Complaint No C03841 [2014] NZREAA 190 (1 July 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: C03841

In the Matter of Licensee One

License Numbers: XXXXXXXX

Licensee Two

License Numbers: XXXXXXXX

Decision of Complaints Assessment Committee

Dated this 01st day of July 2014

Complaints Assessment Committee: CAC305

Chairperson: Graham Rossiter

Panel Member: Miles Maitland

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 Licensee One and Licensee Two. The Licensees are licensed under the Real Estate Agents Act 2008 (the Act). Licensee One holds a branch manager’s license and Licensee Two holds a salesperson’s license. The Licensees’ Agency acted for the Complainant on the sale of her property (the Property).

1.2 The Complainant raises the following concerns:

a) That Licensee Two contacted the Complainant two days prior to the first open home

expressing concern that the kitchen in the Property was not the subject of a valid “consent”

from the City Council (therefore it was illegal);

b) That Licensee Two went, on her own accord, to the City Council to inquire as to the legality of the kitchen;

c) The Property was auctioned for sale on 6 August 2013 at the Agency’s auction rooms with the auctioneer allegedly stating the unit’s kitchen was not ‘permitted.’ This was allegedly repeated three times at the auction.

2. Material Facts

2.1 In the auction authority from the Complainant to the Licensees’ firm, dated 9 July 2013, the paragraph regarding ‘other disclosures’ was initialled to the effect that the vendor-client (the Complainant) was not aware of any work completed that may have required permits or local authority consents. The answer to that question was clearly indicated with a tick as to ‘No.’

2.2 The listing agents had some concern about the vendor’s requirement to advertise the Property

as a ’home and income.’

2.3 This apparent oversight on behalf of the vendor to disclose the legal status of the kitchen was discussed at some length by the Licensees with the Complainant. The Complainant was also invited by Licensee Two to go to City Council together so the issue could be resolved. The Complainant did not agree to this. Licensee Two then went to Council on her own behalf to attempt to clearly identify the correct situation with regard to the Property.

2.4 It appears that there was some initial confusion at the City Council as to what has been

‘permitted’ with regard to the kitchen in the Property.

2.5 The listing agents obviously had some major concerns about this matter and sought the advice and direction of their branch manager. They were advised by the branch manager that they could not continue to advertise the Property as ‘home and income’ but the option of advertising the Property as house with ‘granny flat’ accommodation would be acceptable.

2.6 The Complainant was not necessarily in agreement with this revised course recommended by the Agency. She was quite insistent that the Property be marketed as a ‘home and income.’

2.7 The Complainant complained to the Agency. The branch manager decided to reimburse the

marketing fees to the Complainant in a ‘full and final settlement’ of the complaint. Notwithstanding this, the Complainant proceeded with her complaint to the Authority. The agency agreement was also cancelled.

3. Relevant Provisions

3.1 The relevant law is section 72 of the Real Estate Agents Act 2008 (the Act) as to the definition of unsatisfactory conduct.

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 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 In addition, consideration may need to be given to rules 6.2 and 10.7 of the Real Estate Agents

Act (Professional Conduct and Client Care) Rules 2012.

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

Rule 10.7 A licensee is not required to discover hidden or underlying defects in land but must disclose known defects to a customer. Where it would appear likely to a reasonably competent licensee that land may be subject to hidden or underlying defects, a licensee must either—

(a) obtain confirmation from the client, supported by evidence or expert advice, that the land in question is not subject to defect; or

(b) ensure that a customer is informed of any significant potential risk so that the customer can seek expert advice if the customer so chooses.

4. Discussion

4.1 The Complainant was determined to have her Property promoted as a ‘home and income.’

4.2 The Licensees’ Agency carefully reviewed all of the information they were able to obtain and, in order to fulfil their obligations to any potential purchasers pursuant to rules 6.2 and 10.7 above, they were unable to ethically promote the Property as a ‘home and income,’ which is what the Complainant-vendor wished.

4.3 The Complainant failed to advise the true situation regarding her Property (with particular reference to the kitchen and the ability to legally use the Property as a ‘home and income’) at the time of the listing. This may well have been done more by oversight than anything else. Nevertheless, the listing agents were quite correct in wishing to check out the issue surrounding

the Property and to take advice from their branch manager.

4.4 It is the Committee’s view that the Agency and the individual Licensees, acted diligently in all respects with regard to this transaction.

4.5 There was one minor error from the Agency. That was the auctioneer reading out some incorrect information at the time of the auction in regard to the Property. The Committee have been reassured that there were no potential buyers for this Property in the auction room so therefore we consider this has no bearing on the complaint.

4.6 There is evidence of a ‘full and final settlement’ being offered to the Complainant, i.e. a refund of marketing fees together with the release of the Complainant from the agency agreement. The Complainant agreed with this course of action. The refund was made to the Complainant and the listing was subsequently cancelled.

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

Miles Maitland

Panel Member

Complaints Assessment Committee

Real Estate Agents Authority

Date: 01 July 2014