Complaint No CD500115 [2013] NZREAA 254 (28 November 2013)

Last Updated: 3 August 2014

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

And

In the Matter of Complaint No: CD500115 (1) Complaint No: CD500034 (2)

In the Matter of Licensee 1

Licence Number: XXXXXXXX

Licensee 2

Licence Number: XXXXXXXX

Decision of Complaints Assessment Committee

Dated this 28th day of November 2013

Complaints Assessment Committee: CAC20002

Chairperson: Patrick Waite

Deputy Chairperson: Deirdre McNabb

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 who are licensed under the Real Estate Agents Act

2008 (the Act). They each hold a salesperson’s license and work for the Agency.

1.2 The Complainants listed their property for sale with the Agency in February 2012.

1.3 The complaint is:

Complaint 1: The Licensees misled the Complainants into believing that the first agency, Agency

X, would receive a share of the commission.

Complaint 2: That Licensee 1 granted a 24 hour extension to the purchasers going unconditional without the Complainants consent.

Complaint 3: That the Licensee allowed the purchasers to bring builders and carpet layers to a pre organized inspection without notifying the Complainants.

1.4 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

29 August 2013 and made a decision to inquire into it.

1.5 The Committee invited Licensee 1 and Licensee 2 to provide a response to the complaint and this was received on 9 September 2013. Final comments from the Complainants were received by the Authority on 25 October 2013. Having satisfied itself that it had completed its inquiry into the complaint, the matter was considered by the Committee on 19 November 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 Complainants were the vendors of a Property that they had initially listed with Licensee X of Agency X. They then listed their Property with another agency as a joint sole agency with that of Licensee X.

2.2 Licensee 1 and Licensee 2 from the Agency were the salespersons who listed the Property as a joint sole agency.

2.3 Prior to signing the listing agency agreement with Licensee 1 and Licensee 2, the Complainants sought assurance that the other licensee, Licensee X of Agency X would be entitled to a commission split in the event of a sale. They understood that he was.

2.4 The Licensees from the Agency presented the Complainants with an offer from the ultimate purchaser Ms D.

2.5 The offer presented was conditional and the Complainants have alleged that Licensee 1

authorised a 24 hour extension to the unconditional date without the Complainants’ permission.

2.6 After the contract was confirmed the purchasers conducted a further inspection of the Complainants’ property, and brought with them builders and carpet layers. The Complainants allege that Licensee 1 knew these tradesmen were coming, however failed to disclose it to the Complainants.

3. Relevant Provisions

3.1 The Committee examined the information supplied by the Complainants in their 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.

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

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.

Rule 9 Client care and dealing with customers

9.1. A licensee must act in the best interests of a client and act in accordance with client instructions.

9.4. A licensee must communicate regularly and in a timely manner and keep the client well informed of matters relevant to the client’s interest.

4. Discussion

4.1 Complaint 1: The Licensees misled the Complainants in respect of the commission split with the initial licensee.

4.1.1 It is clear that the Complainants believed that Licensee X would jointly share in any commission that arose from the sale of their Property and that both Licensee 1 and 2 acknowledged that understanding. The listing agreement was signed as a joint sole agency.

4.1.2 This understanding was consistent with the behaviour of Licensee 1 who advised the Complainants that they had some people coming from Christchurch wishing to view the Property and before visiting it she had called into Licensee X’s office and obtained a property folder on the property.

4.1.3 After settlement the Complainants discovered that the Agency had not paid a commission to Licensee X.

4.1.4 The Licensees in their response to the complaint advised that, whilst initially the Complainants agreed to take the Property to an auction and Licensee X would be involved in the auction as a shared listing, the Complainants had changed their minds and had chosen to sell by negotiation.

