Complaint No C02318 [2014] NZREAA 184 (23 June 2014)

Last Updated: 25 February 2015

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

And

In the Matter of Complaint No: C02318

In the Matter of Licensee One

License Number: XXXXXXXX

Licensee Two

Licence Number: XXXXXXXX

Decision of Complaints Assessment Committee

Dated this 23rd day of June 2014

Complaints Assessment Committee

CAC20008

Chairperson: Ellen Ryan

Deputy Chairperson: Graham Rossiter

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1 The Complainant listed a property (the Property) owned by her company for sale with a Real Estate Agency in November 2012. The complaint is made against Licensee One from another Agency. Licensee One is known to the Complainant. She approached the Complainant and told her she had a buyer for the Property. An agreement for sale and purchase with a sale price of $399,000.00 was presented to the Complainant. The Complainant alleges that Licensee One placed undue pressure on her and her husband to sign the agreement for sale and purchase on the 14 April 2013. The Complainant on the 16 April 2014 contacted Licensee One and told her to withdraw the sale however Licensee One stated the buyer had already signed the agreement on the previous day. Licensee One was reluctant to help them resolve this issue. This has resulted in a detrimental situation for the Complainant if the sale is completed as the proceeds would not be sufficient to cover taxes as explained by her accountant.

2. Material Facts

2.1 In April 2013 Licensee One advised the Complainant’s Agent that she had an interested buyer for the Property. On the 14 April 2013 the Agent and Licensee One came to the Complainant’s home. Licensee One told her that her client had originally offered $370,000.00 but she was able to persuade this buyer to offer $400,000.00. She then told the Complainant stories about the poor and how she had persuaded the buyer to let an old couple rent the Property. According to the Complainant she was touched by these stories and was exhausted after work so she agreed to sign the agreement. Her husband also signed the agreement. On the 16th April 2014 she rang Licensee One advising her she wanted to withdraw the sale. Licensee One responded that this was not possible as the buyer had already signed the agreement on the

15th April 2014 however she would try to persuade the buyer to withdraw. She then states that

Licensee One was reluctant to help her sort out this problem.

2.2 The Complainant asked Licensee One whether she was the buyer’s agent but she would not answer. On the 14 May 2013 Licensee One suggested they find tenants which they did and signed a tenancy for one year. Later the Complainant was told by the buyer that she will find her own tenant. The Complainant told the buyer if she was willing to take the tenant she would transfer the house to her but she did not agree.

2.3 The Complainant states that undue pressure was put on her to sign the agreement for sale and purchase by Licensee One. She signed the agreement regretted immediately after doing so as her husband was furious. Her signature was subject to her husband’s signature as he has the final say. They initially wanted to wait for another year before selling as the prices may rise however Licensee One told them she does not believe the price will rise 12% in the following year. Licensee One told her to be happy with what she earns from this house. Further her stories of the poor touched her heart and both agents knew she had cancer. She was exhausted from work and could not resist any longer and initialled everywhere as directed by Licensee One. Later the Complainant realised that these stories about the poor by Licensee One were told for the purpose of persuading her to sell as Licensee One was aware of her Christian faith. On the night of the 14th April 2013 she had told the two agents she did not want

to sell. The Complainant states she withdrew the sale on the 16 April 2013 by phone to the

Agents.

2.4 The Complainant also raised other issues pertaining to “she withdrew the sale before the buyer or her lawyer communicated acceptance to her”, “whether the agreement for sale and purchase is binding between the vendor and the purchaser?” and “whether specific performance is a suitable remedy because the buyer is innocent?” Such issues are between the Complainant (vendor) and the purchaser to be resolved by the parties themselves or addressed in a Court of Law and not by this Committee.

2.5 In response Licensee One states that she knew the Complainant and her husband as they had attended the same church. In March 2013 the Complainant’s husband contacted her to help sell their Property which had been listed with another Agent. She asked him what price they would sell the Property and was told $400,000.00. She contacted their Agent and they agreed to a 50/50 conjunctional sale. She did obtain an interested purchaser. A negotiated offer of

$399,000.00 was made to purchase the Property.

