King - Complaint No CA2968824 [2011] NZREAA 19 (8 February 2011)

New Zealand Real Estate Agents Authority

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King - Complaint No CA2968824 [2011] NZREAA 19 (8 February 2011)

Last Updated: 27 July 2012

In the Matter of Part 4 of the Real Estate Agents Act 2008

And

In the Matter of Complaint No: CA2968824

In the Matter of Lester King

_{Licence Number: 10014199}

Decision of Complaints Assessment Committee

_{Dated this 8}th _{day of February 2011}

Complaints Assessment Committee: CAC10006

Chairperson: Robyn Wilson Deputy Chairperson: Peter McDermott Panel Member: Chris Rogers

Complaints Assessment Committee

Decision finding unsatisfactory conduct

1. The Complaint

1.1 Mr C had made a complaint about Lester King acting as a real estate agent without the appropriate license (or ―Selling for a success fee without a licence‖). Mr C sent in a copy of a brochure advertising Bermuda Private Sale with Lez King pictured and described as the Marketing Manager.

1.2 The Complaints Assessment Committee (the Committee) decided to inquire into the complaint on 27 April 2010.

1.3 A second matter arose during the Committee‘s investigation; the requirement for licensee‘s to advise the Registrar of a change of circumstances, in particular a change of the real estate business that a licensee works for under section 67 of the Real Estate Agents Act 2008 ( REAA 2008).

1.4 Mr King was asked what he had done to comply with section 67 as it appeared he hadn‘t notified the Registrar as required of his change of employment from Now Realty Ltd to Jet Employment Ltd t/a Remax Manukau.

2. Material Facts

2.1 Mr King holds a salesperson‘s license and is recorded on the register as holding a salesperson‘s licence and working for Now Realty Ltd as of 31 March 2010. Mr C says he was provided with the brochures from a third party but was unable to provide a date. Mr King was also asked in a letter from the Real Estate Agents Authority (the Authority) dated 23 September 2010 for the time period that he was involved in the promotion of Bermuda Private Sales but has not provided this information. The date is important because of the different disciplinary regimes that exist before and after 17 November 2009 when the REAA 2008 came into force. Conduct prior to this date is covered by the Real Estate Agents Act 1976 (REAA

1976).

2.2 The brochure states that Bermuda Private Sale has no commission, that it ―finds your buyer‖ and that the customer saves ―thousands‖. It compares Mr King‘s old real

estate company‘s commission with Bermuda Private Sale fee with sale prices of

$350,000 to $600,000. It describes the services provided as follows:

“Bermuda offers all properties Professional Photography, Large photo signs, Internet, NZ Herald, Local newspapers, Open homes, Buyer screening etc, as included in the marketing investment outlined above”.

Mr King is described as ―a highly experienced successful former real estate agent

working for you!‖

2.3 Mr King explained to the Authority investigator on 27 May 2010 that the purpose of Bermuda Private Sale was to assist vendors with the marketing of their property only. He said he would have received income from margins on the marketing he would supply. He says the business was not successful and no longer in operation. In his letter dated 24 September 2010 he said clients would pay a marketing fee covering ‗actual advertising‘ and ―my fee for organising the marketing and advice given as to preparation for marketing‖. He said the fee was not selling for a success fee, ‗they would pay as they would pay Home Sell‖.

2.4 In relation to his place of employment, he says he ceased working at Now Realty Ltd when the complaint was submitted to the Authority. The complaint was received by the Authority on 4 March 2010. He says he had been taking a break up until that date. Mr S of Now Realty Ltd said on 27 May 2010 that Mr King had not worked there for ‗about a year.‘ Mr King said he had not advised the registrar of his change in employment because he did not realise he had to. He asked (rhetorically) why Mrs S of Now Realty Ltd hadn‘t advised the Registrar and suggests it was because it was a business where agents come and go. He gave his present place of employment as Jet Realty Ltd t/a Remax Manukau.

3. Relevant Provisions

3.1 Real Estate Agents Act 2008 (REAA 2008) Section 72 Unsatisfactory conduct –

For the purposes of this Act, a licensee is guilty of unsatisfactory conduct if the licensee carries out real estate agency work that—

(a) falls short of the standard that a reasonable member of the public is entitled to expect from a reasonably competent licensee; or

(b) contravenes a provision of this Act or of any regulations or rules made under this Act; or

(c) is incompetent or negligent; or

(d) would reasonably be regarded by agents of good standing as being unacceptable.

