The term ‘real estate’ covers real property ownership and some ownership-like leases. It refers to an interest in land within Australia where a person (including both individuals and ‘non-individuals’) has any of the following:

• ‘fee simple interest’ – which is the usual form of land ownership in most of Australia
• leasehold interest of more than 30 years
• land use entitlement. This means an entitlement to occupy land conferred through ownership of shares in a company, or units in a unit trust scheme, or a combination of a shareholding or ownership of units together with a lease or licence.

Examples include:

• 99-year leases in the Australian Capital Territory
• crown and pastoral leases
• residential site agreements where the term of the leasehold interest in the land is longer than 30 years.

‘Real estate’ also covers an interest, estate, right or entitlement in land in a foreign country that’s equivalent to one of the above interests or otherwise confers ownership rights. While the ‘real estate’ can be located in a foreign country, you will only have obligations under the Act if the designated service has a geographical link to Australia. 

Designated services relating to real estate regulate the sale, purchase and transfer of these interests whether or not there was payment or other consideration involved in the transfer. For example, a conveyancer who assists a parent transfer ownership of the family home to their child without consideration will provide a designated service.

Exclusions from the definition of real estate

The definition of real estate excludes interests such as:

• leases of 30 years or less
• incorporeal hereditaments (for example, easements and restrictive covenants)
• mortgagee interests
• dwellings not attached to land, where the resident owns the dwelling but leases the land on which the dwelling is located, such as caravan parks and some retirement villages.  

This means that a business involved in the sale, purchase and transfer of these interests won’t be providing a designated service relating to real estate. 

For example, a person may own a caravan but only has a lease that’s less than 30 years over the land on which it’s located. In this situation, neither the caravan nor the lease of land qualifies as real estate. The caravan is treated as a chattel under law and the lease is too short.

Brokering the sale, purchase or transfer of real estate

You’re providing a designated service when you broker the sale, purchase or transfer of real estate as part of a business. 

The relevant designated service defined in the Act is extracted below: 

Table 5 — Real estate services

This means that: 

• real estate doesn’t need to be bought or sold for consideration; brokering the transfer of property without consideration is sufficient
• both the buyer and seller (or transferee or transferor) of real estate will be the customer of the same reporting entity for the purposes of the designated service. 

For example, when a real estate agent acts for the seller and brokers the successful sale of a house, their customer is both the buyer and the seller, and they’ll have AML/CTF obligations in relation to both parties.

What it means to ‘broker’ a sale, purchase or transfer of real estate

We consider a broker is a person who acts as an intermediary or agent for another person for consideration. 

To provide this designated service you must be operating as a broker in the course of carrying on a business. A common indicator of this will be if your services include negotiating on behalf of the person you represent or seeking to find a person for the person you represent to transact with, in return for a payment of a commission.

Activities that’ll generally be a designated service of this kind include brokering conducted by seller’s and buyer’s agents.

When you start providing a designated service

When you start providing a designated service depends on whether you’re acting for the buyer or seller. 

Seller’s agent

A person acting as a seller’s agent starts providing a designated service to a seller or transferor when an agreement to broker the sale or transfer of a property is signed. 

This agent starts providing a designated service to the buyer or transferee when it’s reasonably expected that the transaction will proceed. This is typically when the buyer’s offer has been accepted and the contract to buy or transfer ownership of the real estate is signed. 

Buyer’s agent

A person acting as a buyer’s agent starts providing a designated service to a buyer or transferee when an agreement to find or identify a property is signed. 

This agent starts providing a designated service to the seller or transferor when it’s reasonably expected that the transaction will proceed. This is typically when the buyer’s offer has been accepted and the contract to buy or transfer ownership of the real estate is signed. 

Auction

When real estate is sold at auction, it’s possible for a buyer to only be known after the fall of the hammer. You can delay initial customer due diligence (CDD) where completing initial CDD would disrupt the ordinary course of business. This will often be the case where the short time between the end of the auction and signing the contract of sale isn’t sufficient to complete initial CDD. 

Learn more about delayed verification for initial CDD.

Selling or transferring real estate without an independent real estate agent

Selling or transferring real estate without an independent real estate agent as part of a business selling real estate is a designated service.

The relevant designated service defined in the Act is extracted below: 

Table 5 — Real estate services

Examples of this designated service include property developers and other businesses who sell any of the following:

• house and land packages
• apartments off the plan
• blocks of vacant land in new subdivisions.

This includes where the property developer or other business sells the real estate with their own in-house agents, sales, or marketing employees rather than engaging an external agency for this work.

References to the ‘transfer’ of real estate make sure that situations where real estate is transferred for no value or consideration are still within scope of the designated service.

Incidental sales of real estate by a business and private sales of residential property aren’t captured under these designated services. For example, where an individual runs their business on premises that they own negotiates and directly sells their premises to a buyer. This is because these sales wouldn’t be carried out as part of a business selling real estate. 

When you start providing this designated service

This designated service relates to real estate transactions that include a sale price or a transfer for no consideration. 

You start providing this designated service when there’s a commitment to sell or transfer the property. This is typically when you enter an agreement to sell or transfer the property.

Residential site operators

A residential site agreement is between a residential site operator and homeowner. This allows the owner to move their home onto a residential site and use it as their residence. These agreements apply in cases where a person owns their home but not the land it’s on. 

A residential site operator is a person who has a business that leases this residential land. For example, a person operating a caravan park or aged care facility. 

Leaseholds in residential land will qualify as real estate where the duration of the lease is more than 30 years. A dwelling located on a residential site, as distinguished from the leasehold interest in the land on which the dwelling is based, doesn’t qualify as real estate. 

A residential site operator who leases or transfers real estate will only be providing the brokering designated service under item 1 of table 5 if they’re brokering the transfer, sale or purchase of real estate on behalf of another person.

This means that a residential site operator only provides this designated service if all of the following are satisfied: 

• they’re not acting for themselves
• they’re acting for one of the parties to the purchase, sale or transfer
• they’re brokering the purchase, sale or transfer of real estate in the course of carrying on a business selling real estate, meaning they’re acting as a broker or agent for compensation, and
• the interest being purchased, sold or transferred is real estate.

A residential site operator will only be carrying out a designated service under item 2 of table 5 if they transfer or sell real estate in the course of carrying on a business selling real estate.

The fact that a residential site operator sells dwellings attached to the site of a residential park won’t be sufficient to qualify as a business selling real estate, as these dwellings don’t qualify as real estate. 

Granting or re-granting a leasehold interest under a residential site agreement will also not generally qualify as the transfer of this interest. This is because the interest only comes into existence once the grant is made and isn’t transferred between people. 

Related pages

• Check to see if you may be regulated
• New industries and services to be regulated (Reform)
• Professional services (Reform)
• Combating money laundering, terrorism financing and proliferation financing
• Summary of obligations (Reform)