Complaint No CB6863618 [2013] NZREAA 165 (23 August 2013)

Last Updated: 1 June 2014

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

And

In the Matter of Complaint No: CB6863618 and CB6863645

In the Matter of Licensee 1

Licence Number: XXXXXXXX

Licensee 2

Licence Number: XXXXXXXX

Decision of Complaints Assessment Committee

Dated this 23rd day of August 2013

Complaints Assessment Committee: CAC20002

Chairperson: Deirdre McNabb Deputy Chairperson: Patrick Waite Panel Member: Barrie Barnes

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. The Complainants have complained to the Real Estate Agents Authority (the Authority) about the conduct of Licensee 1 and Licensee 2 both of whom are licensed under the Real Estate Agents Act 2008 (the Act). Licensees 1 and 2 both hold salespersons licenses.

1.2. The complaint is:

• Undue and unfair pressure and high pressure sales tactics were used both at the time of listing and at the time of sale of the complainants home. It is alleged that the agent conducted themselves unprofessionally and threatened the complainants with legal action.
  
• The commission deducted was not as per the verbal agreement the complainants had with the licensees. Licensee 1 did not complete the listing authority to reflect this verbal agreement and the estimated commission was not calculated or detailed on the Complainants copy of the listing authority.
  
• The agents did not demonstrate the level of professional competence the Complainants could reasonably expect or the standards in the professional code of conduct for licensees.
  

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

20 March 2013 and made a decision to inquire further.

1.4. The Committee invited the Licensees to each provide a response to the complaint. 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. The Licensees were the listing agents for a property.

2.2. The Complainants were the successful tenderers for the purchase of this property and they purchased it on 16 February 2012.

2.3. After the Complainants had purchased the property they retained the Licensees to be their real estate agents for the purposes of selling their own property.

2.4. The Complainants state that they asked the Licensees to come to their property on the evening of 16 February 2012 so that they could countersign the sale and purchase agreement for the new Property that they had bought. They wanted to finalise that contract. They say that they had not intended to sign a listing authority for the sale of their own Property that evening but that the Licensees put them under immense pressure to sign a listing authority with their

Agency and they did so. They also say that Licensee 1 applied immense pressure during the marketing of their property to have them reduce their price expectation and accept a deal. They consider that Licensee 1 exploited her knowledge of their unconditional purchase of the new property and effectively used that to threaten the Complainants with legal action when they tried to negotiate an offer on the sale of their own Property.

2.5. In response Licensee 1 says that the Complainants were aware she was seeking the listing for the sale of their Property, and she knew that they wanted to pay less commission than that which the Licensees would usually charge.

2.6. She states that the Licensees attended an appointment with the Complainants at their home at

7.15pm in the evening. At that appointment they were expecting to finalise the documentation for the sale of their new Property and complete a listing for the sale of the Complainants property. The appointment finished at 8.30pm. She states that the appointment was not high pressure or rushed, but rather that they discussed strategy, marketing and the Complainants questions and concerns before completing the listing authority for the sale of their property. That is confirmed by the listing authority being signed on 16 February 2012.

2.7. A range of marketing material was provided to the Authority along with email correspondence all of which indicated regular contact between the Licensees and the Complainants during the marketing of their property. The Licensee held Vendor meetings every week during the marketing campaign and indicated to the Complainants that people viewing the property did not see it as being worth more than the mid $500,000’s.

2.8. A copy of a registered valuation of the property has been provided and sets the price of the property at $560,000.

2.9. Email correspondence indicates that the Complainants were not happy with the level of interest in their property and that they eventually instructed the Licensees to market the property as a buyer enquiry range of ‘enquiry over $530,000’.

2.10. Licensee 1 states that she and Licensee 2 told the Complainants that if they were marketing the property this way they had to be prepared to seriously consider an offer at or around this level for such advertising to be valid. She also states that she told them that they (the Licensees) were legally obliged not to advertise property at a price that the vendors of that property would not seriously consider based on a Commerce Commission ruling to that effect. She went on to say that she did not threaten the Complainants with legal proceedings on this point but told them that any attempt to counter sign an offer on their property at a price considerably higher than the ‘enquiry over $530,000’ price was likely to alienate a buyer.

