What an agent must not do with regards to photographs used in advertising of a property explain why?

Table of Contents Show

False claims about price
Example of false or misleading representations
The legislation
Photographs
Words and descriptions

Whether you are renting, buying or selling a home, real estate agents must not mislead you and must use fair contract terms in line with federal, state and territory laws.

It is unlawful for real estate agents to:

intentionally mislead you
lead you to a wrong conclusion or impression
give you a false impression
leave out or hide important information (e.g. in fine-print disclaimers)
make false or inaccurate claims.

It makes no difference whether the agent meant to mislead or deceive you—it is how you perceived the conduct that matters.

To reduce the chances of misleading you, real estate agents must take care to:

disclose all information relevant to the price of the property
advertise the selling price based on a reasonable market appraisal or the price the seller has indicated they are likely to accept
not make false claims about the price of the property
not advertise or under quote a property at a price significantly less than the selling price to attract interest in the property
not make false claims about the location, characteristics or use that can be made of the land.

False claims about price

A real estate agent might make false claims about the price by:

advertising a property as 'passed in' at a price higher than what was actually bid at an auction
claiming that the vendor has already rejected offers more than the buyer is willing to pay, when no such offers have been made and/or rejected
advertising a property at a price that is less than a previously rejected offer unless the seller is now prepared to accept a lower offer.

Ensure the agent has a licence. Check with your local state or territory consumer protection agency.
Do some research to understand the going rate for homes for rent or sale in the area. An independent evaluation may help.
Read contracts and documents carefully before you sign. Get legal advice if you are unsure about what the contract means. Ask for explanations to ensure you understand:
- all costs and what they cover
- any limitations
- lease or settlement time frames and any cooling-off periods.
Ask yourself whether the information the agent has given you seems fair and accurate.
Never sign blank sales authorities, contracts of sale or rental agreements.

Dummy bidding is when an agent or a person acting on the vendor's behalf pretends to be genuinely interested in purchasing a property by making bids at an auction. When dummy bids continue after the reserve price has been reached, the genuine bidder is competing with a false buyer and is pushed to pay as much as they can. Unless the dummy bidding is fully disclosed at both the start of the auction and at the time the bid is made, it is likely to be considered misleading and therefore unlawful.

Dummy bidding is not the same as vendor bidding. Vendor bidding is an acceptable practice used by a seller to make sure the property reaches its reserve price. With vendor bidding, the identity of the person making the bids is announced by the auctioneer at the commencement of the auction and each time a bid is made. Vendor bids must not continue once bidding for the property has reached its reserve price.

Contact your local state or territory consumer protection agency

Consumer rights & guarantees
Contracts

Some private treaty sales are marketed to buyers with an ‘offers over’ price tag.

If you use an 'offers over' price tag, it should carry the minimum amount the vendor is willing to accept to sell the property.

If you represent a property as being for sale at a specified price, while knowing the vendor will not sell the property for that price, it is a false or misleading representation about the price payable for the property.

The vendor’s minimum selling price is the list price they have noted on the Property Occupations Act 2014 appointment form (form 6).

Making false or misleading representations about the sale of land and property is an offence under the Australian Consumer Law (ACL). The maximum penalties are:

for a corporation breach of the ACL, whichever is greater of
- $10 million
- 3 times the value of the benefit received
- 10% of annual turnover in the preceding 12 months (where the benefit cannot be calculated)
for an individual a breach of the ACL, up to $500,000 per breach.

Making a false or misleading representation about the price payable for property is prohibited because it gives buyers a false impression about what price a seller will accept for a property.

As a licensed property agent, you must not engage in misleading or deceptive conduct with prospective buyers or sellers.

Similarly, if a seller outlines how they want to advertise a property on an agent’s appointment form, it would also be considered a false or misleading representation if the agent knows the details they provide are not correct. It is the agent's responsibility to make the seller aware of the law.

Example of false or misleading representations

Last updated: 15 July 2021

Real estate agents will inevitably make representations to attract potential clients, buyers and/or tenants. These representations may be in writing and can include pictures, photographs, plans and drawings, a verbal statement or even conduct (gestures and demeanour). It should also be remembered that silence may constitute a representation. Therefore, extreme care must be taken by agents to ensure that all representations are accurate and will not fall foul of the consumer protection legislation.

