Complaint No C04525 [2014] NZREAA 174 (12 June 2014)

Last Updated: 22 February 2015

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

And

In the Matter of Complaint No: C04525

In the Matter of Licensee

Licence Number: XXXXXXXX

Decision of Complaints Assessment Committee

Dated this 12th day of June 2014

Complaints Assessment Committee: CAC 307

Chairperson: Jane Parker Deputy Chairperson: Graeme Rossiter Panel Member: Miles Maitland

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 the Licensee.

1.2 The Complainants were the Vendor-Clients of the Respondent-Licensee. The Complainants listed their property with the Respondent who sold the property for $708,156.00.

1.3 The property was sold to Mrs H, a Real Estate Agent with another agency. Within 4 weeks of purchase Mrs H offered the property for sale, initially by auction and when that was unsuccessful, offered it for sale for $815,000.00.

1.4 The Complainants allege the Respondent:

1.4.1 Mislead them about the true value of the property

1.4.2 Failed to act in their best interests

1.4.3 Had a relationship with the purchaser and profited from the sale

2. Material Facts

2.1 The Complainants purchased the property through the Respondent and in 2010 left the country to live overseas and the property was tenanted out.

2.2 The Complainants decided to list the property for sale and contacted the Respondent.

2.3 29 July 2013 the Respondent emailed the Complainants regarding options for selling the property and provided a current market appraisal with a selling price of between $630,000 and

650,000.

2.4 The Complainants confirmed the option where the property was listed with the Respondent and offered for sale on the basis of “agents eyes only” whereby the property could not be seen by the public.

2.5 Within ten days of listing the Respondent had three offers and these were presented by telephone to the Complainants.

2.6 The highest offer was the offer by Mrs H or nominee.

2.7 On 10 August 2013 the sale and purchase agreement between the Complainants and Mrs H was signed, sale price $708,126 and settlement date set for 22 October 2013.

2.8 Included in the sale and purchase agreement were specific terms of agreement acknowledging

“the vendor is aware that the purchaser is a licensed real estate agent for another company ...”

Also Schedule 2 of the agreement stated “purchaser intends at settlement to use the property as a principal place of residence ...”.

2.9 The Complainants state that the Respondent advised them that Mrs H the purchaser had advised

they “loved the property and intended moving in”.

2.10 On 22 October 2013 settlement occurred.

2.11 On 8 November 2013 Mrs Hao listed the property for auction.

2.12 The Complainants learned the property was on the market again and notified their solicitor and they “had concerns that if raised directly prior to the auction the Vendors would deliberately “crash auction” and pretend the bids were too low or had a pre auction offer” so they would rather wait for true outcome.

2.13 On 7 December 2013 the property was auctioned but passed in at $800,000

2.14 The property advertised for sale on 9 December 2013 at $815,000; the Complainants notified

REAA of complaint.

2.15 The property taken off the market in January 2014.

3. Relevant Provisions

3.1 The relevant law is the definition of ‘unsatisfactory conduct’ in section 72 of the Real Estate Act

2008 (the Act)

Section 72 – Unsatisfactory conduct

For the purpose 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 regulation 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 acceptable

3.2 In addition, consideration may need to be given to rules 6.4, 9.1 and 10.2 of 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 in 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 law.

Rule 10.2 An appraisal of land or a business must—

(a) be provided in writing to a client by a licensee; and

(b) realistically reflect current market conditions; and

(c) be supported by comparable information on sales of similar land in similar locations or businesses.

4. Discussion

4.1 The Committee considered the Complainants’ submissions, the Respondent’s submissions,

email correspondence between the parties and the Investigator’s Report.

