Complaint No CB7124609 [2013] NZREAA 118 (21 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: CB7124609

In the Matter of Licensee

Licence Number: XXXXXXXX

Decision of Complaints Assessment Committee

Dated this 21st day of June 2013

Complaints Assessment Committee: CAC20002

Chairperson: Deirdre McNabb

Panel Member: Barrie Barnes

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. Mr W, Solicitor for the Complainant has lodged a complaint on his client’s behalf with the Real Estate Agents Authority (the Authority) about the conduct of the Licensee who is licensed under the Real Estate Agents Act 2008 (the Act). He holds a salesperson license and works for the Agency.

1.2. The complaint is whether the Licensee breached the Act by:

• supplying the vendor of a the Property he bought in his personal capacity with an incomplete current market appraisal (CMA) of the Property.
  
• submitting an offer to purchase the Property so soon after he provided this incomplete CMA (2 days later).
  

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

15 October 2012 and made a decision to inquire into it further. The Committee invited the

Licensee to provide a response to the complaint.

1.4. Having satisfied itself that it had completed its inquiry into the complaint, the matter was considered again by the Committee on 4 June 2013.

1.5. 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. In April 2012 Mr T contacted the number of a real estate agency seeking an appraisal of the Property. It had belonged to his grandmother who had passed away and the family planned to sell it. Mr T was helping his mother Mrs T who was an executor of his grandmother’s estate. On

21 April 2012 Mrs T met with the various agents her son had contacted whilst visiting the

Property.

2.2. On 23 April 2012 a Licensee from the Complainant’s Agency submitted a CMA for the property with a price range of $420,000 to $450,000.

2.3. On 24 April 2012 the Licensee contacted Mr T by email. He stated that ‘Before I provide you with

our submission for the sale of your home, I should declare a possible personal interest.’ That

email went on to indicate that the Licensee was interested in buying the Property for his family and that various requirements would need to be met under the Act if Mr T was prepared to consider dealing with him.

2.4. On 26 April 2012 the Licensee provided Mr T with a partially completed CMA for the Property. A market appraisal price range was not included in this document. By email dated 3 May 2012 the Licensee made an offer of $380,000 to purchase the Property.

2.5. On 25 May 2012 Mrs T signed a sole agency listing agreement with the Complainant’s company.

That agreement specifically provided on behalf of the vendor ‘We reserve the right to deal

privately with the Licensee and his wife.’

2.6. During the month of June three different offers on the Property were submitted through the

Complainant’s company but they were ultimately unsuccessful.

2.7. On 9 July 2012 the Licensee made an offer of $420,000 to purchase the Property in his personal capacity. The offer included the following provisions:

‘20.0 This agreement is conditional upon the Purchasers obtaining at their own expense a Registered Valuation report on the said property and the vendor is to be given a copy of the valuation within 10 (ten) working days from the date of the agreement. If the valuation provided under this clause turns out to be higher than the purchase price on this agreement, the vendor is entitled to cancel this contract immediately.

21.0 The Vendor acknowledges that they have been advised that the Licensee is a licensed real estate salesperson. This transaction does not include any commission payable to any Real Estate Company or salesperson.’

2.8. In July 2012 the Licensee provided an independent valuation of the Property to the vendor which set the value at $425,000.

2.9. Mr T advises that:

• The Licensee told him that it was not appropriate for him to market the Property because of his personal interest. He said that he would talk to his boss and if he was interested in purchasing the property his company would not do anything about the listing.

• The Complainant’s firm was given every opportunity to sell the property but the offers they put through all fell over. He states that he asked them whether they had any more and that said they did not and ‘You are more than welcome to go with the Licensee.

2.10. The Solicitor acting for the Vendor of the Property confirmed that her client received a copy of the valuation that the Licensee had obtained on 23 July 2012. She states that she spoke with her client about the valuation and the potential for the contract to be cancelled under special condition 20.0 set out above. She states that she was instructed that the client was happy with the valuation and that she was to confirm special condition 20.