3.2 Section 4 Real Estate Agency Work –

(a) means any work done or services provided, in trade, on behalf of another person for the purpose of bringing about a transaction; and

(b) includes any work done by a branch manager or salesperson under the direction of, or on behalf of an agent to enable the agent to do the work or provide the services described in paragraph (a); but

(c) does not include—

(i) the provision of general advice or materials to assist owners to locate and negotiate with potential buyers; or

(ii) the publication of newspapers, journals, magazines, or websites that include advertisements for the sale or other disposal of any land or business; or

(iii) the broadcasting of television or radio programmes that include advertisements for the sale or other disposal of any land or business; or

(iv) the lending of money on mortgage or otherwise; or

(v) the provision of investment advice; or

(vi) the provision of conveyancing services within the meaning of the

Lawyers and Conveyancers Act 2006

3.3 Section 49 Branch manager‘s or salesperson‘s licence

(1) A branch manager's licence or a salesperson's licence authorises the licensee to carry out real estate agency work for or on behalf of an agent.

(2) The licence also authorises the licensee to sell or to offer to sell, on behalf of the agent, any land by auction without having to be licensed under the Auctioneers Act

1928 S 50 Salespersons must be supervised

3.4 Section 50 Salespersons must be supervised

(1) A salesperson must, in carrying out any agency work, be properly supervised and managed by an agent or a branch manager.

(2) In this section properly supervised and managed means that the agency work is carried out under such direction and control of either a branch manager or an agent as is sufficient to ensure—

(a) that the work is performed competently; and

(b) that the work complies with the requirements of this Act

3.5 Section 67 Obligation to notify Registrar

(1) Each applicant for a licence, and each licensee, must give written notice to the Registrar of any change in circumstances within 10 working days after the change. (2) In this section, change of circumstances means—

(a) any change in the information recorded in the register; and

(b) any change in the real estate business for which the agent, branch manager, or salesperson works (if any); and

(c) any change that may be prescribed

3.6 Section 145 Offence to fail to notify change in circumstances

(1) A licensee or applicant for a licence commits an offence who, without reasonable excuse, fails to notify the Registrar of any change in circumstances as required by section 67.

(2) Every person who commits an offence against this section is liable,— (a) in the case of an individual, to a fine not exceeding $10,000; or (b) in the case of a company, to a fine not exceeding $50,000.

4. Discussion

4.1 The Committee‘s view is, based on the timing of the complaint and Mr King‘s responses, that it is likely the alleged conduct in relation to selling real estate without the appropriate licence and not advising of a change in employment occurred after 17 November 2009 and is therefore only subject to the REAA 2008.

4.2 Undertaking real estate agency work on one‘s own account without an agent‘s licence is a breach of the REAA 2008 as it is for a person with a salesperson‘s licence to work (under supervision). The Committee‘s view of the advertisement for Bermuda Private Sale is that it is capable of being seen as advertising services within the definition of ‗real estate work‘. But Mr King says the intention was that he be paid a fee for organising the advertising and the actual cost of the advertisements and that his fee was not a success based fee.

4.3 The advertisement does not make it clear that the fee is payable regardless of whether the property is sold, making a direct comparison between likely real estate agent's commission rates and his costs nor is it clear that assistance will not be provided in negotiating with buyers. It does however describe the services as a

―professional marketing system‖ which is consistent with Mr King‘s description of

what he was offering and the name of the business, Bermuda Private Sale, also

suggests he is doing something different from real estate agents.

4.4 The definition of ‗real estate agency work‘ excludes the provision of general advice or materials to assist owners to locate and negotiate with potential buyers. The Committee is not satisfied that the advertisement is clearly offering services within the definition of real estate work and without any evidence of Mr King actually having any clients that he undertook such work for, that he has not been shown to have breached section 49 or section 50 of the REAA 2008.

