Complaint No CB6948182 [2013] NZREAA 109 (18 June 2013)

Last Updated: 3 May 2014

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

And

In the Matter of Complaint No: CB6948182

Complaint No: CB6948218

In the Matter of Licensee 1

Licence Number: XXXXXXXX

Licensee 2

Licence Number: XXXXXXXX

Decision of Complaints Assessment Committee

Dated this 18th day of June 2013

Complaints Assessment Committee: CAC20002

Chairperson: Patrick Waite

Deputy Chairperson: Deirdre McNabb

Panel Member: Barrie Barnes

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. The Complainant has complained to the Real Estate Agents Authority (the Authori ty) about the conduct of Licensee 1 and Licensee 2 who are licensed under the Real Estate Agents Act 2008 (the Act). They each hold a salesperson license with Licensee 2 working for Agency 1 and Licensee 2 working for Agency 2.

1.2. The complaint, which is in relation to the purchase of a property, is:

• Licensee 1 provided false information about property, including false advertisement on newspaper and sale board; it was advertised with 5 bedrooms and 3 bathrooms however only

3 bedrooms and 1 bathroom under permit.

• Licensee 2 made false representations about the property and responded ‘yes of course’ when

the Complainant asker her is there 5 bedrooms, is all approved and legal?

• Someone had told them that a person died in the ho use and this is bad for the Complainant’s culture.
  

1.3. The Authority referred the complaint to the Complaints Assessment Committee (the

Committee). Pursuant to section 79(1) of the Act, the Committee considered the complaint on

2 August 2012 and made a decision to inquire further.

1.4. The Committee invited the Licensee s to each provide a response to the complaint and a response was received f rom the Solicitor acting on behalf of Licensee 1 on 29 August 2012. Licensee 2’s response was received on 30 August 2012. The Complainant has been given copies of the Licensee’s responses and additional information and invited to make a submission in reply but at the date of the Committee meeting no response had been received.

1.5. Having satisfied itself that it had completed its inquiry into the complaint, the matter was considered again by the Committee on 20th May 2013.

1.6. The hearing was conducted on the papers pursuant to section 90(2) of the Act and the

Committee made its determination on the basis of the written material before it.

2. Material Facts

2.1. The property purchased by the Complainant was built in 1983. The previous owners, Mr and Mrs N had purchased the property in January 1996. Around the time Mr N had died, the property was then transferred into a family trust. Trustees of the family trust are Mr J, Ms N, Mr R N and Mrs N.

2.2. Around the end of March 2012, the trustees decided to place the property on the market and engaged Ms O and Ms Y to act as listing agents. Both licensees hold a salespersons licence and work for Agency 1.

2.3. The property was described as having 5 bedrooms and 3 bathrooms. It was to go to auction on 6

May 2012. The Complainant, who was a prospective buyer, submitted a number of pre -auction

offers before the trustees finally accepted her offer. Prior to submitting the offers, she had conducted her own due diligence, this included a building inspection.

2.4. A few months after settling the Complainant contacted Agency 2 and Agency 1 alleging to have received false information prior to buying the property which she believe would have affected her decision ultimately to buy. She had made enquiries with the Council which confirmed that structural alterations were carried out by former owners without first obtaining permits for the work.

2.5. Licensee 1 who is the branch manager and director of Agency 1 together with Mr D, manager of Agency 2, met with the Complainant and it would appear unsuccessfully attempted to resolve her concerns. Licensee 1 has been named on the complaint although he has never been involved with the process of listing the property.

2.6. Licensee 2, who works for Agency 2, is the Licensee who brought the Complainants through the house and supplied her with an information pack prepared by Agency 1.

3. Relevant Provisions

3.1. The Committee examined the information supplied by the Complainant in her written complaint to determine whether S72 or S73 of the Real Estate Agents Act 2008 (the Act) applied i.e. was there evidence which would indicate that the Licensee s could be considered guilty of unsatisfactory conduct (S72) or misconduct (S73).

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 of 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.

Section 73 Misconduct

For the purposes of this Act, a licensee is guilty of misco nduct if the licensee’s conduct–

(a) would reasonably be regarded by agents of good standing, or reasonable members of the public, as disgraceful; or

(b) constitutes seriously incompetent or seriously negligent real estate

agency work; or

(c) consists of a wilful or reckless contravention of –

(i) this Act; or

(ii) other Acts that apply to the conduct of licensees; or

(iii) regulations or rules made under this Act; or

(d) constitutes an offence for which the licensee has been convicted, being an offence that reflects adversely on the licensee’s fitness to be a licensee.

3.2. Real Estate Agents Act (Professional Conduct and Client Care) Rules 2009

Rule 5 Standards of professional competence

5.1 A licensee must exercise skill, care, competence, and diligence at all times when carrying out real estate agency work.

Rule 6 Standards of professional conduct

6.1. An agent must comply with the fiduciary obligations to his or her client arising as an agent

6.2. A licensee must act in good faith and deal fairly with all parties engaged in a transaction.

6.3 A licensee must not engage in any conduct li kely to bring the industry into disrepute.

6.4 A licensee must not mislead a customer or client, nor provide false information, nor withhold information that should by law or in fairness be provided to a customer or client.

