Auction Laws in NSW for buying a property
We have laws regarding selling a property by auction in NSW. You can find out more information about those laws by having a look at the NSW Fair Trading website, by following this link.
Some of the legal protections that a bidder at auction has include the restriction of the vendor to one bid, and the auctioneer must indicate that this is a vendors bid.
What about auctions for rental properties?
There has been talk in the media about new apps coming onto the market in Australia that allow people to bid on line for rental properties. A number of concerns have been raised about this, namely that it will drive up rental prices, but there is also a bigger issue. Are there any protections for the consumer (you) in a 'rental auction'?
The Property, Stock and Business Agents Act 2002 and Property, Stock and Business Agents Regulation 2003 cover the sale of property in NSW, not renting of property. There are a number of pieces of legislation dealing with renting residential properties in NSW, all with similar names but different years, but none of that legislation covers the auction of a rental property.
This does not mean there is no legislation protecting the consumer, the agent is (like any business) bound by consumer protection laws, however the more specific legislation protecting participants in an auction doesn't apply to rental auctions. This includes:
- The bidders must all be registered and provide proof of identification
- The agent must keep a bidding record for three years
- The auctioneer/agent can be fined $11,000 for accepting a bid from an unregistered bidder
- The auctioneer/agent must notify the other bidders if a bid is a 'vendor bid', and the vendor only gets one bid
One obvious weakness in an unregulated system is that a landlord or agent could be one of the bidders. While that is misleading and deceptive behaviour, how would you know? You are bidding on an app on your phone. Furthermore, even if you found out that a landlord was a bidder there is no requirement for them to keep and produce a bidding record, so the process of proving that the existence of the improper bidder may be more expensive (if it is indeed possible to prove).
Also, as there is no requirement to be physically present and to produce original identification documents to the real estate agent, how will the app know whether these bidders are legitimate? It could be kids, overseas investors who just want to see how hot the market is, or a potential tenant who actually isn't very serious and wouldn't pass the rental inspection tests anyway. All of these could drive up the price, while the rental market is quite competitive you don't need the price driven up by people who in the end wouldn't be accepted as potential tenants.
Furthermore, what if the App is not registered in Australia? How would you subpoena the owner of the App from another country for information? If the App itself is suspected to be at fault, not the agent or vendor (which no doubt would be asserted), how do you prove or disprove this? If it is proved, how do you enforce judgement against the overseas app developer? Is the overseas app developer even bound by our laws?
What can I do?
It is easier said than done in an overheated rental market, but be very wary of rental auction apps.
If you believe that an agent has participated in misleading or deceptive conduct, or if you having problems with your residential rental property, you should make an appointment to speak with Hamish Williams.
Our first half hour appointment is free, so there is no harm in speaking to him about your matter.
If you would like more information on Property or Real Estate then click on the blue button to the right and read some of our articles on the topic