2.6 Licensee One states she did go to the Complainant’s home on the 14th April 2013 with her

Agent. The Complainant’s husband did refer to an article he read about house prices going up

12% the following year and asked what she thought. She told him that there was a 50/50 chance. No one knows. But she does worry about the house market increasing too much. She said to them to please make a final decision as the buyer cannot wait too long. The Complainant then decided to sell. Her husband also agreed to sell and wanted to change a clause in the agreement as the vanity door cannot be fixed. This change was made. The agreement was eventually signed by both the Complainant and her husband both initialling further terms of sale and the changes. They left the Complainant’s place around 9:15 pm. She then went back to her office and rang the purchaser. The purchaser came to the office at

10:00pm accepted the agreement and initialled all the changes. The contract was then faxed to both the vendor and purchaser’s solicitors. The Complainant’s Agent emailed the contract to them that same night. She had read the date wrong thinking that the 13 April 2013 was Sunday but was actually Saturday. The correct date for both parties signing was the 14 April

2013 which was a Sunday.

2.7 The next day Monday 15th April 2013 the Agent for the Complainant rang advising her that the vendors (the Complainant) had changed their mind and did not want to sell the Property. The Complainant had also rung her to tell her that based on her accountant’s advice they will end up with insufficient funds to pay government taxes. Licensee One then contacted the purchaser to persuade her to withdraw from the contract however the purchaser would not agree. The Agent for the Complainant also tried to persuade the purchaser however she would not agree.

2.8 Subsequently the Complainant and her husband later in April signed a tenancy agreement with a tenant to move into the Property on the 27th April 2013. This was a major problem as the contract required the Property to be vacant upon settlement. She went with the Complainant’s Agent to see the Complainant and suggested ways to resolve it. The Complainant however proceeded to go ahead with the tenancy. They tried to resolve it with their solicitor however, the Complainant fired their lawyer.

2.9 In response Licensee Two states that he had supervised Licensee One throughout the whole sale process giving correct advice on procedure. Licensee One did advise the vendor’s agent and vendor they must seek advice from a qualified solicitor. When the Complainant’s husband contacted him he also advised him to see a solicitor and he needed to direct all communications with his Agency and it would not be appropriate for him to deal with him.

They did not agree to relinquish the commission, given accusations by the vendor could be misconstrued as an admission of wrong doing and judging by the vendors vexatious accusations and references to REAA and the media he could not trust that any generosity would be treated fairly should he take advantage of that.

2.10 The vendor had also, despite a strong recommendation from the sales persons, proceeded to rent the Property for a one year fixed term and were not in a position to settle with vacant possession as required under the contract so the commission became irrelevant.

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 5.1 and 9.2 of the Real Estate Agents

Act (Professional Conduct and Client Care) Rules 2009.

Rule 5.1 A licensee must exercise skill, care, competence, and diligence at all times when carrying out real estate agency work.

Rule 9.2 A licensee must not engage in any conduct that would put a prospective client, client or customer under undue or unfair pressure.

4. Discussion

4.1 We have considered the allegation made by the Complainant that undue pressure was put on her to sign the agreement for sale and purchase by Licensee One however, Licensee One denies she put any pressure whatsoever on the Complainant to sign this agreement. The parties conflict on this point and we find no evidence to support the allegation of undue pressure, as the agreement was duly signed by both parties and all changes initialled. As to the issue regarding the tenancy of the Property we find the explanation provided by Licensee One to be reasonable that she was only aware of this after the Complainant had signed up a tenant for the Property and would never suggest it as the agreement clearly states that the Property is to be vacant on possession by the purchaser. The parties also conflict on the point regarding the comments made by Licensee One on whether the house prices will increase by 12% in the following year as Licensee One is adamant that she had stated there is no way of knowing whether it would increase by 12%. Neither is there any evidence that Licensee One was

reluctant in helping the Complainant when she withdrew from the sale on the contrary Licensee One did make attempts to persuade the purchaser to withdraw from the agreement on behalf of the Complainant. As to Licensee Two we find no evidence of any wrong doing on his part. He did not deal with the Complainant’s transaction; it was handled by Licensee One.

4.2 For these reasons, on balance, we find no wrong doing on the part of the Licensee One or Licensee Two that would amount to a breach of any of the provisions of the Act or Rules under the Act.

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 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

Ellen Ryan

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 23 June 2014