Complaint No C02105 [2014] NZREAA 96 (10 April 2014)

Last Updated: 3 January 2015

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

And

In the Matter of Complaint No: C02105

In the Matter of The Licensed Agency

License Number: XXXXXXXX

and

The Licensee

License number: XXXXXXXX

Decision of Complaints Assessment Committee

Dated this 10th day of April 2014

Complaints Assessment Committee: CAC20005

Chairperson: Stuart Rose Deputy Chairperson: Chris Rogers Panel Member: Denise Bovaird

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 the Licenced Agency and its principal officer, the Licensee. The Licenced Agency is licensed under the Real Estate Agents Act 2008 (the Act), as an agent company and the Licensee is a licensed agent.

1.2 The complainant was a tenant at the Property.

1.3 The complainant says firstly that; the licensees did not give sufficient notice before holding an open home at the property. Secondly that they left the property unsecured after an open home which resulted in damage to the property and the theft of personal property, and thirdly that they did not make disclosure to prospective purchasers that the property was under offer, and that there are 10 long-term tenants of the property.

2. Relevant Provisions

2.1 The Real Estate Agents Act 2008 establishes a statutory basis for the licensing and hearing of complaints against real estate agents, amongst other things. The Act provides for the setting up of Complaints Assessment Committees to hear the complaints and allegations about licensees. It also establishes a Disciplinary Tribunal to hear complaints at the next level.

2.2 Section 3 of the Act sets out the purpose of the Act.

Purpose of Act

(1) The purpose of this act is to promote and protect the interests of consumers in respect of transactions that relate to real estate and to promote public confidence in the performance of real estate agency work.

(2) The act achieves its purpose by –

a) Regulating agents, branch managers, and salespersons:

b) Raising industry standards:

c) Providing accountability through a disciplinary process is independent transparent and effective.

2.3 When a committee considers a complaint it must decide whether it breaches the standards of conduct that are set out in section 72 and 73 of the act and also the Rules of Professional Conduct and Client Care as set out in the Real Estate Agents Act (Professional Conduct and Client Care) Rules

2012.

2.4 The Real Estate Agents Act 2008

Section 72 of the Act provides:

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.

Section 73 of the Act provides:

73 Misconduct

For the purposes of this Act, a Licensee is guilty of misconduct if the Licensee’s conduct –

(a) would reasonably be regarded by agents of good standing, or reasonable members of the public, as disgraceful; or

(b) constitutes seriously incompetent or seriously negligent real estate agency work; or

(c) consists of a wilful or reckless contravention of—

(i) this Act; or

(ii) other Acts that apply to the conduct of Licensees; or

(iii) regulations or rules made under this Act; or

(d) constitutes an offence for which the Licensee has been convicted, being an offence

that reflects adversely on the Licensee’s fitness to be a Licensee.

2.5 Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012. (the rules).

The Rules set out the standards of conduct and client care that agents, branch managers or salespersons (licensees) are required to meet when carrying out real estate agency work and dealing with clients. Whilst these rules are not meant to be exhaustive list, they set minimum standards that licensees must observe and are a reference point for disciplinary decisions.

Examples of the Rules that may be relevant in this complaint are:

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

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 fairness be provided to a customer or client.

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

3. Parties submissions/ evidence and Discussion

3.1 The first part of the complaint is the allegation that the licensees failed to consider the circumstances or interests of the former owner/tenants of the property while the property was marketed and sold in a mortgagee sale which resulted in the theft of property belonging to the complainant during an open home.

3.2 The complainant says that the Licensed Agency illegally forced entry to the house on 12 May 2013 to gain access for an open home. They say that there was no notice and that the forced entry contravened the tenant’s rights under the tenancy act. They also say that the Licensed Agency left the property insecure after the open home and as a result when the tenants arrived home at 8 p.m. the house was empty, unsecured and items of jewelry had been stolen. As part of this the complainant indicated that a police complaint had been lodged and they were investigating this allegation of theft.

3.3 The licensee’s response in summary is as follows:

3.4 The Licensed Agency was appointed to sell the property on 28 March 2013 by the first mortgagee and to market the property as a mortgagee sale. The owner of the property (the complainant) had been served with all relevant documentation by the solicitor for the mortgagee. On 6 April 2013 the first advertisements were placed in the newspaper.

3.5 On 19 April 2013 an order of the High Court gave the Licensed Agency authority to give prospective buyers full and free access to the property. On the 22 April 2013 Ms C from the Licensed Agent received a copy of the High Court’s interlocutory order dated 19 April 2013 and advised the complainant that she had to provide access for prospective buyers. The licensee says the complainant continued to refuse access to the property and as a result the planned auction was postponed and then cancelled. A tender process was then put in place for the property.

