certificate • 16 Discharge of Mortgage • 17 Section 118 Notices • 20, 22 Disposal of Sale Proceeds • 18 Settlement Adjustment Figures • 18, 21 Drainage Diagram • 16 Settlement Agent • 18, 21 E Settlement Cheques • 21 E-mail • 12 Settlement Date • 18, 21 Errors & Omissions • 9 Settlement Instructions • 18, 21 Exchange of Contracts • 17, 19 Stamp Duty • 20 F Stamping • 20 Facsimiles • 11 T File Maintenance • 15 Telephone Calls • 13 File Notes • 9 Telephone Log Book • 13 Filing • 15 Telephone Messages • 13 Final Statement of Account • 18, 21, Tenancy • 20 22 Title Deed • 22 Following Settlement • 18, 22 Title Details • 20 I Title Search • 16 Initial Statement of Account • 16, 19 Transfer • 17, 20 Instruction Sheet • 16, 19 Trust Account • 17 K V Keys • 18, 21 Vendors Agreement • 16 L Land Titles Office • 22 Lease • 16
30 NOTES
31 APPENDIX A
Australian Institute of Conveyancers NSW
DOCUMENTATION REQUIRED - ACTING FOR THE VENDOR
• Title Search
• Section 149 Certificate from the Council
• Drainage Diagram
• Building over sewer letter (if necessary)
• Copy of the lease (if the property is tenanted)
32 APPENDIX B
Australian Institute of Conveyancers NSW
REPORTS THAT THE PURCHASER MAY
REQUEST
• Building Report
• Pest Report
• Survey Report
• Strata Report (if the property is strata titled)
SEARCH A Guidance Manual for Licensed Property Conveyancers © 2005 Gold Seal I.P. Pty Limited
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