Complaint No C19008 [2018] NZREAA 161 (17 October 2018)

Last Updated: 2 December 2019

Before the Complaints Assessment Committee

Complaint No: C19008

In the matter of

Part 4 of the Real Estate Agents Act 2008

and

Licensee 1: Licensee 1 (XXXXXXXX)

Decision to take no further action

17 October 2018

Members of Complaints Assessment Committee: CAC416

Chairperson: Marjorie Noble

Deputy Chairperson: Rachael Schmidt-McCleave

Panel Member: Geoff Warren

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. On 4 September 2017 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). He was employed at the time of the conduct complained of by the Agency.

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

1.4. The details of the complaint are that the Licensee did not tell the Complainants the Property leaked and that he had not inspected the south wall on the Property, did not tell them there certain details (set out below) about the kitchen, did not tell them other buyers had had a building inspection report completed which may have identified building work issues, misled them to believe another couple had made a conditional offer, did not look into whether they could get certification before settlement, did not get all of the vendors to sign the Particulars and Condition of Sale of Real Estate by Auction document and did not retain all written offers which were submitted following the auction during the negotiation process.

1.5. This is the second complaint made by the Complainants in relation to the Property. The previous complaint named the listing salesperson (Licensee A) and the auctioneer (Licensee B) as respondents. The first complaint went before the Real Estate Agents Disciplinary Tribunal (READT). On 27 February 2017 a finding of Unsatisfactory Conduct against Licensee A was issued by the READT.

1.6. In particular, the Complainants advised that:

a) The Licensee did not tell them the Property leaked and that he had not inspected the south wall on the Property.

b) The Licensee did not tell them there had been illegal kitchen work done in the guest wing which he discovered prior to the auction and from the advertising material they were led to believe the guest wing could well suit a home stay or could even work as a holiday rental; and they were not informed the push-out kitchen in the main house was illegal.

c) The Licensee did not tell them other buyers had had a building inspection report completed which may have identified building work issues.

d) The Licensee misled them to believe another couple had made a conditional offer.

e) The Licensee did not look into whether they could get CCC/COA before settlement.

f) The Licensee did not get all of the vendors to sign the Particulars and Condition of Sale of

Real Estate by Auction document.

g) The Licensee did not retain all written offers which were submitted following the auction during the negotiation process

1.7. The Complainant requested a remedy, being:

a) A finding of misconduct against the Licensee.

b) Compensation (The Committee notes the limits on it in this regard).

1.8. The Licensee responded to the complaint against them.

1.9. In particular, the Licensee commented that:

a) He was the selling agent for the Property. He accompanied the Complainants to view the open homes twice.

b) After the first viewing, he sent them all the property documents and explained the notes provided within the Agency’s internal system and suggested the Complainants carry out due diligence.

c) He worked with the listing agent and vendor to ensure the auction documents clarified what the vendors would be responsible for.

d) He attended the auction with the Complainants and participated in the negotiations.

e) The period after the auction and settlement date, he communicated a few times with the vendor, purchasers and listing agent in relation to the COA/CCC.

2. What we decided

2.1. On 4 December 2017 the Complaints Assessment Committee (the Committee) considered the complaint and decided to inquire into it under section 79(2)(e) of the Act. There was then some delay while the Committee awaited the audio recording of evidence (given by the Licensee at the related hearing) from the READT (subsequently transcribed). The Committee has considered this transcript, and the Complainants’ further submissions, in reaching its decision.

2.2. On 27 August 2018 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, specifically Rules 5.1 (skill and care), 5.2 (knowledge of the Act and associated rules), 6.2 (fairness), 6.4 (disclosure), 9.1 (client’s best interest), 9.2 (undue/unfair pressure), 10.7 (underlying defects) and 10.12 (copies of offers).

3. Our reasons for the decision

3.1 The Committee concluded, in essence, that the responsibilities attempted to be sheeted home by the Complainants to the Licensee were not his responsibilities as selling agent, and in fact lay elsewhere. The Committee therefore determined to take no further action on the complaint.

