Complaint No C07332 [2015] NZREAA 389 (3 September 2015)

Last Updated: 18 June 2020

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

And

In the Matter of Complaint No: C07332

In the Matter of The Licensee

License Number: XXXXXXXX

Decision of Complaints Assessment Committee

Dated this 3rd day of September 2015

Complaints Assessment Committee: CAC 402

Chairperson: Marjorie Noble Deputy Chairperson: Deborah Clapshaw Panel Member: Jane Ross

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. On 20 February 2015 the Real Estate Agents Authority (the Authority) received a complaint against the Licensee from the Complainants.

1.2. The Licensee is a licensed salesperson under the Real Estate Agents Act 2008 (the Act).

1.3. The complaint relates to a property (the Property).

1.4. The details of the complaint are that during the Complainants’ purchase of a prefab building situated on a campsite, the Licensee failed to disclose relevant information to the Complainants.

1.5. In particular, the Complainants advised that in May 2014 they were looking to purchase a property for their daughter, and saw the Licensee’s advertisement for a “mortgage free and fully furnished” home “designed for permanent living”. The building was a prefab located on a campsite owned by the Church, and known as the Park. The Complainants would be able to buy the prefab but the land it was situated on remained in the ownership of the Church, who independently charged a rental fee. The Complainants say the Licensee initially advised them the land rental would be $100 per month but they subsequently discovered the fee was $100 per week.

1.6. During negotiations the Complainants state the Licensee advised them that if the owners decided to sell the land there was a possibility they would need to move the prefab but the possibility of this occurring was extremely slim. They were advised by the Licensee that the prefab had no consent but there was consent for it to be on site as it came under the camp site’s consent. As part of their due diligence the Complainants asked the Licensee a number of questions. The Licensee advised the Complainants to contact the camp site manager who told the Complainants that should they wish to sell they would be able to sublet the site and on-sell on the same conditions under which they purchased.

1.7. The Complainants purchased the prefab and state the Licensee made hand written, non - authorised changes to the agreement for sale and purchase after they had signed it, in relation to payment for and the transfer of, a swipe card.

1.8. In January 2015, due to a change in circumstances, the Complainants decided to sell the prefab. They listed it with Mrs. T of the agency but, after some enquiry, Mrs. T advised the Complainants she was reluctant to continue with the listing as she was concerned about the legality of the prefab and the camp site’s Council consent. Mrs. T discovered that if the prefab was sold, the camp site manager would decline occupancy due to non-compliance with Council regulations. The Complainants believe many of the people involved during their purchase, including the Licensee, knew about the compliance issues.

1.9. The Complainants state they viewed the Licensee’s advertising of “designed for permanent living” as an indication of stability of tenure for the prefab at the camp site. They have since been advised a number of owners of similar prefabs at the camp site have been told to remove their buildings and believe they are likely to have to remove theirs as well and cannot

find a site that will accommodate the prefab. They believe they purchased a prefab that was illegal, non-compliant, and without consent to be at that camp site.

1.10. The Complainants consider the Licensee failed to meet her disclosure obligations and subsequently they are left with an unsaleable unit and substantial financial loss.

1.11. The Complainants requested a remedy, being:

• Compensation for the loss in value from when they purchased the prefab to its present value and any costs involved in relocating the building. The Complainants have been advised that compensation is not available under the Act.

1.12. The Licensee responded to the complaint against her. In particular, the Licensee commented that:

a) The Licensee listed the Property for the vendors, Mr. and Mrs. K, in late February 2014.