2.11. The Complainants expected the two Licensees to attend each Open Home conducted at their Property and complained that this did not happen as promised. The Licensees acknowledge that Licensee 1 conducted the fourth Open Home on her own due to Licensee 2 leaving the franchise and therefore a shortage of available salespersons. This Open Home produced the ultimate purchaser of the Property.

2.12. The ultimate buyer of the Complainants Property first offered $535,000 on the property and finally purchased it at a negotiated price of $555,000. These negotiations took place over a period of time and they were able to consider the offer they ultimately accepted overnight before signing the agreement.

3. Relevant Provisions

3.1. The Committee examined the information supplied by the Complainants in their written complaint and that supplied by the Licensees 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 Licensees 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.

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 9 Client and Customer Care

Rule 9.2 A licensee must not engage in any conduct that would put a prospective client, client or customer under undue or unfair pressure.

Rule 9.8 A licensee must not take advantage of a prospective client’s, clients, or

customers inability to understand relevant documents where such an inability is reasonably apparent.

4. Discussion

4.1. The Committee carefully considered all of the material provided by the Complainants and the

Licensees.

4.2. In relation to the allegations of undue and unfair pressure, high pressure sales tactics, unprofessional conduct and threats of legal action the Committee found:

• The Complainants were aware that the Licensees wanted to list their property after they purchased the new Property. The Committee considered it would not be unreasonable for the Complainants to expect the Licensees would likely want to cover this issue off when visiting the Complainants to sign the documentation required for their new purchase. Whilst the Licensees may well have put their case for the listing strongly, this is to be expected. There was no obligation on the part of the Complainants to sign anything at the meeting on

16 February 2012 and yet they have both done so. The Committee does not see the signing of the listing itself to be undue or unfair pressure.

• The documentation provided indicates frequent communication between the parties which is to be expected of a competent licensee. The Committee noted that the Licensees did not always both attend Open Homes as originally contemplated but such occurrences may occasionally occur through unforeseen events during the marketing of a property and there is insufficient evidence to conclude that this occurred frequently enough to indicate unprofessional conduct on the part of the Licensees.

• The Committee noted the complaint about threats of legal action but found that the Licensees would have been expected to explain what was required of a vendor in the event they choose to market their property on an ‘enquiry over...’ basis. Such an explanation can avert problems for the vendors at a later date. Accordingly the Committee did not find that discussion of this legal issue was improper or to be construed as a threat.

The agents did not demonstrate the level of professional competence the complainants could reasonably expect or the standards in the professional code of conduct for licensees.

4.3. In relation to the suggestion that the Licensees did not honour a verbal agreement to charge a commission lower than that recorded on the listing agreement, the Committee found that the listing sets out a clear basis for calculating the sales commission that would be charged in the event of a sale. The Complainants state that the estimated commission was not calculated in their presence or detailed in the copy of the listing authority.

4.4. A copy of the listing agreement provided to the Committee shows that, where the commission is provided for in the listing agreement, the Complainants have specifically initialled a change that reduced the percentage of the purchase price that would ultimately be charged from 4% to 2.75%. This suggests that the Complainants specifically turned their minds to this aspect of the agreement. Accordingly the Committee considers that the basis for calculating commission was consciously agreed to by the parties at the recorded rate. It also found that there is insufficient evidence to suggest that any different agreement had been reached verbally and such an agreement is denied by Licensee 1.

4.5. Finally the Committee considered the allegation of professional incompetence and an inadequate standard of conduct on the part of the Licensees. Having reviewed all of the material before it, the Committee was unable to conclude that the Licensees had conducted themselves in such a manner. It found that the Complainants were obviously unhappy with aspects of the marketing campaign but that ultimately they signed an offer negotiated through the Licensees. The price on that contract was well in excess of the enquiry range price that they had instructed the Licensees to market the property at and was supported by a registered valuation very close to the price achieved. Whilst the legal explanation provided to the Complainants by the Licensees was construed as a threat the Committee found that it was in fact a protection for the Complainants and something that would be expected of a competent licensee.

4.6. After consideration of all of the factors in this case, the Committee is of the view that the actions of the Licensees were consistent with the requirements of the Rules that licensees exercise skill, care, competence and diligence on behalf of a client. It also found there was insufficient evidence of improper conduct or evidence to suggest that the actions of the Licensees fell short of the required standards of conduct.

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 the Licensees are not 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 licensees 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: 23rd August 2013