4.3 He has however clearly breached section 67 by failing to notify the Registrar of the change in the business he works for in that he had not advised of his leaving Now Realty Ltd or starting at Jet Realty within the required ten days and probably for up to at least six months. A breach of section 67 is a ground for finding unsatisfactory conduct under section 72 and the Committee so finds Lester King guilty of unsatisfactory conduct.

4.4 Mr King‘s explanation for his failure is that he was not aware of the requirement. He also appears to treat his breach as inconsequential describing the following up by the Authority of the complaint about Bermuda Private Sale and his failure to notify a change in circumstances as ‗trivia‘. The Committee‘s view is that not knowing about the requirements is not a reasonable excuse and also notes that as of 24 December

2010 Mr King has not rectified the matter. The REAA 2008 provides that there can be a fine of up to $10,000 against an individual for breaching section 67 without reasonable excuse. The Committee views a breach by a salesperson as opposed to an agent or branch manager as less serious due to the requirements and responsibilities being generally less onerous for salespersons but on the other hand Mr King‘s attitude and of not rectifying the situation as soon as it was bought to his intention, is not at the low end of seriousness scale.

5. Decision

5.1 After conducting an inquiry into the complaint, pursuant to section 89(1) of the REAA 2008, the Committee held a hearing with regard to that complaint. In accordance with section 90(1) of the REAA 2008, the Committee conducted the hearing on the papers, and pursuant to section 90(2) the Committee‘s determination was made on the basis of the written material before it.

5.2 The Committee has determined under section 89(2)(b) of the REAA 2008 that is has been proved, on the balance of probabilities, that Lester King has engaged in

unsatisfactory conduct.

6. Penalties

6.1 Having determined under Section 89 (2) (b) of the REAA 2008 that it has been proved to the required standard that Lester King has engaged in unsatisfactory conduct, the Committee has the power by virtue of section 93 of the REAA 2008 to make an order in the nature of a penalty against Lester King.

6.2 Section 93 provides:

93 Power of Committee to make orders

(1) If a Committee makes a determination under section 89(2)(b), the Committee may do 1 or more of the following:

(a) make an order censuring or reprimanding the licensee:

(b) order that all or some of the terms of an agreed settlement between the licensee and the complainant are to have effect, by consent, as all or part of a final determination of the complaint:

(c) order that the licensee apologise to the complainant: (d) order that the licensee undergo training or education:

(e) order the licensee to reduce, cancel, or refund fees charged for work where that work is the subject of the complaint:

(f) order the licensee—

(i) to rectify, at his or her or its own expense, any error or omission; or

(ii) where it is not practicable to rectify the error or omission, to take steps to provide, at his or her or its own expense, relief, in whole or in part, from the consequences of the error or omission:

(g) order the licensee to pay to the Authority a fine not exceeding $10,000 in the case of an individual or $20,000 in the case of a company:

(h) order the licensee, or the agent for whom the person complained about works, to make his or her business available for inspection or take advice in relation to management from persons specified in the order:

(i) order the licensee to pay the complainant any costs or expenses incurred in respect of the inquiry, investigation, or hearing by the Committee.

(2) An order under this section may be made on and subject to any terms and conditions that the Committee thinks fit.

6.3 Pursuant to section 93 (1)(g) the Committee orders that the licensee pay to the

Authority a fine of $1200.00. This fine should be paid to the Authority within 20 working days from the date of this decision.

7. Publication

7.1 One of the Committee‘s functions pursuant to section 78(h) of the REAA 2008 is to publish its decisions.

7.2 Publication gives effect the purpose of the REAA 2008 of ensuring that the disciplinary process remains transparent, independent and effective. The Committee also regards publication of this decision as desirable for the purposes of setting standards and that it is in the public interest that the decision be published.

7.3 The Committee directs publication of its decision, but omitting the names and identifying details of the complainant (including the address of the property), and any third parties in the publication of its decision.

8. Right of Appeal

8.1 A person affected by a determination of a Complaints Assessment Committee may appeal by way of written notice to the Disciplinary Tribunal against a determination of the Committee and must do so within 20 working days from the date of the determination.

8.2 Appeal is by way of written notice to the Tribunal. Further information on lodging an appeal is available by referring to the Guide to Lodging an Appeal at

_{www.justice.govt.nz/tribunals.}

Signed

Robyn Wilson

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 8 February 2011