Complaint No C10829 [2016] NZREAA 171 (15 August 2016)

Last Updated: 12 March 2017

Before the Complaints Assessment Committee

Complaint No: C10829

In the matter of

Part 4 of the Real Estate Agents Act 2008

Licensee: The Licensee (XXXXXXXX)

Decision to take no further action

15 August 2016

Members of Complaints Assessment Committee: CAC410

Chairperson: Nigel Dunlop

Deputy Chairperson: Paul Elenio

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. On 21 October 2015 the Real Estate Agents Authority (the Authority) received a complaint against the Licensee from the Complainant.

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 the Licensee had failed to notify him of defects with the Property that had been brought to her attention at the time of listing and before he purchased it.

1.5. In particular, the Complainant advised that:

a) He was a property investor who contacted the Licensee on 13 July 2015 seeking investment opportunities. She told him about the Property, which had been managed by her Agency’s property management arm.

b) He asked the Licensee if there were any known problems with the Property and she

advised him there were not any. He purchased the Property the next day without viewing it.

c) He visited the Property for a pre-settlement inspection with the Licensee on 26 August and asked the tenant whether there were any problems. The tenant listed a number of problems, including the stove not working, a caravan included in the chattels that was leaking and there was a leak in the bathroom.

d) The Complainant received legal advice and settled the purchase of the Property. Since lodging the complaint the Complainant had negotiated with the vendor a settlement of

$2,750.00 for addressing the problems with the chattels.

e) Subsequent to settlement the tenant showed the Complainant photographs of the Property during a flood in December 2013, showing that the water around the Property was knee-high. The tenant said she had previously advised the Licensee of the problem. She had also reported the flooding issue to the property managers and provided the photographs. She said that flooding occurred after heavy rain three times a year during her three-year tenancy.

f) The Complainant said he had raised the flooding problem with the Principal Officer of the Agency and sought a copy of the listing agreement to see what was disclosed, but a copy was not provided. Similarly the Licensee’s report of events for the Principal Officer was also not made available to him.

1.6. The Complainant requested a remedy, being:

a) That the Licensee fix the flooding problem.

b) The Licensee apologise to the Complainant and the tenant, because the tenant had been described by the Licensee as a trouble maker.

c) Compensation for financial loss.

1.7. The Licensee responded to the complaint against her. In particular, the Licensee commented

that:

a) She had previously dealt with the Complainant. When contacted by the Complainant about possible property opportunities she mentioned that the Property had been newly listed and indicated its price range and condition and its current rental. She told him her Agency’s property management arm managed the Property and advised it “has limited drainage”.

b) Although he did not view the Property the Complainant telephoned her to arrange an unconditional cash offer, which was acceptable to the vendor as it was a good price and the early settlement was appealing. However settlement date was subsequently extended by the Complainant to 27 August with the reluctant agreement of the vendor.

c) The day before settlement she accompanied the Complainant on a final inspection of the Property where he discussed with the tenant the unsatisfactory state of the chattels. At that meeting the Complainant accused her of having access to the property management files, but she responded that the property management company was separate to the real estate agency and she did not have access to the files.

d) At no stage had she or any member of the sales or property management been told of any flooding issues with the Property. She agreed there was a drainage issue and, after a heavy storm, there was a puddle on the front lawn but this did not amount to a flooding issue.

2. What we decided

2.1. On 18 January 2016 the Complaints Assessment Committee (the Committee) considered the complaint and decided to inquire into it under section 79(2)(e) of the Act.

2.2. On 21 July 2016 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. The decision was also made with reference to the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012. This included Rule 6.4 (licensee must not mislead a customer nor provide false information or withhold information) and Rule 10.7 (licensee must disclose known defects to a customer).

3. Our reasons for the decision

The Committee concluded:

3.1. That the evidence did not establish on the balance of probabilities that the Licensee was aware of defects within the Property which later became subject to legal negotiation nor of possible flooding issues prior to the sale of the Property. It is not proven, therefore, that the Licensee withheld information from the Complainant which should have been disclosed to him.

Awareness of defects

3.2. The Committee noted that the speed with which the Property was listed with the Licensee’s

Agency and an offer made and accepted, all in a couple of days, was such that it would have been difficult for the Licensee to learn about defects later raised by the tenant with the Complainant. The Committee accepts that while the Property was managed by the Agency’s property management arm prior to sale, it was run separately to the part of the Agency for which the Licensee worked, and did not give her access to information about the Property that needed to be passed on to the Complainant.

Flooding issues

3.3. The Committee is not satisfied the evidence proves on the balance of probabilities that the Property has been subject to serious flooding issues on a number of occasions. It has viewed the photographs provided by the tenant and accepts that the tenant had reported the flooding on at least one occasion to the property management firm. However there is no certainty that the problem was drawn to the firm’s attention multiple times and the evidence does not establish that the Licensee was aware of the flooding. The Licensee had not been told about flooding by the vendor, only about limited drainage.

4. 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 (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 ).

5. Publication

5.1. 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.

5.2. 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.

5.3. 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

Paul Elenio

Date: 15 August 2016

Appendix 1: Relevant provisions

The Real Estate Agents Act 2008 provides:

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.

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.

The relevant provisions from the Real Estate Agents Act (Professional Conduct and Client Care) Rules

2012 are:

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.

Disclosure of defects

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.