Disclaimer: The information provided in this article is for general guidance only. It does not constitute legal advice and should not be relied upon as such, as it does not take into account the specific circumstances of your agency.
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Getting Your Compliance Compliant: Insights from Sarah Heuvel
In rent roll transactions, small mistakes or omissions in a contract can lead to big consequences. Whether it’s a missing or incomplete proof of identity checklist, an incomplete or missing ingoing condition report, or disputes during the retention period. These compliance issues can delay settlements, damage relationships, and in some cases, unravel entire deals.
To shed light on these challenges, solicitor Sarah Heuvel from Swaab, who has more than a decade of experience advising on property and rent roll transactions, shares her expertise, and even shares some real life experiences of some deals. Below, we explore three major compliance areas—Proof of Identity, Ingoing Condition Reports, and Loss Management/Retention. Please also check out this week our first video with Sarah regarding Proof of Identity.
Proof of Identity: Protecting Against Fraud
One of the most common stumbling blocks of late in rent roll transactions is the Proof of Identity (POI) or Verification of Identity (VOI) requirement. POI ensures that only verified owners can enter into new agency agreements.
Q: Why is POI such a critical requirement?
Sarah: Fraud prevention is the big reason. Property owners who lived overseas were discovering that their properties had been sold without their knowledge. POI protects both the vendor and the agent, ensuring the person signing an agreement is who they say they are and that they have legal authority to sell the property.
There have been instances where properties were sold on behalf of people who were not the true owners. In fact, some scammers were able to sell properties that they did not own. After that, other jurisdictions moved quickly to strengthen fraud prevention measures and implement changes to the supervision guidelines. These safeguards were designed to stop fraudulent transactions before they happen and to give everyone in the process—agents, vendors, and buyers—confidence that the transaction is genuine.
Q: Who holds the responsibility for identity verification?
Sarah: The vendor of the rent roll. All agents, however, must make sure the verification process is documented when entering into an agency agreement. There’s no need to store physical copies of IDs, but you do need to record enough details. A good practice is noting the last three digits of an ID document—it’s specific enough to confirm authenticity but still secure.There used to be a requirement where people were keeping full copies of identity documents—passports, driver’s licenses, and so on—but that’s no longer required. In fact, keeping that level of detail creates its own risks. If too much information about a document ends up in the wrong hands, it could be used to forge someone’s identity. That’s why we recommend only recording the last three digits of a driver’s license or passport number. It provides an identifier you can check against later, without exposing sensitive data. For example, if you’re ever asked whether you verified the documents, you can confirm because those last three digits will match what the client provided.
Ingoing Condition Reports: The Foundation of Tenancy Management
If POI protects the start of a transaction, ingoing condition reports protect the tenancy itself. These reports set the baseline for the property’s condition, which the parties are required to rely on at the end of tenancy when determining whether the bond is going to be released in full or in part, and to which party.
Q: Are photos required for ingoing reports?
Sarah: No, the law only requires a signed and dated written report from the agent. Photos can support a claim, but without a signed report, your legal standing is weak.
Q: What if the ingoing report is missing?
Sarah: It’s not ideal, but there are workarounds and only in limited circumstances, like the age of the tenancy. For example, if a tenancy is older than 10years old, you won’t be able to rely on the ingoing for the majority of the claims. In other circumstances, you may be able to rely on routine inspection reports to provide context. In some contracts, we have seen clauses that carve out managements that were takeovers as the agent would have inherited the tenancy and therefore did not do the ingoing. The key is transparency—don’t pretend the report exists if it doesn’t.
Beyond compliance, the quality of these reports matters commercially. Poor or inconsistent ingoings usually point to weak property management oversight. Purchasers in rent roll sales should pay close attention—missing reports can affect the value and enforceability of the portfolio.
One issue we often see with ingoing condition reports is around signatures and dates. Sometimes reports are signed and dated by the tenant, but not by the agent, which is acceptable. Other times, agents might complete the report but forget to sign or date it themselves.
From a compliance perspective, the most important thing is that the tenant signs and dates the report. That’s the legal confirmation that they’ve accepted the condition of the property at the start of the tenancy. If the agent hasn’t signed or dated it, it’s not ideal—it looks incomplete—but the critical safeguard is the tenant’s signature and date. That’s what protects both the landlord and the agent if there’s ever a dispute at the end of the tenancy.
Lost Managements & Retention: Balancing Risk After Settlement
Even with solid POI and ingoing condition reports, disputes can arise during the retention period—the agreed timeframe after settlement when purchasers can claim any managements that are lost for legitimate reasons set out by the contract, but also how does the vendor protect themself against mismanagement, or if a management is lost but it was the purchaser’s fault.
Q: Why do contracts have a retention period?
Sarah: It’s a safety net for the purchaser primarily. If the purchaser uncovers issues during this time—say, unpaid bonds, or they lose a management during this period, the purchaser can claim against the retention. Without a retention period and clear parameters over lost managements.
Q: What makes lost managements tricky?
Sarah: Mismanagement is often subjective. One purchaser’s “acceptable delay” is another’s “serious negligence.” That’s why contracts need clear clauses around notice periods, definitions of mismanagement, and exceptions.
It also becomes tricky because expectations are rarely the same. A landlord may think the agent hasn’t done enough, while the purchaser might believe the situation was handled appropriately. Without clear communication, these small differences in perspective can turn into larger disputes.
Another challenge is record-keeping. If documents like bond lodgments, condition reports, or rent reviews aren’t properly maintained, it becomes very hard to prove what was or wasn’t done. That lack of clarity often fuels disagreements during the retention period.
For purchasers, the retention period is not passive time. It’s the best opportunity to build relationships with landlords, iron out misunderstandings, and ensure issues don’t blow up after retention ends.
For vendors, strong contracts and proactive communication reduce the risk of messy disputes. Being upfront about any unusual arrangements or potential issues helps protect relationships and avoids surprises later. Ultimately, good documentation, transparency, and open dialogue are what make lost managements and adjustments to the retention smoother for both sides.
The Bigger Picture: Why Compliance Matters
Compliance can feel like paperwork, but Sarah stresses it’s more than that:
“Proof of identity, ingoing condition reports, and retention clauses aren’t just boxes to tick. They’re the structures that keep deals enforceable, protects relationships, and prevents costly disputes. If agents treat compliance as an afterthought, they risk undermining the very transactions they’ve worked so hard to secure.”
As the property industry grows more complex, agents who understand and apply these compliance measures will not only safeguard their businesses but also build trust with clients, and ultimately safeguard the sale or purchase of their rent roll.
Final Word
Whether you’re a purchaser, or a vendor, staying on top of compliance isn’t optional—it’s essential. By tightening up proof of identity processes, ensuring ingoing condition reports are properly documented, and managing the retention period with clarity, you can navigate the complexities of rent roll transactions with confidence.
Watch the Part 1 of the video below as I sit down with Sarah Heuvel from SWAAB to talk about her insight about Get Your Compliance Compliant.