Complaint No C40279 [2022] NZREAA 58 (26 April 2022)

Last Updated: 4 May 2023

ricBefore the Complaints Assessment Committee
In the matter of	Complaint No: C40279 Part 4 of the Real Estate Agents Act 2008
and
Licensee:	The Licensee (XXXXXXXX)

Decision to take no further action

26 April 2022

Members of Complaints Assessment Committee: CAC2104 Chairperson: Rachel Palu

Deputy Chairperson: Denise Evans Panel Member: Julian Twiss

V20201203

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. On 5 July 2021 the Real Estate Authority (the REA) received a complaint against the Licensee from Complainant 1 and Complainant 2 (together 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 commercial property situated at the Property.

1.4. The Complainant confirmed the following key concerns:

1. That the Licensee suggested the Complainants sell their home and live at the Property.
2. That the Licensee pushed the Complainants to increase their offer.

100. That the Licensee told the Complainants the vendors would agree to extend the settlement date; and allow them access to the Property before settlement.

4. That the Licensee told the Complainants the vendors would fix a broken door and leaking roof.

1.5. In particular, the Complainants said:

1. They signed a Deed of Lease for Shop 2 of the Property in August 2018.
2. In August 2020 the Property was marketed for sale with the Agency but did not sell.

100. The Licensee suggested to the Complainants that they could buy the Property. They felt pressured by the Licensee to purchase the Property as the Licensee had told them if they did not buy the Property, there was a risk they might face eviction.

4. They had explained to the Licensee that they could not financially afford to buy the Property.
5. The Licensee suggested said to the Complainants that they could sell their house and purchase the Property and live there. They said the Licensee said to them that a new owner may not agree to them living in the upstairs area.
6. They eventually purchased the Property. They said they were pressured into increasing their offer from $1.75 million to $1.812 million
7. The agreement for sale and purchase was signed on the 15th of October 2020 with an agreed settlement date of the 8th of December 2020.
8. They asked that the settlement date be extended to the 20th of January 2021. The

Licensee said that they needed to pay an additional $5,000.00 for the early entry but that requirement was later removed.

1. They paid the deposit and asked for early access to the other shop which they were not leasing. The vendor refused to give access even though that had been agreed between them and the Licensee .

10. That the Licensee told them the leaking roof and the back door would be fixed before settlement but it was not.
11. When they took possession there were a lot of things left behind and that they were not shown how things work.

50. They have become concerned that it might be illegal if they lived at the Property.

13. They say that the Licensee misled and trapped them and this has had a significant impact on their life and health.

1.6. The Complainant requested a remedy, being:

1. That the Licensee’s license is suspended.
2. Compensation for mental stress and financial loss.

100. The Licensee reimburse some of their costs.
     

1.7. The Licensee responded to the complaint against him.

1.8. In particular, the Licensee said:

• (a) That he was appointed by the Vendors/Landlords to market and sell the Property by tender in a Campaign closing on the 5th of August 2020.
• (b) The Complainants were tenants of one half of the building, they were on an initial

lease of 3 years with less than one year to go. They had 2 further rights of renewal of 6 years each.

(c) He had several discussions with the Complainants during the marketing campaign as he had arranged inspections for various potential buyers and after the campaign had ended. The Property had not sold.
(d) He had been approached by Complainant 2 who said that he wanted to buy the property. Complainant 2 told him that he and Complainant 1 had put their residential property on the market and were at the point of selling it to help fund the purchase.
(e) He told Complainant 2 of the Vendor’s price expectation and then prepared a Sales and Purchase agreement.
(f) He says that they made an initial offer of $1,750,000.00 plus they needed a due diligence period of 10 days with a settlement dated of the 8th of December 2020.
(g) He asked them where they intended to live and that they had told him they intended living in the mezzanine of the building.
(h) He advised them that there would be a number of potential issues with them living in the mezzanine and in particular the impact on the Vendors/Landlords insurance. He also noted a concern about the suitability of the premises as a place for young children to live. The Complainants have 2 young children.
(i) The Vendors countersigned the offer at $1,850,000.00. After some further negotiation the contract was signed at $1 815,000.00. The agreement was conditional for ten working days.
(j) He assisted the Complainants with referrals to funders and a valuer. There were a number of extensions required to enable the Complainants to obtain finance and declare the contract as being unconditional.
(k) He also contacted the Vendors/Landlords insurer to ask if the insurer would agree to transfer the insurance to a new owner which was agreed.
(l) The Complainants asked if they would be able to store surplus stock in the vacant tenancy.
(m) He discussed this with the Vendors/Landlords, and they commented that once the contract was unconditional and deposit paid, they would consider it, this was when settlement was 8 Dec 2020.
(n) When the contract was declared unconditional, he advised the Complainants the

deposit was due, and they advised they wanted to extend the settlement date initially

to 16 Jan 2021 then subsequently to 20 Jan 2021.

