A licensed estate agent in Victoria becomes aware that an agent's representative employed at their agency has been accepting secret commissions from a developer in exchange for steering buyers toward the developer's properties. Under the Estate Agents Act 1980, what is the licensed agent's obligation and potential liability?

Q: What is the correct answer to: A licensed estate agent in Victoria becomes aware that an agent's representative employed at their agency has been accepting secret commissions from a developer in exchange for steering buyers toward the developer's properties. Under the Estate Agents Act 1980, what is the licensed agent's obligation and potential liability?

The correct answer is The licensed agent must report the conduct and is vicariously liable for the representative's actions; failure to act may result in the agent's own licence being suspended or cancelled. Under the Estate Agents Act 1980, the licensed agent must report the misconduct and is vicariously liable for the representative's actions. Secret commissions are a criminal offence. Failure to supervise and act upon discovering the conduct can result in the licensed agent's own licence being suspended or cancelled by the Business Licensing Authority.

Q: What background knowledge is needed for this Ethics Compliance question?

Victorian law holds licensed agents accountable for their representatives' conduct through vicarious liability. Secret commissions (undisclosed payments from third parties) are criminal offences under the Crimes Act and the Estate Agents Act. Licensed agents must maintain adequate supervision systems, act promptly on discovered misconduct, and report criminal behaviour to Consumer Affairs Victoria and police.

Q: What is a good way to remember the answer to this Ethics Compliance question?

The licensed agent is VICARIOUSLY LIABLE for representatives. Must REPORT misconduct and faces OWN licence consequences for failure to act. Remember 'vicarious = responsibility flows up'—the licensed agent always shares liability for representative misconduct.

Q: What exam tip applies to this Ethics Compliance question?

Licensed agents bear vicarious liability for representatives—they must report misconduct and cannot claim ignorance as a defence.

Q: How does this Ethics Compliance concept apply in Australian real estate practice?

A licensed agent in Doncaster discovers their sales representative has been receiving $5,000 payments from a developer for each buyer steered to the developer's projects. The agent immediately terminates the representative, reports the conduct to Consumer Affairs Victoria and police, and cooperates with the investigation to protect their own licence.

Question

Ethics ComplianceVICHARD

A licensed estate agent in Victoria becomes aware that an agent's representative employed at their agency has been accepting secret commissions from a developer in exchange for steering buyers toward the developer's properties. Under the Estate Agents Act 1980, what is the licensed agent's obligation and potential liability?

Answer Options

A

The licensed agent has no liability as the representative acted independently

B

The licensed agent must report the conduct and is vicariously liable for the representative's actions; failure to act may result in the agent's own licence being suspended or cancelled

C

The licensed agent should simply terminate the representative's employment with no further action required

D

The licensed agent should negotiate a share of the secret commissions to avoid conflict