4. Discussion

4.1. The Complainant alleges that the Licensee failed to inform them that renovations undertaken by the Vendor did not have building consent. In support of her complaint the Complainant states:

• During the initial phase of purchasing the property she asked Licensee 2 if there were any problems with the house, she replied “no problem”. The same question was asked post sale with the agent who replied “I don’t know”.

• Enquiries conducted with the Local City Council and work done by her builder confirm that only three bedrooms are permitted by the Council, the other two bedrooms were modified without having a permit, the kitchen was modified into a garage, the master bedroom into a kitchen and the bedroom on the first floor has been changed into a garage. These are modifications which were not approved by the Council.

• The newspaper and sale board advertisements had described the property as having five bedrooms and three bathrooms. This information is misleading because only three bedrooms and one bathroom are legally built.

4.2. Licensee 2 in response to the complaint has made the following points:

• An information pack was provided to the purchaser which included the LIM report, certificate of title and auction agreement.

• The Complainant was advised to consult a solicitor con cerning the transaction and had arranged for a builder to inspect the property.

• On 24 April 2012 the Vendor spoke with the Complainant and advised her that they had not carried out any alterations during the past 18 years of ownership.

4.3. Licensee 1 through his solicitor has provided a comprehensive response to the complaint.

Relevant points include:

• The property was marketed using information from various sources i.e. real estate property NZ

website, interviews with the vendors prior to listi ng and visual inspections by the salespeople.

• The Licensee relied on statements made by the Vendor who described the house as having 5 bedrooms and 3 bathrooms. The agency agreement co ntains warranties given by the Vendor that the statements provided are true and correct. The Licensee was entitled to rely on the warranties and for the Vendor to indemnify the Agency should these representations be incorrect.

• The Vendor purchased the property in 1995 and according to them no structural or alterations were undertaken during the course of ownership. This is supported by a signed statement from vendor Mrs N.

• The Complainant had sufficient time to conduct due diligence having submitted numerous pre - auction offers within two weeks leading up to the schedul ed auction.

• The initial inspections show that the property was in a dilapidated state and there was no evidence of work carried out to modernise it. It is alleged that if there had been any alterations to add bedrooms and bathrooms that work would have been carried out pre-1995 before the Vendor took ownership.

• The LIM did not reveal any adverse findings.

• On the issue of withholding information about a death on the property, he states that such allegations are unfounded.

4.4. The Vendor, Mrs N, advised during an interview with the Authority’s investigator: “I then asked when you moved into the house in 1995 how m any bedrooms did it have? Ms N said the upstairs has got four bedrooms and downstairs it ’s like a study but we also put a bed in there so it ’s like another room, in total 5 bedrooms. I as ked and how many bathrooms? Mrs N said 3 bathrooms”.

4.5. The Committee noted that the Complainant has been given copies of the Licensees’ responses and additional information and invited to make a submission in reply. She was also asked specifically to provide information on the building inspection received before she purchased the property. At the date of the meeting of the Committee (20 May 2013) no comment had been received by the Authority.

5. Decision

5.1. After conducting an inquiry into the complaint, pursuant to section 89(1) of the Real Estate Agents Act 2008 (the Act), the Committee held a hearing with regard to that complaint. In accordance with section 90(1) of the Act, 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 is satisfied from the information received that there would appear to have been no alterations undertaken by the Vendor before the property was on-sold to the Complainant. It appears to the Committee that the listing agents involved with the sale had inspected the property, interviewed the vendors and explained to them the Vendor warranties before describing the house as having five bedrooms and three bathrooms on all advertising.

5.3. The Committee is satisfied that a full disclosure of all documents relevant to the investigation has taken place. Comment has been sought from all parties relating to the issues under enq uiry.

5.4. Accordingly the Committee has concluded that there is insufficient clear evidence for it to conclude that the Licensees could be considered guilty of unsatisfactory conduct in terms of sS72 or misconduct in terms of S73. Accordingly the Committee has determined under section

89(2)(c) of the Act to take no further action with regard to the complaint or any issue involved in the complaint.

6. Publication

6.1. One of the Committee’s functions pursuant to section 78(h) of the Act is to publish its decisions.

6.2. Publication gives effect the purpose of the Act 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.

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

6.4. The Authority will publish the Committee’s decision after the period for filing an appeal has ended unless an application for an order preventing publication has been made to the Real Estate Agents Disciplinary Tribunal (Tribunal). Such an application can only be made as part of an appeal to that Tribunal. In order to ensure publication of the decision does not take place it is important that you serve a copy of your application on the Authority. Publication of the decision will not take place until the Tribunal has made a decision on the application.

7. Right of Appeal

7.1. A person affected by a determination of a Committee may appeal to the Tribunal against a determination of the Committee within 20 working days after the date of this notice.

7.2. Appeal is by way of written notice to the Tribunal. You should include a copy of this Notice with your Appeal.

7.3. Further information on filing an appeal is available by referring to the Guide to F iling an Appeal

at www.justice.govt.nz/tribunals.

Signed

Patrick Waite

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 18th June 2013