3.2. The Committee’s reasons (under each heading) are set out below.

Weathertightness issues

3.3. The Licensee said he visited the Property at the open home with the Complainants and they inspected the Property together. The Complainants were fully aware this was the Licensee’s first time inspecting the Property. There was difficulty accessing the south wall and the Committee accepts the Licensee’s evidence that he offered to try and climb to it but was told by the Complainants that was not necessary. The Committee considers the Licensee as selling agent was entitled to rely on the assurances of the listing agent.

Kitchen issues

3.4. The Licensee says he found out the kitchen in the guest wing was illegal and required resource consent from the Complainants via email (on 4 March 2015 - 3 days prior to Auction), who had obtained that information from the Council. The Committee is satisfied the Licensee then immediately met with the vendor and notified the listing agent of the issue. It was not the Licensee who marketed the Property or completed the due diligence which was the responsibility of the listing agent.

3.5. Further, the Committee notes that the Complainants, as part of their due diligence, discovered the issues prior to the auction.

Prior building inspection report

3.6. The Committee accepts the Licensee’s evidence that he did not arrange any building inspections for this property for anyone and is not aware of any building inspections completed for the Property. The Committee considers this allegation is hearsay evidence with no foundation in the established evidence.

Misleading conduct regarding other counter-offer

3.7. The Committee is satisfied that there is no evidence that the interest from other purchasers was anything other than a conditional expression of interest, for which the Licensee had no responsibility or limited knowledge.

COC/COA prior to settlement

3.8. The Committee considers the evidence shows that the vendor disclosed to the listing agent when the property was listed three matters which required remediation in order to obtain any necessary COA/CCC. These were also recorded in the LIM report. The evidence also shows the vendor warrantied to provide a CCC/COA prior to settlement and in progressing this had the Council complete an inspection which resulted in a Section 95A letter which identified 22 items to be repaired.

3.9. The Committee accepts no due diligence was completed by the Licensee prior to the auction with respect to the Council issuing a CCC/COA and he has relied on the internal listing documents which were prepared by the listing agent. However, the Committee does not consider that is the selling agent’s responsibility and he was entitled to rely on what has been recorded by the listing agent.

Obtaining signatures on ASP

3.10. The evidence shows that the vendors were recorded on the Certificate of Title but only one vendor has signed the ASP. The Auction Authority Sale by Client Trust Form was completed by the vendors, however no representative to act on the Trusts behalf was named on the form.

3.11. The Licensee says he obtained the signatures of the Complainants on the ASP and passed it to the listing agent’s manager to obtain the vendor signatures.

3.12. The Committee considers that it would have been prudent of the Licensee to follow up on this point when he noticed there was only one vendor signature and recommends the Licensee take more care in this regard in future. However, the Committee is satisfied that, again, the Licensee was entitled to rely on the listing agent and her manager obtaining all relevant signatures.

Retention of written offers

3.11. The Licensee accepts the Complainants made two offers which are not on the final accepted offer but states he has been unable to find them on his files. Leaving aside the question of whether rule 10.12 applies just to formal agreements, the Committee reminds the Licensee of rule 10.12 which requires him to retain all written offers for a period of 12 months, but considers this conduct to not reach the threshold for a finding of unsatisfactory conduct. The first two offers appear to have been recorded on a sheet of paper which has not been found. The Licensee said this sheet of paper may have been discarded by the Auctioneer. The Licensee did retain a copy of the final agreed version of the ASP.

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 notice 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

Rachael Schmidt-McCleave

Date: 17 October 2018

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 1 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:

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

Rule 5.2: A licensee must have a sound knowledge of the Act, regulations, rules issued by the

Authority (including these rules), and other legislation relevant to real estate agency work.

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

Rule 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.

Rule 9.1: A licensee must act in the best interests of a client and act in accordance with the client’s instructions unless to do so would be contrary to law.

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.

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.

Rule 10.12: An agent must retain, for a period of 12 months, a copy of every written offer submitted. This rule applies regardless of whether the offer was submitted by the agent or by a licensee employed or engaged by the agent and regardless of whether the offer resulted in a transaction.