Licensee in charge – role and responsibilities in a property agency
A property agency must appoint a licensee in charge (LIC) to supervise the business, or several LICs for different parts of the business. Only an LIC can authorise withdrawals from trust accounts.
Who can be an LIC
An LIC is an individual who either:
- carries on business under a Class 1 licence, or
- is employed to be in charge of a business under section 31 of the Act.
Licensing requirements for an LIC
An LIC is responsible for the proper supervision of the business of which they are in charge. They must hold a Class 1 licence in the category relevant to the business.
For example, an LIC of a real estate agency will need to hold a Class 1 real estate agent’s licence.
A corporation licence holder or an individual who runs a business under a Class 2 licence will need to employ an LIC to supervise their business.
These licence holders are referred to in the supervision guidelines as the ‘principal licensee’.
LICs must supervise all parts of a business
A principal licensee may nominate either of the following, so long as they ensure that no part of the business is left unsupervised:
- one LIC to oversee the entire business, or
- several licensees to oversee different parts of the business.
One LIC can be responsible for many parts of a business, but there cannot be more than one LIC in charge of the same part of the business.
It is up to the principal licensee to decide the parts of their business.
For example, they may decide to appoint an LIC for:
- each place of business, or
- each business area, such as:
- strata
- real estate sales or
- property management.
To notify NSW Fair Trading of any changes to your current LIC arrangements, please complete the Licensee in charge details form.
LICs can authorise withdrawals from general trust accounts
Only an LIC may ‘authorise’ the withdrawal of money from a trust account
An agent may not authorise the withdrawal of money from a trust account unless the agent:
- holds a Class 1 licence, and
- is currently appointed as a licensee in charge.
This makes licensees in charge ultimately accountable for any trust money released from the agency’s trust accounts.
The supervision guidelines also require agencies to maintain operational procedures. These include the process to get the express authorisation of the licensee in charge for all release of trust money and to document it.
The licensee in charge needs to approve each specific release of funds. They cannot delegate their authority to authorise the release of funds to anyone else.
Only 1 LIC per trust account
There may only be 1 LIC authorising withdrawals from a trust account.
If a business has multiple trust accounts, there should only be 1 LIC responsible for authorising withdrawal of money per account.
However, an LIC may be responsible for more than 1 trust account.
These requirements do not apply to trust accounts held by an owners corporation for a strata scheme.
Trust money withdrawals – electronic fund transfers and cheques
Trust money may only be withdrawn from a trust account by cheque or electronic funds transfer. Cash withdrawals are prohibited.
Signing cheques
Only the LIC may sign cheques for payments from an agency trust account. This function cannot be delegated.
All cheques drawn on the trust account:
- must include the name of the licensee corporation, licensee or firm of licensees in whose name the trust account is kept
- must include the words “Trust Account”, and
- may include a name to identify the person on whose behalf the money in the account is held.
Effecting electronic funds transfers
The Regulations allow another person in the agency, other than the LIC, to physically disburse funds from a trust account by electronic means.
For example, under instruction from the LIC, the other person may press a button to release funds from a bank account, but only if the LIC responsible for that trust account has first authorised the withdrawal in writing.
For each electronic funds transfer from an agency trust account, a record must be kept of:
- the name of the person effecting the transfer
- the reference number or other particulars sufficient to identify the transfer
- details identifying the ledger accounts to be debited
- the reason for the transfer.
See the trust accounts page to learn more about trust account requirements.
An LIC cannot act for 2 or more licensees
A person cannot act as an LIC for 2 or more licensees (whether the licence is held by an individual or corporation) unless those licensees are in partnership.
Notifying NSW Fair Trading about the business's LIC
Section 31 of the Act requires any individual or corporation who employs the holder of a Class 1 licence to be the LIC, to notify the Secretary of the licence details of the LIC.
You must notify the Secretary of the:
- name and licence number of the person in charge
- address of each place of business for which the LIC will be in charge.
The notification must be received within 5 business days of the licensee assuming duties as an LIC.
If an LIC is temporarily or permanently unable to carry out their duties due to illness, leave or any other reason, the principal licensee must appoint another Class 1 licence holder as a replacement.
The principal licensee will also need to notify the Secretary of the details of any replacement LICs within 5 business days, including their start and finish dates as an LIC.
To notify NSW Fair Trading of any changes to your current LIC arrangements, please complete the Licensee in charge details form.
The supervision guidelines for property and stock agents
The supervision guidelines set out specific actions that both principal licensees and LICs must take to ensure the proper supervision of their business.
The principal licensee is responsible for preparing and maintaining written records about their LICs as part of operational procedures for the business. These must clearly identify:
- each LIC for the business
- the dates on which they were the LIC, and
- if there is more than one LIC, the part of the business and which trust accounts each person is in charge of.
Learn more about the obligations of LICs under the supervision guidelines.
LIC annual training plan
All agencies licensed under the Act need to prepare and maintain an annual training plan for their agency. The plan must connect performance goals with the training needs of all agents employed in an agency.
Nominated LICs are responsible for the development and implementation of the training plan, as well as reviewing and updating it annually.
The plan will align to each Continuing Professional Development (CPD) year, which runs for 12 months from 1 July each year.
Purpose
A training plan ensures all agency principals and licensees in charge are thinking about the training needs of their business.
Planning for and documenting the professional development of all property and stock agents is an important step towards a more trusted, empowered and accountable property services sector.
Template
There is a template to help LICs create a training plan for their agency. It can be expanded and modified as needed.
This template is provided as a minimum guideline only.