Complaint No C00129 [2013] NZREAA 230 (8 November 2013)

Last Updated: 15 July 2014

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

And

In the Matter of Complaint Number: C00129

In the Matter of Licensee One

Licence Number: XXXXXXXX

Licensee Two

Licence Number: XXXXXXXX

Decision of Complaints Assessment Committee

Dated this 8th day of November 2013

Complaints Assessment Committee: CAC20007

Chairperson: Paul Biddington Deputy Chairperson: Ann Skelton Panel Member: Joan Harnett-Kindley

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 Authority) about the conduct of Licensee One and Licensee Two. Licensee One and Licensee Two are licensed under the Real Estate Agents Act 2008 (the Act). Licensee One holds a salesperson’s licence and Licensee Two holds a branch manager licence. Both Licensees work for The Agency.

1.2. The Complaint relates to the conduct of Licensee One and Licensee Two in the negotiating and the purchase of the Property. The Complainant alleges that Licensee One misrepresented value of and expectations of sale price by giving a price guide $70,000 under the auction reserve. Furthermore, Licensee One led the Complainant to believe that pre-auction offers could be made given a flyer on the Property stated “present your offer today”. The Complainant further alleges that Licensee One and Licensee Two banked the Complainant’s cheque for $20,000 after telling him they would not bank it until after calling him mid-week to make sure the funds were available to cover the amount.

1.3. The complaint was received by the Authority on 21 February 2013 and referred to a Complaints

Assessment Committee (the Committee). The Committee considered the complaint on 28

February 2013 and made decision pursuant to section 79(1) of the Act to inquire into the complaint. The Committee met again to consider the complaint and further evidence gathered on 2 September 2013.

2. Material Facts

2.1. On 13 November 2012 the Complainant contacted Licensee One requesting information relating to the capital value and the expected sale price of the Property that Licensee One had advertised online. The Property had subdivision consent and a new title was issued for the Property on 14

November 2012. Licensee One advised that because of the subdivision there was no current

Rateable Value for the Property and he was inviting buyers over $330,000 to view the Property, but expected it to sell in the mid $300,000s.

2.2. The Complainant advised that he was unable to pay 10% deposit on the offer and would the Vendors accept a $20,000 deposit as he was dependant on the settlement proceeds from the sale of another property. Licensee One discussed the Complainant’s position with the Vendors and spoke to Licensee Two in relation to varying and signing the pre-auction procedures form. The Vendors agreed that a deposit of $20,000 would be acceptable. The Complainant stated that he advised Licensee One that the money was not readily available and that Licensee One stated that it was not a problem as long as the cheque was received.

2.3. After viewing the Property 15 November 2012 the Complainant signed the pre-auction procedure form and an offer of $340,000 was drafted by Licensee One which the auctioneer presented it to the Vendors. This offer was not accepted by the Vendors. The Complainant made a further offer of $350,000, however this was also rejected.

2.4. The Complainant stated that he asked Licensee One why the Property had been marketed as inviting buyers over $330,000 stating “Present you offer today” when clearly the vendors had no intention of accepting an offer around this figure. He further stated that Licensee One should have marketed the Property as inviting buyers from $350,000 or $370,000 which would have been more truthful.

2.5. Licensee One stated that his appraisal price was between $350,000 and $390,000, however the listing agreement estimated between $370,000 and $390,000. Licensee One further stated that because he had no rating value to go off and because a similar property nearby had sold for

$337,000 with a rateable value of $380,000, was why he had stated buyers to inspect over

$330,000. Licensee One had sold a neighbouring property with a rateable value of $380,000 for

$360,000.

2.6. Licensee Two stated that Licensee One had advertised the Property different from company instructions in that a figure was used instead of low, mid or high $300,000s. The mid $300,000 range runs from $330,000 to $370,000. Licensee One had used the bottom figure to effectively say that if your budget is under $330,000 do not view the Property.

2.7. The Complainant stated that after his pre-auction offers of $340,000 and $350,000 had been rejected, he wanted to offer $360,000 but was advised by Licensee One that the Vendors would not now be accepting any offers prior to auction.

2.8. On 16 November 2012 Licensee One stated that the Vendors advised the auctioneer, who advised him, that they did not want to take pre-auction offers now due to pressure and wanting the auction to happen. Licensee One confirmed this with the Vendors and then advised the Complainant. The Vendors had confirmed with Licensee One they didn’t want to accept any further pre-auction offers due to the amount of interest in the Property. As the advertising of the Property included that the selling method was auction (unless sold prior) and also stated “Present your offer today” Licensee One advised that he removed the statement from the internet and further marketing once the Vendors had made their decision.