As part of her appraisal the Licensee spoke with the camp site manager to verify the camp site rules and fees. At no point during that meeting was there any mention by the manager of any problems, with either the camp as a whole or the prefab unit. The Licensee also questioned the vendors in regard to any issues with the Property, including any defects that would affect its habitability and whether they had withheld any material information known to them. The vendors responded “no” and signed the listing accordingly. The Licensee states she has sold a number of similar properties and makes a practice of checking details with camp site managers as, due to being non-titled properties sitting on private land within privately owned camp sites, there are no Council records for these properties. As such, information can only come from the camp site owners, the vendors, or the occupants of the camp site. The Council does not keep records of the individual properties on private land.

b) The Licensee advised the Complainants were provided with the contact number of the acting camp site manager and met with him on a one to one basis as part of their due diligence. The Complainants were verbally assured the prefab was covered by camp site consents, the site could be used as per the requirements of the Complainants, and the prefab could be on sold under the same conditions as when they purchased. These assurances were made by the camp site manager independent of the Licensee.

c) The Licensee believes the issue in regard to the Complainants’ misunderstanding of the camp site land rental came about when she explained the fees to the Complainants’ daughter. She was detailing the power bill as a monthly expense when the Complainants came into the prefab and she considers they only heard the end of the conversation and mistook the land rental as a monthly fee as well. When the Licensee became aware of the misunderstanding, she immediately clarified the error in writing to the Complainants. The Complainants’ lawyer subsequently confirmed the purchase as unconditional.

d) The Licensee states the Complainants’ belief she had altered the sale and purchase agreement post signing in regard to a swipe card is ill founded, as there are clearly four sets of initials adjacent to the Licensee’s hand written clause.

e) The terminology used by the Licensee in her advertising of the Property “designed for permanent living”, pertained to the Licensee indicating the dwelling was substantial and could be lived in long term, unlike a caravan for instance; rather than suggesting the prefab could stay on the camp site forever. The Licensee states she made it clear to the Complainants, as she does whenever selling a property of this type, that they were buying the building only and that the camp site owners do have the right to ask for the prefab to be removed. The Licensee refutes the Complainants’ claim that she gave them information about the likelihood of needing to move the building being “extremely slim”. She states any information of this nature would have been discussed with the camp

management, not the Licensee.

f) In late February 2015, the Licensee was asked to appraise a similar property at the Park, and during a similar process of due diligence as undertaken for the Property, became aware of problems with the camp site. On questioning the camp site manager, the Licensee was directed to approach Mr. P, the camp site’s general secretary, who divulged extensive problems they were experiencing with the Council. He advised the Licensee that if any of the camp residents wanted to sell their prefabs, they must first be removed from the site, as the camp was in the process of trying to obtain resource consent. Mr. P also disclosed to the Licensee that letters had been sent to all the camp site residents and provided copies of the letters to the Licensee showing a correspondence from June

2013 up to the current time, detailing the consent issues with the camp itself and also with some individual dwellings in the camp grounds. Several of the letters asked the dwelling owners not to contact the Council with questions, and not to raise issues in regard to consents or other issues, as this could potentially jeopardise the resource consent for the whole camp. The Licensee asked why she had not been informed of any problems when she had been selling the Property and had questioned the camp site manager regarding any relevant issues. Mr. P stated he did not know why the manager did not address the issues at the time but stated he did assume she would have known of the problems as the original vendors, Mr. and Mrs. K, were fully informed. The Licensee subsequently advised the prospective clients she would not be able to sell their property at that time.

g) The Licensee was not aware of the Complainants’ situation until she received notification from the Authority of a complaint against her on 17 March 2015. The complaint indicated that the camp site manager had said the Licensee knew of the issues at the time she sold the Property, and the Licensee immediately contacted the manager who confirmed he had not made that statement but had also assumed the Licensee was aware of the issues from her vendors. After some time and effort pursuing camp site management to verify she had not been advised by them of the problems with the camp, the Licensee obtained written confirmation from Mr. P that neither he nor the camp site manager told the Licensee of the issues prior to February 2015. Mr. P also confirmed that Mrs. T had not found the information for herself; rather he had contacted her when he became aware she was potentially involved with a sale of one of the units in the camp. Mr. C, compliance officer for the City, also verified to the Licensee in writing that “the issues at the Park would not have shown on Council records as the matter was/is an ongoing investigation and as such the records are still in hard copy form on a working file”. The Licensee made several attempts to contact the previous vendor, Mrs. K (knowing Mr. K is now deceased) to confirm what they knew at the time she sold the Property, and to confirm they did not pass relevant information to her. The Licensee did not get a response from Mrs. K.