3. Relevant Provisions

3.1. The Committee examined the information supplied by the Complainant in the written complaint to determine whether section 72 or section 73 of the Real Estate Agents Act 2008 (the Act) applied i.e. was there evidence which would indicate that the Licensee could be considered guilty of unsatisfactory conduct (Section 72) or misconduct (Section 73).

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 misconduct 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.

Section 134 Contracts for acquisition by licensee or related person may be cancelled

(1) No licensee may, without the consent of the client for whom he or she carries out real estate agency work in respect of a transaction, directly or indirectly, whether by himself or herself or through any partner, sub-agent, or nominee, acquire the land or business to which the transaction relates or any legal or beneficial interest in that land or business.

Section 136 Disclosure of other benefits that licensee stands to gain from transaction

(1) A licensee who carries out real estate agency work in respect of a transaction must disclose in writing to every prospective party to the transaction whether or not the licensee, or any person related to the licensee, may benefit financially from the transaction.

Section 4 Interpretation

real estate agency work

(a) Means any work done or services provided, in trade, on behalf of another person for the purposes of bringing about a transaction.

4. Discussion

4.1. The Committee noted from the complaint lodged on behalf of the Complainant that ‘the issue is not with respect to the Licensee purchasing the property, the issue is the manner in which he submitted the offer so soon after the CMA (not bearing any price as should have been provided) and whether or not the Licensee breached the Rules when he completed the CMA and failed to complete it correctly and properly and when he, two days after submitting the incorrect CMA, initiated personal purchase interest activity.’

4.2. In response to the complaint, the Licensee through his solicitor stated that he provided the incomplete draft CMA to Mr T two days after he spoke with Mr T and declared his personal interest in the Property. It is clear to the Committee, and has been confirmed by Mr T who was assisting the Vendor of the Property, that the Licensee made his personal interest apparent from the outset and that he made it clear that he could not be involved in marketing the Property because of that interest.

4.3. Despite there being no listing agreement in place with the Licensee’s company, the Licensee still made provision in the offer that he made for the property whereby the vendor could choose to cancel the agreement if the valuation obtained by the Licensee came out at a figure higher than the amount of the offer that had been made. In fact this was the case and the solicitor for the Vendor confirms that the valuation was provided to her client who elected to proceed with the purchase despite the valuation coming out at a slightly higher figure than that offered by the Licensee.

4.4. The Committee considered whether the Licensee was engaged in real estate agency work in terms of the Act. It noted that before the partially completed CMA was provided to Mr T the Licensee had already declared his interest in purchasing the Property. It also noted that it was the clear understanding of the Mr T on behalf of the vendor that the Licensee ought not to be involved in the marketing of the Property because of his personal interest in buying it. Mr T made it clear that the Licensee had made this point with him. The Committee is of the view that the Licensee was not engaged in real estate agency work within the meaning of the Act when he provided the information about the Property to Mr T on 26 April 2012. Neither the Licensee nor the real estate company that he works for had a listing for the sale of the Property. The sole agency listing agreement that existed for the Property was with the Complainant’s company and it specifically reserved the right for the Vendor to deal privately with the Licensee.

4.5. In fact the Licensee went beyond his obligations as a Licensee by making provision in his private offer on the Property whereby the Vendor could choose to cancel the agreement if the valuation that the Licensee got for the Property turned out to be at a higher figure than the amount of his offer.

4.6. The Committee does not consider that the Licensee was carrying out real estate agency work when he provided Mr T with the draft CMA. It takes the view that the Licensee offered to purchase the Property in his capacity as a private purchaser and that there has been no improper treatment of the Vendor of the property by the Licensee.

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 has concluded that the Licensee was not carrying out real estate agency work in respect of the property and that he offered to purchase it in his private capacity. It has concluded that the Licensee cannot be considered guilty of unsatisfactory conduct in terms of section 72 or misconduct in terms of section 73. 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 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 Filing an Appeal

at www.justice.govt.nz/tribunals.

Signed

Deirdre McNabb

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 21st June 2013