4.1.5 Licensee 1 states that when the Complainants agreed to sell by negotiation she made it very clear to them that both agencies would operate independently. She says that the Complainants were verbally advised by her that the successful agency would be paid the commission due. Licensee 2 believed that there was a clear understanding between the agencies and the Complainants that the selling agent would receive the commission. The Committee noted that whilst the Property was sold some 18 months ago, the subject of commission had not been raised by Licensee X or his company which would appear to support the Licensees’ understanding of the commission arrangement.

4.1.6 Licensee X was interviewed by the Authority on 11 September 2013. He confirmed that he had agreed to the Complainants’ wish to change his listing from a sole agency to a joint agency with the Agency. He had met with Licensee 2 whom he had known for 35 years and they agreed that they would do a joint listing to sell by way of auction. The Agency would control and run everything and he would be available to assist with open homes. There was an agreement for a

50/50 split of the commission in the event of a sale although this arrangement was not recorded and rather “a handshake agreement was made”. This arrangement was confirmed by the Complainants who advised that they had entered into a joint agency agreement on the understanding that he was involved.

4.1.6 Licensee X has stated that following this arrangement being reached he had not heard

anything further from the Agency other than having Licensee 1 call into his office to collect one of his property flyers before showing the Property to a client as they hadn’t prepared any. He subsequently heard that the Property had been sold by the Agency but as he had nothing in writing about him receiving a share of the commission he did not consider he had anything to pursue. He confirmed that he had not initiated the complaint against the Licensees nor driven it.

4.2 Complaint 2: That Licensee 1 granted a 24 hour extension to the unconditional date without the Complainants knowledge.

4.2.1 Whilst the Complainants believed that the extension had been granted by Licensee 1 without their authority, copies of emails obtained from the Licensees show clearly that the request for an extension was made by the purchaser’s solicitor to the Complainants’ solicitor who confirmed the extension. There is no indication that Licensee 1 authorised the extension on behalf of the Complainants.

4.3 Complaint 3: That the Licensees allowed the purchasers to bring builders and carpet layers to an inspection after confirmation date.

4.3.1 Whilst the Complainants agreed to a clause in the sale and purchase agreement allowing the purchasers a 2 hour period to inspect the Property at a date and time suitable to themselves, it would seem that they did not understand that this included allowing trades people to come to the ‘viewing’ by the purchasers.

4.3.2 Licensee 2 believes that he had advised the vendors that he thought the purchasers wanted to do an assessment of the alterations they planned. It is clear that the Complainants have a different recollection of this in that they believed that the purchasers only wished to refresh their memory of the house.

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 Best practice in the industry in regard to joint listings would suggest that arrangements between real estate agencies to jointly market a vendors property should in all cases be recorded in writing. In this case however, there was no written documentation to support the contention that there was any conjunctional agreement in place. All parties have a version of events that indicate there was to be some arrangement for the sharing of commission if the Property went to auction. The Property was not sold by auction. There is insufficient evidence to establish that there was an agreement that a 50/50 split of commission would be payable in the event that the Property sold outside of the auction process. To date the Agency has not paid any commission to Licensee X and in the absence of a written agreement legally they are not obliged to. The Committee noted that Licensee X has not pursued any payment from the Agency.

5.3 In regard to the complaint that Licensee 1 agreed to an extension without the Complainants approval there is no evidence available to the Committee that this in fact occurred. Emails between the two solicitors involved confirm that the request came from the purchaser through their solicitor to the Complainants’ solicitor who agreed to such an extension. Whilst it seems

that Licensee 1 was in agreement with this there is no indication that she authorised an extension on behalf of the Complainants.

5.4 The sale and purchase agreement does contain a clause allowing an inspection for a period of 2 hours. In the view of the Committee the insertion of this special clause would support the contention that the inspection was more than merely a viewing.

5.1 Accordingly after full consideration the Committee has determined under section 80(2) 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. Any application for an order preventing publication must be made to the Real Estate Agents Disciplinary Tribunal (the Tribunal).

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.ju st ice. go vt .n z /t rib u nals .

Signed

Patrick Waite

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 28th November 2013