The legislation

Section 212 of the Property Occupations Act 2014 (Qld) (PO Act) relates to false representations about property. Section 212(1) of the PO Act states that a licensee or real estate salesperson must not represent to someone else anything that is false and misleading relating to the letting, exchange or sale of real property. The maximum penalty for breaching this provision is currently $72,063 (540 penalty units).

Section 212(3) of the PO Act provides that a representation is taken, for the subsection, to be false or misleading if it would reasonably tend to lead to a belief in the existence of a state of affairs that does not in fact exist, whether or not the representation indicates that the state of affairs does exist.

If a person makes a representation relating to a matter and he or she does not have reasonable grounds for making the representation, the representation is taken to be misleading (section 212(4) of the PO Act). The onus of establishing whether the person had reasonable grounds is on the person making the representation (section 212(5) of the PO Act).

Further, section 18 of the Australian Consumer Law (ACL) prohibits conduct, in trade or commerce, which is misleading or deceptive, or is likely to mislead or deceive. Misleading and deceptive conduct is a broad concept which includes words, actions and pictures. It is irrelevant whether there is an intention to mislead; what is relevant is the overall impression created by the conduct and its actual or likely effect on the target audience.

As agents will appreciate, with the restrictions introduced during the COVID-19 pandemic, the marketing of a property for sale or rent has, at times, included a reduction in physical inspections of a property and an increase in absentee buyers or tenants who are interested in purchasing or renting a property without physically inspecting it.

We now look at some specific risks which agents need to be conscious of when marketing a property for sale or rent.

Photographs

Photographs used when marketing a property for sale or rent may be false or misleading if they lead a prospective buyer or tenant to believe in the existence of a state of affairs that does not in fact exist. Photographs may be considered misleading if they are digitally altered or enhanced, and the alterations or enhancements materially change the photograph, or the perception provided by the photograph.

Digitally altering or enhancing the photographs of a property to change the colour of the paint on the walls may be considered misleading. However, cleaning a property and including additional lighting before photographing the property is not misleading.

It may also be considered misleading to digitally alter a photograph to remove images from the background that may be considered undesirable, such as electricity towers, items that obscure views, or objects in neighbouring properties.

In this regard, agents will recall in February 2016, a NSW real estate agency advertised a three bedroom home for sale in Sydney’s Penshurst. The photographs of the property placed on the internet did not show a large water tower immediately behind the property, which dwarfed the house when viewing it from the street. At the time, the NSW Fair Trading issued a statement saying that the digital enhancement of advertising material may constitute an offence where the enhancements are not disclosed or create a deception for buyers. If a photograph is altered, agents should be mindful of whether their conduct may be misleading or deceptive or likely to mislead and as a result, be in breach of the ACL.

Aside from editing photographs, other conduct that can result in claims against agents may include not using up-to-date photographs of a property in its advertisements. Where absentee buyers or tenants are interested in purchasing or renting a property without physically inspecting it, they will rely upon the information they are able to gather about the property from the photographs used in the advertising campaign.

Agents should therefore be mindful to always ensure that any photographs of a property reflect the property in its current condition. Out-of-date photographs should not be used to save time and money.

SEE ALSO: Photo editing and marketing responsibilities

Words and descriptions

Agents need to ensure the accuracy of all descriptions and words used to promote a property in their advertising campaigns.

Representations about the potential or permitted use of land or buildings must acknowledge any legal restrictions affecting the property. These include planning requirements, restrictive covenants and easements. Representations about the characteristics of land include for example:

the suitability for residential developments;
the ability to be subdivided;
the drainage, water supply and topographical features; and
the dimensions of the land or buildings.

Any representations about the development potential of properties should include words to the effect of ‘Subject to Planning Consent’ and all interested parties should be encouraged to undertake their own independent enquiries and seek professional advice if appropriate.

Agents must also be careful when describing the location of a property. They must ensure that they correctly describe the suburb, as well as the local amenities and school catchment areas.

Conclusion

Agents must be vigilant in ensuring that they comply with their legislative obligations when marketing properties for sale or rent. As well as being careful to ensure that all written and oral representations and statements made in relation to properties are completely accurate, agents should ensure that they actively encourage all prospective buyers and tenants to undertake their own enquiries and investigations to satisfy themselves that the property meets their requirements and that they obtain their own expert advice. Agents should also ensure that all of their marketing material contains an appropriately worded disclaimer.