Complaint No C02489 [2013] NZREAA 267 (6 December 2013)

Last Updated: 13 September 2014

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

And

In the Matter of Complaint No: C02489

In the Matter of Licensee 1

Licence Number: XXXXXXXX

Licensee 2

Licence Number: XXXXXXXX

Decision of Complaints Assessment Committee

Dated this 6th day of December 2013

Complaints Assessment Committee: CAC20004

Chairperson: Michael Vallant Deputy Chairperson: Paul Morten Panel Member: David Russell

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. The licensees are licensed under the Real Estate Agents Act 2008 (the Act), Licensee 1 is a licensed agent and Licensee 2 is a licensed branch manager.

1.2 The complaint is that the licensees have acted in bad faith. The complainants’ allegation is that as they had verbally accepted the vendor’s counter offer, this should have put them in preference to any other offer and their dealings with the vendor should have been concluded before any other offer was presented to the vendor.

2. Material Facts

2.1 On 29 May 2013 the complainants entered into a sale and purchase agreement (the agreement)

for a section (the property). The agreement was given to Licensee 1 to present to the vendor.

2.2 On 31 May 2013 Licensee 1 received a counter offer from the vendor and e-mailed the counter offer to the complainant. The complainant advised Licensee 1 that as it was a long weekend and they had family commitments, they would leave the counter offer until after the long weekend.

2.3 On 3 June 2013 Licensee 1 contacted the complainant by text message, following up on the counter offer, to see if any progress had been made. The complainants’ view was that it was too late in the evening by the time he saw the text to deal with the matter.

2.4 On 4 June 2013 Licensee 1 telephoned the complainant to discuss the counter offer. The complainants advised that it had been a very busy day and requested that the matter be dealt with the following morning.

2.5 On 5 June 2013 Licensee 1 arranged to meet with the complainants to sign the counter offer.

This appears to have taken place at approximately 11:30 AM. Shortly thereafter, Licensee 1 became aware of a second purchaser’s interest in the property and contacted the complainants to advise them there was another offer and warned that the counter offer could be withdrawn by the vendor, at anytime. The complainants requested a couple of hours to make some phone calls and to speak with their bank manager.

2.6 At approximately 2:15 PM Licensee 1 advised the complainants by phone that a second buyer through another licensee had made an offer and they needed to make their decision quickly. The complainants advised Licensee 1 they accepted the counter offer and made arrangements to sign the agreement.

2.7 Licensee 1 at approximately 2:54 PM advised the vendor that the complainant had verbally accepted the counter offer. The vendor advised Licensee 1 that the counter offer was withdrawn. Licensee 1, almost immediately after the conversation with the vendor, phoned the complainants and advised the complainant that the vendor had withdrawn the counter offer.

2.8 At approximately 4 PM the second buyer's offer was presented to the vendor which he accepted

at approximately 6 PM.

2.9 At 7 PM, or thereabouts, Licensee 2 phoned the complainants and advised them that the vendor had withdrawn his counter offer and accepted the offer of the second purchaser which meant their offer to purchase was at an end.

3. Relevant Provisions

3.1 The Complaints Assessment Committee ( the Committee) finds the following provision relevant:

3.2 Pursuant to section for of the Real Estate Agents Act 2008:

50 Salespersons must be supervised

(1) A salesperson must, in carrying out any agency work, be properly supervised and managed by an agent or a branch manager.

(2) In this section properly supervised and managed means that the agency work is carried out under such direction and control of either a branch manager or an agent as is sufficient to ensure—

(a) that the work is performed competently; and

(b) that the work complies with the requirements of this Act.

3.3 Pursuant to the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012:

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

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

9.3 A licensee must communicate regularly and in a timely manner and keep the client well informed of matters relevant to the client’s interest, unless otherwise instructed by the client.

4. Discussion

4.1 At the outset, the Committee notes that there is a conflict between the complainant and the licensees as to the timing of the events on the critical day, 5 June 2013. For the Committee to make a decision on this matter however, the timing of the events although relevant is not critical.

4.2 The complainants made their offer on 29 May 2013, which the Committee notes was conditional, on finance, a LIM report, and solicitor’s approval. The vendor counter offered on 31

May 2013 and the complainants could have accepted the counter offer anytime up until the vendor withdrew his counter offer on the afternoon of 5 June 2013. The complainants raised a number of reasons for their failure to not sign the agreement, a long weekend, they had been too busy, and they needed to discuss the agreement with their banker and lawyer. In short, they had a period of 5 days during which they could have made their decision.

4.3 It is noted during that 5-day period they were contacted by Licensee 1 on 3 and 4 June by phone

and text trying to see whether any progress had been made and whether they were ready to sign the agreement.

4.4 The law in relation to sale and purchase agreements is that there is no binding agreement until the parties have signed the agreement. The signing of the agreement can be on the original document or by way of fax or e-mail. As Licensee 1 pointed out to the complainant, albeit on 5

June, the vendor could withdraw the counter offer at any time and accordingly he warned them that they should make their decision quickly. Even with that advice, the complainants still sought further time to consult with their bank manager.

4.5 The Committee cannot understand why the complainants, when receiving the advice from Licensee 1 that they needed to hurry up making their decision, decided that they needed to consult with their bank manager when the contract was conditional upon them obtaining finance. If they did not obtain finance then the contract would not proceed.

4.6 The complainants have a view that once they had made the offer no further offer could be considered by the vendor until their offer had been resolved. The Committee considers that this view is legally incorrect. If they had clarified the matter with their banker or lawyer who they had been in contact with, or even with the Licensee, they would have been made aware of the correct legal situation.

4.7 In saying that, Licensee 1 did make it clear to them on 5 June that the counter offer by the vendor could be withdrawn at anytime. From that time, they were aware of the legal situation and knowing there was a second purchaser making or about to make an offer, they should have proceeded with all haste to sign the agreement rather than seeking further time.

4.8 Licensee 1, in the Committee's view, took all practical steps possible to encourage the complainants to sign the agreement. When the possibility of a second purchaser arose, Licensee

1 informed the complaints as soon as practical.

4.9 Licensee 1 cannot be held responsible for the complainants misunderstanding of the law.

4.10 In any event it is the Committee's view that the complainant had a period of approximately 5 days to sign the agreement which was more than ample time. The fact that three of those days were holidays is irrelevant as it would not stop the signing of the agreement. Unfortunately, the complainants are the authors of their own misfortune in this instance, and cannot blame either licensees for the complainants' failure to understand the law and inability to act in a prompt manner.

4.11 Accordingly, the Committee finds that the complainants had failed to establish that Licensee 1 or Licensee 2 have carried out real estate agency work in a manner which constitutes unsatisfactory conduct.

5. Decision

5.1 After conducting an inquiry into the complaint’s, pursuant to section 89(1) of the Real Estate Agents Act 2008 (the Act), the Committee held a hearing with regard to that complaint’s. 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.

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

Michael Vallant

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 6 December 2013