h) The Complainants indicated they, along with other residents, have been asked to remove their prefab from the camp site as a result of the issues with the Council. Correspondence provided by the Licensee indicates this is not correct. Mr. P, on behalf of the Park, has made it clear in his letter of 3 March 2015 that any person wishing to sell their accommodation unit must move it off the grounds before it is advertised for sale. However, Mr. C in his letter of 8 May2015 states “no notices have been served by Council requiring any of the residents to remove their buildings from the property”.

2. What we decided

2.1. On 25 March 2015 the Complaints Assessment Committee (the Committee) considered the

complaint and decided to inquire into it under section 78(a) of the Real Estate Agents Act

2008 (the Act).

2.2. On 27 July 2015 the Committee held a hearing on the papers and considered all the information gathered during the inquiry.

2.3. The Committee has decided to take no further action on the complaint.

2.4. This decision was made under section 89(2)(c) of the Act.

3. Our reasons for the decision

3.1. The alleged conduct did not involve real estate agency work described under section 4

Interpretation of the Act as the sale was for a structure only, did not involve the acquisition of freehold estate or interest in land, and was facilitated by a sale and purchase agreement for the sale of goods. Therefore the provisions relating to section 72 Unsatisfactory Conduct of the Act cannot be applied. The Committee must consider whether the conduct of the Licensee would fall under the provisions of section 73 Misconduct; conduct that would be reasonably regarded by agents of good standing, or reasonable members of the public as disgraceful. The Committee did not consider it does.

3.2. The Committee concluded:

(a) Land rental fee $100 per week, not per month – the Complainants misheard with no

intention to mislead by the Licensee.

(b) Camp site and building consents – the camp site did have consent to operate as a camping ground as per the Camping Ground Regulations 1985.

(c) Advertising “designed for permanent living”- this was subjective from the Complainants’ point of view but similar terminology appears to be used with sales of similar units.

(d) Change to sale and purchase agreement post signing – as evidenced, the Complainants had initialed this change.

(e) Resource consent issues not disclosed – the Committee is satisfied the Licensee did not and could not have known about any problems at that time.

(f) Unsaleable unit – no evidence supplied to indicate this.

(g) Financial loss – no evidence supplied to verify this.

Reason One: Land rental fee

3.3. The Committee considers it most likely the Complainants misheard the fees as being monthly rather than weekly, as the Licensee was explaining the electricity fee as monthly to the Complainants’ daughter when the Complainants came into the room, and they appear to have assumed the land rental fee was also monthly. The Committee is satisfied the fee is noted correctly on the listing form and the Licensee wrote to the Complainants to ensure they, and their lawyer, were clear on this issue prior to confirming the contract as unconditional.

Reason Two: Camp consents

3.4. The Complainants were concerned the camp ground and the prefab did not have consents and therefore were not legal. The camp ground did have consent under the Camping Ground

Regulations 1985 and the prefab itself had not needed a separate consent. It appears issues arose in regard to the number of units on the site and the size of some of the units, but as stated by the Council Compliance Officer, this information would not have been available to the Licensee at that time. The Committee is satisfied the Licensee did all she possibly could have done to establish any issues in regard to consents at the time of sale of the Property.

Reason Three: Advertising

3.5. The Committee considers the Complainants were fully aware the rental of the land from the camp was not a permanent arrangement and could be terminated by the camp management. The advertisement of the prefab as “designed for permanent living” indicated the suitability of the building as a permanent dwelling rather than the land as a permanent position.

Reason Four: Change to agreement

3.6. The Committee is satisfied the amendment to the sale and purchase agreement in regard to the swipe card, has been acknowledged by the Complainants as part of the contract by their initials adjacent to the clause.

