Conducting a conveyancing business
The Conveyancers Licensing Act 2003 and Conveyancers Licensing Regulation 2006 include requirements relating to the way conveyancers must conduct their business.
Supervision of a conveyancing business
Licensed conveyancers are responsible for supervising the conveyancing business carried on under their licence.This includes a requirement to:
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properly supervise employees
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establish procedures to ensure all relevant laws are complied with, and
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monitor the conduct of the business to ensure those procedures are followed.
A licensee who conducts business at more than one place must employ another licence holder to be in charge of each other place of business. Similarly, a corporation licensee must employ a licence holder to be in charge of each place of business.
A licensee cannot be in charge of more than one place of business, or more than one conveyancing business, unless an exemption has been granted by the Director General. An exemption would generally only be considered for conveyancing businesses in remote areas, where it may be difficult to comply with the requirements to have a licensee-in-charge of each branch office. The Conveyancers Licensing Regulation 2006 sets out the matters that are taken into account by the Director General when considering an exemption request.
Top of pageEmployees
Under section 30 of the Conveyancers Licensing Act 2003, a licensee is legally responsible for the work done by employees. Records of employees’ names and residential addresses must be kept, and must be retained for at least 3 years after a person ceases to be an employee. A licensee must notify the Director General in writing within 7 days if an employee becomes a disqualified person.
Rules of conduct
Rules of conduct have been prescribed to provide conveyancers with a clear guide to the standards expected by the public in respect of business dealings and ethical behaviour.
Conveyancers are expected to deal with their clients competently, diligently and according to principles of fairness and honesty. Conveyancers should be acutely aware of the fiduciary nature of the relationship with their clients and always deal with them free of the influence of any interest which may conflict with a client’s best interests.
The rules address matters such as providing information to clients about the conveyancing process and conflicts of interest. Contravention of the rules can result in disciplinary action.
The rules of conduct are in Schedule 3 of the Conveyancers Licensing Regulation 2006.
Business names
If a licensee wishes to conduct business under a name other than their own name, it must be approved by the Director General. You can request this approval when you apply for the licence. The name will also need to be registered under the Business Names Act 2002.
Advertising
A licensee may, (subject to the Act, Division 4, Advertisements and Representations), advertise in any way the licensee thinks fit.
However, an advertisement must not be of a kind that is or that might reasonably be regarded as:
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false, misleading or deceptive, or
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in contravention of the Trade Practices Act 1974 of the Commonwealth, the Fair Trading Act 1987 or any similar legislation, or
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in contravention of any requirements of the regulations.
The regulations may make provision for or with respect to advertising by licensees.
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:
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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
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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
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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
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if the licensee is a corporation and the corporation is carrying on business in its own name—the name of the corporation
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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
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the number of the licence.
The maximum penalty for breaching these provisions is 100 penalty units.
Changes to licence details
If a licensee’s name, address or other registered details change, notice of the change must be given to NSW Fair Trading within 7 days. It is recommended that the notice be given in writing.
Disclosure of interests
Before carrying out any work for a client, a licensee must disclose in writing to the client the basis of the costs for conveyancing work to be carried out and any beneficial interest the conveyancer may have in the transaction.
The disclosure must include amount of costs or basis for calculating costs, billing arrangements and the client’s rights in relation to the hearing of costs disputes by the Consumer, Trader & Tenancy Tribunal (section 36).
Failure to make these disclosures can have serious consequences for a conveyancer. If disclosure is not made in accordance with the Act’s requirements, the client need not pay the costs of the conveyancing work (section 41).
Costs disputes
Costs disputes are heard by the Consumer, Trader & Tenancy Tribunal. An application to the Tribunal may be made by either the client or conveyancer, and must be made within 60 days after the licensee has delivered their bill or account to the client.
On being notified of a costs dispute, the Tribunal may take any action it considers necessary to resolve the dispute. This could include referring the dispute to an independent expert for assessment. If the parties are able to reach an agreement, the Tribunal will make an order to give effect to the agreement. If the dispute cannot be resolved by agreement of the parties, the matter will be heard and determined by the Tribunal.
Accounting
The Conveyancers Licensing Act 2003 includes requirements for trust accounts which are equivalent to requirements for agents under the Property, Stock and Business Agents Act 2002.
Conveyancers’ audit reports
Under sections 75 and 76 of the Conveyancers Licensing Act 2003, the annual audit period is the year ended 30 June each year. The auditor’s report must be submitted within 3 months of the end of the audit period, that is, by 30 September in each year.
From the following year, the audit period will revert to the standard 12 month financial year, that is, from 1 July to 30 June.
The information in the Trust accounts and Trust account audit requirements pages applies to licensed conveyancers.
Trust accounts
Trust account audit requirements
Transitional arrangements for controlled money received before 15 December 2006
Under the Conveyancers Licensing Act 1995, money received on behalf of a client was able to be held in either a trust account or a controlled money account. The legislation imposed separate sets of accounting requirements for trust money and controlled money.
The Conveyancers Licensing Act 2003 does not allow for controlled money accounts to be opened by licensees. All money received by a conveyancer on another’s behalf must be paid into:
- the licensee’s general trust account, or
- a separate trust account opened by the licensee for a specific client or for the buyer and seller in a transaction.
For controlled money accounts opened before the Conveyancers Licensing Act 2003 commenced and still open at that date, the controlled money accounting requirements of the 1995 Act and its regulation continue to apply. This will mean that some licensees may continue to operate a dual accounting system until all controlled money accounts opened under the former Act have been closed.
If licensees would prefer to move to a single accounting system under the 2003 Act, they may opt to transfer any money held for a client in a controlled money account to a separate trust account opened for the client. The written approval of the persons for whom the money is held must be obtained before money is transferred.
Record keeping requirements
A licensed conveyancer must keep the originals or copies of all documents in relation to any transaction carried out by the licensee or the licensee’s employees. Records relating to a transaction must be kept in a separate file for that transaction. Records must be kept by the licensee for 6 years, unless they have been lawfully transferred to another licensee or a legal practitioner. All books and records must be in English. These requirements are set out in Part 6 of the Conveyancers Licensing Regulation 2006.
Professional Indemnity Insurance
All licensed conveyancers should make certain they are insured under a policy of Professional Indemnity, as required by clause 6 of the Conveyancers Licensing Regulation 2006. That clause provides that a licensee is insured if they are insured under an approved policy of professional indemnity insurance in force with respect to the licensee, or his or her employer; or the licensee carries out conveyancing work only in the licensee’s capacity as an employee of a complying law practice.
A master policy of professional indemnity insurance, approved by the Minister for Fair Trading, is available to members of the Australian Institute of Conveyancers (NSW Division). The approved policy (number LPS 011195725) is issued by Vero Insurance Limited and Allianz Australia Limited and covers the period 1 July 2010 to 30 June 2011. This is the only current Professional Indemnity Insurance Policy for licensed conveyancers approved by the Minister.
Conveyancers should inquire with the Australian Institute of Conveyancers concerning membership and insurance coverage at www.aicnsw.com.au/aicnsw_cms/ (Australian Institute of Conveyancers NSW Branch)
Consumers should check that a conveyancer has professional indemnity insurance in place before engaging the services of a conveyancer.
The Minister's approval of the Professional Indemnity Insurance Policy was published in the NSW Government Gazette on 21 May 2010.