Complaint No CO3566 [2013] NZREAA 265 (2 December 2013)

Last Updated: 19 August 2014

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

And

In the Matter of Complaint No: CO3566

In the Matter of Licensee

Licence Number: XXXXXXXX

Decision of Complaints Assessment Committee

Dated this 2nd day of December 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 Complainant has complained to the Real Estate Agents Authority (the Authority) about the conduct of the Licence) who is licensed under the Real Estate Agents Act 2008 (the Act). He holds a salesperson’s license.

1.2 The Complainant alleges that the Licensee advised him to change the covenants to his property to help sell it when he believes it was only done to help the Licensee sell the neighbouring property.

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

16 September 2013 and made a decision to inquire into it.

1.4 The Committee invited the Licensee to provide a response to the initial complaint and this was received on 4 October 2013.

1.5 The Complainant was interviewed by the Authority’s investigator on 31 October 2013.

1.6 Having satisfied itself that it had completed its inquiry into the complaint, the matter was considered by the Committee on 19 November 2013.

1.7 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 Complainant signed a listing agreement with the Licensee on 28 June 2013 in order to sell sections.

2.2 The sections had covenants registered against the title from the neighbouring property and the Licensee asked the Complainant to agree to change/remove these covenants because he thought it would be easier to sell the sections without the covenants there.

2.3 The Licensee told the Complainant that he had a buyer that was prepared to pay good money for one of the sections as long as the covenants weren’t there, in particular the covenant that restricted building closer than 50 metres from the road.

2.4 To support the covenant changes the Complainant was required to agree to allow the neighbour to remove some trees on his section and he did so.

2.5 The Licensee assisted with the provision of the documentation to give effect to the removal of the covenants. These were prepared by the neighbour’s solicitor and the Complainant signed these on the advice of his own solicitor.

2.6 The Complainant now believes that the covenants were removed only to enable the sale of the

neighbour’s property which was sold by the Licensee. The Complainant does not believe there was a genuine buyer for his own property.

2.7 Since the sale of the neighbour’s property the Complainant alleges that he has had no further contact from the Licensee.

3. Relevant Provisions

3.1 The Committee examined the information supplied by the Complainant in his written complaint to determine whether sections 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

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

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 Issue 1: The Licensee misled the Complainant into removing covenants.

4.1.1 The Licensee in his response to the complaint has advised that he has been marketing three of the Complainant’s sections since 12 September 2012 and the fourth and most valuable since 28 June 2013.

4.1.2 A title search by the Licensee showed that two of the sections were significantly affected by covenants, being building line restrictions from the neighbour’s two boundaries. The Licensee was not advised of these at the time of the listings. When he discovered these were restrictive covenants registered against the title to the land by the owner of the neighbouring property, an approach was made to have them removed to enable the sections to be more saleable.

4.1.3 When the Licensee received interest in one of the sections he felt that it was prudent to recommend that the Complainant seek to have the neighbour remove the covenants. He believed there was a possibility that if he delayed, compensation may be required later to obtain the neighbour’s approval or if there was a refusal to do this then there would be a requirement to disclose the covenants to purchasers. These things were expected to have an impact on the value of the section.

4.1.4 The Licensee negotiated with both parties for the removal of the covenants. The neighbour agreed provided there was a change so that trees or buildings could not be placed within 20 metres of the neighbour’s property. This enabled the neighbour to remove a row of pine trees from the Complainant’s property at the neighbour’s expense. Once an agreement was reached, the Licensee emailed the relevant documentation to the Complainant so that he could see in writing what the neighbour had agreed to and what the effects would be. The neighbour’s solicitor drew up the document which the Complainant signed in the presence of his own solicitor.

4.1.5 The Licensee showed a Mr. and Mrs. P the section on 26 June 2013 and they appeared keen. He knew they were genuine buyers as they had just sold and were looking to build again. On 1 July 2013 the licensee emailed the Complainant to advise that the party interested in the section was not going to make a decision for approximately 10 days. This was verified by Mr. and Mrs. P who have confirmed to the Authority that they were shown the section by the Licensee. They had recently sold their property and were keen on the Complainant’s section but had other things to consider. They decided to wait before making a decision but due to a change in circumstances they decided to purchase an existing house.

4.1.6 The Licensee has provided a trail of emails and communication with the Complainant

which clearly indicate that the Complainant was kept informed, understood the implications of what he was agreeing to and was receiving advice from his solicitor who was supportive of him signing to have the restrictive covenants removed. From the interview the Complainant had with the Authority’s investigator on 31 October 2013, the Committee noted the comment that “At the time I spoke to my lawyer Bridget and she said that she did think it was sensible to have the covenants removed.”

4.1.7 The neighbour’s property was conditionally sold on 27 June 2013 with the sale and purchase becoming unconditional on 11 July 2013 with settlement on 26 July 2013. The parties that purchased the neighbouring property have confirmed that they purchased it through the Licensee and that they were kept informed by the Licensee with regular updates during the process. They further state that they were happy to purchase the property regardless of the alterations to the covenants on the neighbouring property.

4.2 Issue 2: No communication after sale of the neighbour’s property.

4.2.1 Aside from the fact that emails were being exchanged with the Complainant and the Licensee after 27 June 2013 when the conditional sale of the neighbour’s property occurred the Licensee has provided a copy of an email dated 16 September 2013 advising the Complainant “I had a chap from Hastings look at the section on Friday. I will let you know if anything develops. He wants to build a new home.”

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 closely examined the information supplied by the Complainant and the responses received from the Licensee and other parties. It appears to the Committee that the covenants on the Complainant’s section were restrictive and the removal or alteration would be of benefit to the Complainant. The Committee noted that the cost of the removal and alteration to the covenants was borne by the neighbour and the trade-off was the removal of a row of pine trees from the Complainant’s property which was undertaken at the neighbour’s expense. The Complainant’s solicitor had been included into all the documentation and has clearly provided advice to the Complainant which the Committee understands included agreeing that it was sensible to have the covenants removed.

5.3 Despite the Complainant believing otherwise the Committee is satisfied that there was a genuine buyer interested in the Complainant’s section.

5.4 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.justice.govt.nz/tribunals.

Signed

Patrick Waite

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 2th December 2013