Reason Five: Resource consent

3.7. It is clear to the Committee from the evidence supplied in the papers that the Licensee did not have any awareness of any consent issues at the time of sale of the Property, nor could she have been expected to know in the circumstances unless advised by the camp management or the vendors, who chose for whatever reason, to not divulge what they knew.

Reason Six: Unsaleable unit

3.8. The Committee has no evidence before it to consider the prefab is now unsaleable. The Complainants cannot presently sell the unit from the camping ground site but that situation may change in the future and the unit could be moved to another site for sale. The camp site management, not the Licensee, assured the Complainants prior to purchase that they would be able to resell the prefab on the same basis on which they bought it. The Licensee cannot be held accountable in any event as she did not have access to the relevant information at the time of sale of the Property.

Reason Seven: Financial loss

3.9. No evidence is supplied to the Committee in regard to a loss by the Complainants. There is speculation from both the Complainants and the Licensee as to moving costs and resale price for the prefab but at the time of the investigation the unit was still owned by the Complainants, and was still at the camp site with a rental return to the Complainants of

$250.00 per week. In any event, the Licensee sold the Property to the Complainants in good faith and cannot be held accountable for any perceived loss they may suffer as a result of information the Licensee did not have at the time of sale of the Property.

4. What happens next

Your right to appeal

4.1. If you are affected by this decision of the Committee, you may appeal in writing to the Real Estate Agents Disciplinary Tribunal (the Tribunal) within 20 working days after the date of this decision. Your appeal must include a copy of this decision and any other information you wish the Tribunal to consider in relation to the appeal. Refer to Appendix section 111.

4.2. For further information on filing an appeal, read Guide to Filing an Appeal at Mi ni stry of

J usti ce -Tri bunal s ( ww w. justi ce. g ov t. nz/ tri bunal s ) .

Publication

4.3. At the Committee’s discretion, the decision will be published without the names or identifying details of the Complainant (including the address of the Property), the Licensee and any third parties.

4.4. The Authority will publish the Committee’s decision after the period for filing an appeal has ended, unless the Tribunal receives an application for an order preventing publication. The Authority will not publish the Committee’s decision until the Tribunal has made a decision on the application.

4.5. Publishing the Committee’s decision supports the purpose of the Act by ensuring that the disciplinary process remains transparent, independent and effective. The Committee also considers that publishing this decision helps to set industry standards and that is in the public interest.

Signed

Jane Ross

Panel Member

For Complaints Assessment Committee 402

Real Estate Agents Authority

Date: 3 September 2015

Appendix 1: Relevant provisions

The Real Estate Agents Act 2008 provides:

Section 89 Power of Committee to determine complaint or allegation

(1) A Committee may make one or more of the determinations described in subsection (2) after both inquiring into a complaint or allegation and conducting a hearing with regard to that complaint or allegation.

(2) The determinations that the Committee may make are as follows:

(a) a determination that the complaint or allegation be considered by the

Disciplinary Tribunal:

(b) a determination that it has been proved, on the balance of probabilities, that the licensee has engaged in unsatisfactory conduct:

(c) a determination that the Committee take no further action with regard to the complaint or allegation or any issue involved in the complaint or allegation.

(3) Nothing in this section limits the power of the Committee to make, at any time, a

decision under section 80 with regard to a complaint.

Section 111 Appeal to Tribunal against determination by Committee

(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 the notice given under section 81 or 94.

(2) The appeal is by way of written notice to the Tribunal of the appellant's intention to appeal, accompanied by—

(a) a copy of the notice given to the person under section 81 or 94; and

(b) any other information that the appellant wishes the Tribunal to consider in relation to the appeal.

(3) The appeal is by way of rehearing.

(4) After considering the appeal, the Tribunal may confirm, reverse, or modify the determination of the Committee.

(5) If the Tribunal reverses or modifies a determination of the Committee, it may exercise any of the powers that the Committee could have exercised.