Complaint No CB6886046 [2013] NZREAA 30 (20 February 2013)

Last Updated: 16 February 2014

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

And

In the Matter of Complaint No: CB6886046

In the Matter of Licensee 1

Licence Number: XXXXXXXX

Decision of Complaints Assessment Committee

Dated this 20th day of February 2013

Complaints Assessment Committee: CAC20003

Chairperson: Marina Neylon Deputy Chairperson: Alison Wallis Panel Member: John Auld

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1 This is a complaint made by the Complainant against the Licensee. The Licensee is a salesperson licensed under the Real Estate Agents Act 2008 (the Act) engaged by the Company.

1.2 The complaint concerns the conduct of the Licensee during and after the marketing of the

Complainant’s property (the Property). Specifically that:

• during the marketing period, the Licensee dissuaded potential buyers for the property to advantage herself as a buyer; and

• after the Licensee’s offer came to an end and the property was being marketed by a different agency, the Licensee told neighbours that the house was unsafe and had to be demolished.

2. Material Facts

2.1 On 23 September 2011, the Complainant listed the Property - owned by her company, for sale by auction with the Licensee. The market appraisal range was $280,000 to $320,000. The auction reserve was set at $275,000.

2.2 On 23 October 2011 the Complainant commissioned a building inspection report for the Property that detailed maintenance and repairs required for the exterior. The report also highlighted issues with the foundation and bearers which had resulted in the floor sagging. The report recommended further expert advice be obtained in regards to the floor and foundation. The report was provided to the Licensee for the information of potential purchasers.

2.3 On 2 November 2011 the property went to auction and was passed in with no bids received.

2.4 The Licensee and her husband made an offer to the Complainant for the property on 3

November for $260,000 conditional on a further building report. This offer was accepted. All statutory requirements for acquisition of land by a licensee were complied with.

2.5 The Property was inspected by the Inspectors who are specialist repairers of foundations. The inspection identified significant issues with the foundation and that the deck joists were not structurally sound. The Inspector informed the tenants who resided in the Property that, in his opinion, the deck was unsafe and recommended that the tenants stay off the deck until it was fixed.

2.6 After receiving the report from the Inspectors the Licensee emailed the Complainant on 9

November 2011 outlining the issues with the deck and the foundations and supplying the name of the builder so that the Complainant could follow up.

2.7 On 16 November 2011 the Licensee exercised her right to cancel the sale and purchase agreement on the grounds that the special condition requiring approval of a building report had not been satisfied.

2.8 On 24 November 2011 the Complainant emailed the Licensee to withdraw the property from the market and request removal of signs. This was confirmed by the Licensee.

2.9 In March 2012 the Complainant listed the property with another agency. The property sold some

10 weeks later for $210,000. The new agent reported the alleged comments to the Complainant.

3. Relevant Provisions

3.1 Real Estate Agents Act 2008

S72 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—

1. 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.

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

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

• Rule 9.1 A licensee must act in the best interests of a client and act in accordance with

the client’s instructions unless to do so would be contrary to the law.

4. Discussion

4.1 Issue 1

The Licensee’s own interest in the Property. The Complainant became aware that, during the marketing of the Property, the Licensee had mentioned to potential buyers and the Property’s tenants that she was interested in purchasing the Property herself. The Complainant believes this was prejudicial to the sale and a conflict of interest on the part of the Licensee. The Committee has investigated this allegation and received statements from neighbours and buyers that attended the Property during the marketing. The Committee also received a statement in response from the Licensee and her management.

4.2 It appears to the Committee that the Licensee did disclose her interest to some parties prior to auction. She also made her client aware of her interest directly, but the evidence before us suggests that rather than dissuade potential buyers, it actually gave them confidence in the desirability of the Property. One statement from a potential purchaser states that the Licensee made it clear she would only pursue the property if it did not sell at auction, leaving the way clear for any purchaser to buy ahead of the Licensee. The Committee has determined that there are no grounds to find that the Licensee’s conduct was unsatisfactory in this regard.

4.3 Issue 2

The negative statements about the Property that have been attributed to the Licensee. The

statements received from all five neutral parties canvassed by our investigator confirmed that the Licensee had nothing derogatory to say about the property at any time. In fact, many comment on how upbeat the Licensee remained about the Property despite its building issues.

4.4 It is possible that the allegations arise out of the disclosure of the building problems that were contained in the Complainant’s building report. The Committee notes that there is a statutory requirement under the Rules for the Licensee to disclose to any potential customer “known defects”. As the Complainant had furnished a building inspection that showed several known defects the Licensee had no choice but to disclose these matters or risk a complaint from the eventual buyer. Therefore such disclosure cannot be considered unsatisfactory conduct.

4.5 In regard to the tenant being informed that the deck was unsafe, it is established that it was the Inspector that initially spoke to the tenants on this matter. The Licensee has a responsibility to ensure that any safety hazard on the Property is dealt with appropriately. The Committee is satisfied that the Licensee acted correctly in emailing the Complainant with this information and went so far as to supply the specialist’s report at no cost to the Complainant.

4.6 The Complainant’s concern regarding the Licensee making derogatory statements about the Property appears to come from the hearsay of her new agent. It appears to the Committee that these hearsay allegations are without foundation and have caused considerable upset to the Complainant and the Licensee.

4.7 The Committee has carefully looked into the conduct of the Licensee in all respects including the manner in which she handled the removal of the listing and finds that the Licensee has been honest and fair in her dealings with the Complainant. Therefore this complaint is dismissed.

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 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. 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

Marina Neylon

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 20 February 2013