3.6 On 1 May 2013 a statement was drafted by the lawyers for the first mortgagee advertising the property for sale.

3.7 The licensees advise that on 12 May 2013 they arrived at the house at 10:30 a.m. accompanied by Ms C and Mr J also from the Licensed Agency, and Mr L a private investigator along with two of his colleagues, who had been employed by the mortgagee to assist with the open home.

3.8 The licensee noted that there were printed signs on the windows saying that the complainant was away for the weekend, and that one of the tenants will open the house at 11 a.m. for prospective buyers. The licensee’s advised that despite several attempts at knocking no one opened the door to the property. Mr L then made contact with the mortgagee’s lawyers who instructed Mr L that entry could be obtained by force. Mr L then broke a small rear window to gain access.

3.9 The licensee advised that 31 groups inspected the house and that the window was re-glazed at the conclusion of the open home by professional glazier. The licensee advised that all internal doors had padlocks securing them and there were sheets over all the windows. They say that the house was locked and secured at the conclusion of the open home.

3.10 On 19 May, following another High Court order, another open home was held and at the conclusion of the open home the property was secured. The licensee says that while access was available the occupants had painted all the windows black and removed all the light fuses, and that all prospective viewers were asked to remove their shoes before entry only to find that broken glass had been scattered over the floor.

3.11 The licensee says that the property finally sold with the existing tenancies in place.

3.12 The licensee considered the Licensed Agent and its agents acted professionally at all times and served all relevant documentation on the tenants and on the complainant as per the various High Court orders. The licensee considered the complainants behaviour which ranged from painting windows black, removing light fuses, scattering broken glass, keeping tenants bond money etc, were obstacles that they had to overcome in order to market and subsequently sell the property.

3.13 The licensee says that on the day of settlement the complainant charged a security guard with a broken bottle and was arrested by the police.

3.14 The licensee has provided with their response a series of documents relating to the sale of the property which include High Court orders, correspondence from solicitors acting on behalf of the mortgagee, and affidavit by an agent in relation to access and actions of the complainant. This evidence is very compelling reading and does not reflect well on the complainants behaviour.

3.15 On 7 October 2013 the committee’s investigator spoke with Mr M of the Police regarding the Police investigation into the allegation of theft of jewelry at the property. Mr M advised that the police had received a complaint; however it was not subject to any ongoing investigation as there was no evidence to support the complaint.

3.16 On 29 October 2013 a response was received from Mr L, the investigator employed by the mortgagee to assist with the sale of the property. Mr L advises that the complainant had fought the sale of the property by the mortgage through the Courts and had impeded any attempts to market and sell the property. He advised that following the order of the High Court he assisted with an open home on 12 May 2013. He acknowledges breaking a window in order to gain access to the house, and that it was repaired following the open home at the same day at the expense of the mortgagee.

3.17 He advised those viewing the property signed in with the licensees and then viewed the house and property. He says that he was present with one assistant and was responsible for taking practical steps to keep the visitors safe and to keep the property secure.

3.18 When asked about the allegation of the theft of jewelry Mr L said he didn’t believe anything had been stolen from the house and that “while we did not have sufficient staff to accompany each and every visitor as they inspected the property, I am satisfied that nothing was stolen, and given the caliber of those visiting I had no reason to fear anything untoward occurring.”

3.19 The Licensees strongly deny placing any pressure on the complaint during the course of the mortgagee sale and say that the complainant’s behaviour was unreasonable and obstructive throughout the process.

3.20 The committee’s investigator says that he has tried on many occasions to contact the complainant subsequent to the complaint being lodged and their initial contact, and that at the date of his report the complainant had not responded.

3.21 We acknowledge that mortgagee sales can be extremely stressful for homeowners. Often there is a potential conflict between licensees who are acting on behalf of the mortgagee and homeowners who are trying to take every legitimate step to retain ownership of their home. Notwithstanding the efforts of homeowners in the situation licensees are still required to comply with the rules and the act.

3.22 The licensee’s evidence in this matter is compelling.

3.23 After full consideration of this matter the committee has determined that there is no evidence to support any of the complainant’s allegations against the licensees. In our view the licensee’s behaviour was exemplary considering the very difficult circumstances they were placed under. As a result of this finding we have determined therefore to take no further action in relation to this complaint.

4. Decision

4.1 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 thepapers, and pursuant to section 90(2) the Committee’s determination was made on the basis of the written material before it.

4.2 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.

5. Publication

5.1 One of the Committee’s functions pursuant to section 78(h) of the Act is to publish its decisions.

5.2 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.

5.3 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.

5.4 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).

6. Right of Appeal

6.1 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.

6.2 Appeal is by way of written notice to the Tribunal. You should include a copy of this Notice with your

Appeal.

6.3 Further information on filing an appeal is available by referring to the Guide to Filing an Appeal at www.justice.govt.nz/tribunals.

Signed

Chairperson

Stuart Rose

Complaints Assessment Committee

Real Estate Agents Authority

Date: 10 April 2014