Fidelity Fund Certificate for Estate Agents: A Comprehensive Guide

 

Purchasing a home is an expensive endeavour, and only some individuals try it with the assistance of an experienced adviser. Most people use an estate agent as their advisor. But how can you know you're getting a knowledgeable guide and not being misled? The answer is straightforward: a Fidelity Fund Certificate (FFC).

What happens if an estate agent does not hold an FFC?

According to the Act, it is prohibited for an agent to operate without a valid Fidelity Fund Certificate, and an agent cannot claim a commission for services given while their FFC is expired. In most circumstances, this is a no-brainer: if an agent does not have an FFC, they cannot operate and cannot claim a fee; however, what if the estate agent's registration is out of current for no fault of their own?

As with any registration process, application and renewal processing may be delayed (even if the agent submitted their renewal documentation and money on time). In this situation, the estate agent may function legally and collect their commission if they can demonstrate that they submitted their application or renewal materials on time.

In other circumstances, this may not be the case. For example, this may occur if an estate agent depended on their principal to complete the requisite application or renewal process, including paying the appropriate fees. Still, the principal needs to complete the essential registration.

Unfortunately, in such cases, it is the agent's job to follow up with their principal. When this occurs, the agent should suspend their services for the time being and may only collect a commission for services performed once they receive their FFC or the requisite documentation that the application or renewal is being processed.

Must the estate agent's FFC be confirmed before services are rendered?

Because there is no legal duty to verify or receive a copy of an agent's FFC in advance, many agents continue to operate as usual, even without a valid certificate. Even the conveyancing agent (also known as a transfer attorney), who is responsible for paying the estate agent's commission, is optional by law to get proof of the agent's FFC before paying the commission.

However, suppose any party to the transaction becomes aware that the agent does not have a valid Fidelity Fund Certificate during the property transfer. In that case, the conveyancer is required by law to deny the agent's commission and pay it into the Estate Agents Fidelity Fund.

What remedy do estate agents have if they fail to receive their commission?

If an estate agent loses their commission due to a lack of a valid FFC, and it is not their fault, the agent has the right to take the issue to court. They will not, however, be suing the purchaser or conveyancer but rather their principal/agency or, in some cases, the EAAB itself, for the delay in obtaining or renewing the FFC.

Conclusion

The usage of a Fidelity Fund Certificate, as well as the agents' duty to register with the Estate Agency Affairs Board, helps to create a safer business environment for property practitioners, buyers, and sellers. When such events occur, the estate agent is forced to fight for their ability to continue operating in their sector, which is an uncomfortable situation. In such a case, ensure that you have the greatest legal representation and guidance possible.