4.2 In their initial email of complaint dated 30 November the Complainants stated that when they learned Mrs H put the property back on the market within 4 weeks they were distressed and would have had a “great deal of mistrust in this transaction had we known that the purchaser was buying with the intention of quickly flipping our property”. The Complainants acknowledged they signed their sale and purchase contract knowing Mrs H was a real estate agent. However they said they were assured by the Respondent that the purchasers loved the property, intended living in the property and that this was substantiated by a clause in the Schedule stating the purchasers were living in the property. The Complainants considered they were misled about the true value of the property and that friends said they could get between $730,000 and

$800,000 “in this buoyant market”. The Complainants said they were concerned that the Respondent “after only seven days, presented to us three offers in August, the highest and mo st obviously lucrative one being from a Mrs H”. The Complainants are concerned that the Licensee may have had an existing relationship with the purchaser and profited from the sale.

4.3 The Respondent stated the appraisal realistically reflected current market conditions, that she did not mislead the Complainants about the value of the property and that she acted in ther best interests at all times.

4.4 Turning first to consider the Complainants’ allegation that the Respondent failed to act in thei r best interests.

4.5 Dealing with the time frame from the Respondent’s appointment through to the date the sale and purchase agreement was signed. The Respondent’s email of 27 July to the Complainants listed four options regarding the sale process, the advantages and disadvantages of each option and also canvassed the idea of delaying the sale until February when the exisitng tenancy ended.

4.6 The Committee has considered the Complainants’ reply of 27 July, confirming option A was their preferred choice and the two reasons for this: their desire that the existing tenants, who were migrants experience the minimum of disruption and their concern not to upset the tenure of the tenancy.

4.7 The Comittee has considered the circumstances around the listing, the agents’ caravan through the property and the three offers within seven days with Mrs H as the successful purchaser who put the property back on the market within 4 weeks. The Committee appreciates the Complainant’s suspicions about the Respondent in the light of this chronology of events.

4.8 However, the Committee finds there is no evidence of any conduct by the Respondent that proves on the balance of probabilities that there has been a breach of Rule 9.2 regarding “best interests”.

4.9 The Committee finds the evidence of the Respondent’s email about options, her use of photographs showing the property in better condition as when occupied by the Complainants,

the process for caravaning agents through the property and, significantly, co-listing with another agent who knew the area well, altogether establishes that the Respondent did act in Complainants best interests.

4.10 Turning to consider the time frame between the date of settlement until when Mrs H put the property up for auction and then sale. The Complainants state that the Respondent had a pre existing relationship with Mrs H and she failed to act in their best interests and also stood to profit from Mrs H’s sale.

4.11 The Respondent denies a pre existing relationship, denies any knowledge that Mrs H would put the property back on the market and denies that she has or might in the future, when the property is sold, make any profit from Mr H’s sale of the property.

4.12 In considering the conflicting evidence from the Complainants and the Respondent, the Committee prefers the logic and detail of the Respondent’s evidence. In particular the Committee places weight on the fact that the Respondent was at all times working with another agent and this exposed the Respondent to scrutiny by another agent. Based upon these facts the Committee is satisied the Respondent did not have a pre existing relationship.

4.13 Turning now to the Complainants allegation that the Respondent misled the Complainants as to the true value of the property and this is evidenced by fact that the property was put on the market for $815,000 after it failed to sell at auction in December 2013. The Committee has considered the documentation about current market values that the Respondent emailed to the Complainants together the Licensee’s detailed written explanation of properties marketed and sold in that area and the Respondent’s account of her discussions with the other agent working on the sale. The Committee finds all this evidence consistent and logical based on this evidence finds the appraisal provided on 29 July 2013 for between $630,000 and $650,000 appears consistent with an appraisal that a reasonable licensee, using skill and care would arrive it. In addition the Committee accepts that the property was tenanted at the time the Complainants offered it for sale and also that some cosmetic changes made by Mr H and these are also factors which contributed to the price difference. These are factors which are unrelated to the Licensee’s conduct.

4.14 The Committee acknowledges the Complainants’ comment that the difference between the

$815,000 and the $708,000 is not insignificant and this in particular prompted the Complainants to consider that the Licensee failed in her obligations to them. The difficulty is that there is simply no evidence that supports the finding that the Respondent has breached her statutory obligations.

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 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

Jane Parker

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 12 June 2014