2.9. The Complainant was unhappy that his pre-auction offers had been rejected and stated that the problem with this whole transaction is that real estate agents can say whatever they like in their ads and there is no come back. The Complainant further stated that if his pre-auction offer had been accepted, the auction could have been brought forward, in line with the pre-auction procedure and he would have been able to purchase the Property for less than he paid. In addition he stated that he felt he had advised Licensee One too much about his current position in relation to having sold and needing to buy a property.

2.10. On 22 November 2012 the auction was held and the Complainant was the successful bidder for

$412,000. The Complainant stated that it had been agreed that he could pay a deposit of

$20,000 and mentioned that the money was not readily available. Licensee Two receipted the deposit cheque from the Complainant and the Complainant post-dated the cheque for 25

November 2012. The Complainant further stated that Licensee One and Licensee Two confirmed that they would call him in the middle of next week to ensure the funds were available before banking the cheque. Licensee One and Licensee Two refute this stating that they would never do this. The deposit had to be paid as soon as possible not sometime in the future. This agreement regarding the deposit of the cheque was not communicated to the administration department and the cheque was banked first thing on Friday morning.

2.11. The Complainant called Licensee One about the cheque being presented on Friday and Licensee

One apologised. Licensee Two subsequently rang the Complainant to apologise. Licensee One

and Licensee Two offered the Complainant full costs and any reasonable charges for the banking of his deposit. The Complainant stated that he asked Licensee One what figure they would be offering and Licensee One said they didn’t know what the charges or the fees would be from the bank. The Complainant declined the offer and stated that he had to spend a day at the bank sorting out the mess and could not afford do this as he had a small business.

2.12. The policies of both the Complainant’s bank and the New Zealand Bankers Association would suggest that if a cheque is post-dated, it could be declined or dishonoured. In this case, the date on the Complainant’s cheque was not noticed and had been processed without issue.

3. Relevant Provisions

3.1. A Complaint can only be made in relation to alleged unsatisfactory conduct (section 72 of the

Act) or alleged misconduct (section 73 of the Act).

3.2. Section 72 of the Act Provides;

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.

3.3. Section 73 of the Act provides:

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.

3.4. The Real Estate Agents Act (Professional Conduct and Client Care) Rules 2009 (the Rules) set out the standard of conduct and client care that agents, branch managers and salespersons (licensees) are required to meet when carrying out real estate agency work and dealing with clients. Whilst these rules are not meant to be an exhaustive list, they set minimum standards that licensees must observe and are a reference point for discipline.

3.5. In relation to this complaint the following Rules may apply:

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

Rule: 9.7: A Licensee must not mislead customers as to the price expectations of the client.

4. Discussion

4.1. The Committee is of the view that because the Property was going to be auctioned it was difficult for Licensee One to know what price the Property would fetch until the day of the auction. Licensee One had marketed the Property inviting buyers over $330,000 with “Present your offer today.” This way of marketing could have produced a buyer before the auction who may have offered a price that the Vendors would have been happy to accept.

4.2. The comparable sales that Licensee One had at the time of listing to reach a comparable listing price for the Property were all over the place. Neighbouring properties had sold above their Rateable Value and others had sold below. Licensee One wanted to keep the price as wide as possible to attract the buyers and not too narrow as to limit what the Vendors may achieve for the Property.

4.3. The Committee is also of the view that the Complainant may have more readily accepted the way that Licensee One marketed the Property had he used the low $300,000s to mid $300,000s. Licensee Two had stated that this range runs from $330,000 to $370,000 and was company policy.

4.4. The Committee accepts that the Vendors were quite within their rights to reject the Complainant’s pre-auction offers and not to counter-offer back and furthermore it was acceptable for them not to consider any more pre-auction offers a week before the auction as the interest in the Property had increased.

4.5. The Complainant was disappointed that he was not able to complete a transaction on the Property before the auction as he felt that he may have been able to buy the Property at a cheaper price. However, this is why the Property was auctioned so that the Vendor could achieve the best price in the current market. Although the Complainant was the successful bidder on the day, the Committee is of the view that he still had the choice not to bid or pay the price he paid.

4.6. In relation to the Complainant’s deposit cheque being presented before the agreed date after Licensee One had suggested that it be post-dated had caused the Complainant difficulties, however Licensee One and Licensee Two had offered to reimburse the Complainant for any expenses that the Complainant had suffered as a result of the error but he rejected the offer. Furthermore, it was not unreasonable for Licensee One and Licensee Two to ask the Complainant to advise them of the costs he had incurred.

4.7. Accordingly, the Committee finds that Licensee One and Licensee Two have not breached the Act or the Rules in relation to the complaint.

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 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 to 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.

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

Paul Biddington

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 8 November 2013