News & Media
From the CEO's desk...
20 Mar 15
From time to time I am asked what responsibilities an Agent has with regard to Form 1 preparation when that preparation is actually outsourced to a third party provider. My short answer is EVERYTHING – you might have outsourced the task but you remain at law responsible for the Form 1 (see section 9 of the Act). It doesn’t matter if someone else has signed it for you – if it is not your certificate (under section 9), the Form 1 is defective and the purchaser retains the right to cool off.
You must trust your supplier of services in that regard completely and utterly as any failing will fall back on you as the agent under legislation in this State. I can almost guarantee to you that each entity that provides these services in South Australia will have the nicest and well drafted ‘all care and no responsibility clause’ as part of the conditions of providing you the service. Ensure you are comfortable with your provider and still check for yourself that you are happy with the content– whilst you may be able to sue under breach of the services contract (depending on the facts of a particular matter even despite the ‘all care and no responsibility’ clause) you are liable for any mistakes and it is your reputation as a real estate agent to ensure it is correct.
Remember too that the agent certifies in Form 1 that the inquiries confirmed the completeness and accuracy of the particulars set out in the Form. Regulation 13 requires you to make inquiries of the vendor. So you need to check the contents of Form 1 with the vendor, particularly if the vendor has not completed a questionnaire for your third party provider.
The stakes can be high if the Form 1 is wrong. Some years ago, a vendor suffered a substantial loss on resale when the original purchaser had cooled off because of a defective Form 1. The vendor received damages of $600,000 from the solicitor who prepared the Form 1. Not nice.
You may wish to ensure that appropriate Professional Indemnity insurance is taken out by that provider also. Why the PI Insurance? It is well recognised that providing form one services is not considered a conveyancing activity and hence is not covered by relevant defaults with regard to the Indemnity Fund.
REISA Chief Executive Officer