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REIQ Journal : June 2008
16 Where to draw the line in the sand: The Legal Profession Act and the role of a real estate agent in the preparation of property contracts by Annette Greenhow, Solicitor to the REIQ SINCE 2007, THE REIQ has updated members in respect of the ongoing consultation with the Department of Attorney General and Justice regarding amendments to the Legal Profession Act 2007 (LPA 2007) passed on 2 May 2008. These amendments (2008 Amendments) related to the exemption in the LPA 2007 to acknowledge the role of a PAMD Act licensee (including employees) in the preparation of documentation as part of the ordinary activities performed by a PAMD Act licensee. The following article sets out the details of the 2008 Amendments and a general summary of how these amendments will affect the practice of providing, preparing or completing property contracts and other documents. It is anticipated that the amendments will take effect on 1 July 2008. The LPA 2007 only recognised a very limited role of a licensee in the preparation of contract documents and extended only to the “filling in” of a property contract or other document. The restrictive nature of the LPA 2007 failed to embrace the duty of a licensee under the PAMD Act and the code of conduct, to exercise reasonable skill, care and diligence when undertaking any transaction on behalf of a client. This extended to the need to ensure that a licensee prepared accurate, REIQ Journal June 2008 legally binding paperwork. After bringing these issues to the attention of the Attorney General, the REIQ participated in lengthy discussions and negotiation regarding the drafting of amendments to the LPA 2007 to more accurately reflect what was happening in practice. The REIQ brief was to attempt to achieve a balance between the role that a licensee had played for many years in the preparation of legally binding documentation and the need to ensure that the aim of consumer protection was achieved. The relevant sections of the 2008 Amendments are extracted below, together with a brief summary of how these may apply in practice. Section 24 (3A) It is declared that neither a PAMDA licensee nor a PAMDA employee is engaging in legal practice only because the licensee or employee provides, prepares or completes a property contract or other document as part of performing either of the following (each of which is a PAMDA licensee’s work) – (a) The work of a PAMDA licensee; (b) other work ancillary or incidental to the work of a PAMDA licensee and part of the ordinary course of business undertaken generally by a PAMDA licensee.