(o) He contacted the Vendors/Landlords and discussed this and was informed that it would cost the Vendors approximately $5,000 in extra costs to extend their mortgage and insurance.
(p) When he contacted the Complainants and explained this to them their reaction was extreme, and they subsequently tried to cancel the contract however, their lawyer advised them this was not possible as the contract was unconditional.
(q) He informed the Vendors/Landlords of the Complainants reactions and they agreed to extend the settlement date with no extra cost to the Complainants.
(r) On advising the Complainants of this, they paid the deposit and immediately wanted access to the other tenancy.
(s) The Vendors/Landlords were then not willing to grant access.
(t) He assisted in getting the Vendors/Landlords to agree to the extended settlement as requested by the Complainants.
(u) However, he was not able to get the Complainants early access due to issues about the Vendor’s liability insurance, water/electricity costs and the difficulties that had arisen between the Complaints and the Vendors/Landlord.

2. What we decided

2.1. On 14 February 2022 the Committee held a hearing on the papers and considered all the information gathered during the inquiry.

2.2. The Committee has decided to take no further action on the complaint. It concluded that none of the Complainants’ claims concerning the Licensees conduct were established on the information provided.

2.3. 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, namely Rules 5.1 and 9.2

3. Our reasons for the decision

3.1. Rule 5.1 requires a licensee to exercise skill, care, competence and diligence at all times when carrying out real estate agency work. This Rule has been considered against all aspects of the Licensee’s conduct complained of by the Complainants.

Did the Licensee exercise due skill and care in suggesting the Complainants could sell their house?

3.2. The Complainants claim that when they explained to the Licensee that they could not afford the Property, he suggested they could sell their house and live at the Property. They did this. They encountered difficulties living at the Property as there was no shower facility. They say that their situation became even more difficult when they were not able to get early access to the adjoining shop which they claim the Licensee represented would be granted. They are also concerned that it is illegal to live at the Property.

3.3. The Licensee rejects that he suggested to the Complainants that they sell their house. He says that he first heard about that when they asked him to draw up their offer on 5 October 2020. There was little information provided to support the Complainants statements and the claim was not established. The Licensee’s account is consistent with the timing of the

Complainant’s house sale which occurred on 23 September 2020 and subsequent

correspondence between the parties. Complainant 1’s email to the vendor on 6 October

2020 advised that they had sold their house; they were working with mortgage broker to get finance for the shop and requested permission to install a shower and kitchen. Overall, we are satisfied that the Complainants made their own decision to market and sell their home and move into the Property.

3.4. No further action is to be taken on this aspect of the complaint.

The Complainants offer

3.5. Under 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.

3.6. The Committee was provided with a statement from the Licensee which detailed the process he followed when dealing with the negotiations between 5 to 15 October 2020 which led to

the conclusion of an agreement to purchase. As stated above negotiations involved an initial offer from the Complainants of $1,750,000, the Vendor countersigning at $1,850,000 and a further counteroffer from the Complainants of $1,815,000, which the Licensee says that the Vendors reluctantly agreed to.

3.7. The Complainants also made a statement which alleged that they felt under pressure when making an increased offer. They say after their first offer was rejected the Licensee told them that if they did not buy the property, they would be unable to live upstairs and if they went up to $1,800,000, he would convince the Vendor. They say that this did not occur and the

Licensee told them it would cost much more. The Complainants say that facing eviction they offered $1,815,000 which was accepted. They also say that they increased their offer as they were offered access to the adjoining shop.

3.8. The Committee concluded that negotiations between the parties were standard. There was a reasonable time between the first discussion about the Complainants first expressing interest in the Property and the finalisation of the agreement for sale and purchase.

3.9. The information provided does not establish that the Licensee pressured the Complainants to increase their offer or otherwise failed to exercise due skill and care in assisting negotiations between the parties. No further action is to be taken on this aspect of the complaint.

Did the Licensee exercise due skill and care in assisting the Complainants with the negotiations in respect of the change of settlement date or providing early access?

Change of settlement date

3.10. The Complainants say that they required multiple extensions to the date for confirming the contract unconditional to get finance approved. They say that for the final extension and before they went unconditional, they told the Licensee that they also needed to extend the settlement date to arrange finance to settle the purchase. The Complainants allege that the Licensee told them the vendors would agree to extend the settlement date; and allow them access to the Property before settlement. They felt that they had been misled when the

Vendor’s solicitor declined to extend the settlement date.

3.11. The Complainants claim that the Licensee misled them in relation to extending the settlement date is not established on the evidence. Instead, we are satisfied that the

Licensee assisted the Complainants to achieve an extended settlement when they raised it with him.

3.12. The information discloses that the Complainants confirmed the contract as unconditional on 17 November 2020. When the Licensee told them that the deposit was due, the

Complainants said they wanted to extend the settlement date to 16 January 2021. Before the deposit was paid, on 20 November 2020 the Complainants’ solicitor wrote to the vendor’s

solicitor about extending the settlement date to 20 January 2021. This was declined. Through the Licensee the vendors advised that this had additional insurance and mortgage costs of around $5,000. This was not well received and the Complainants acknowledge that Complainant 1 became upset and sought to cancel the sale. After this the Licensee went back to the Vendor and they agreed to extend settlement without further cost. The

Complainants paid the deposit.

3.13. No further action is to be taken on this aspect of the complaint.

Early access

3.14. The Complainants also say that the Licensee led them to believe that they would be able to get early access. They say he verbally told them that if they made an offer he could give early access, then told them that if they went unconditional, he could ask the vendors. It is alleged that the Licensee then said they would get early access when they paid the deposit.

3.15. It is not established on the evidence that the Licensee told the Complainants that they would get early access if they made an offer. The Committee accepts that there was discussion between the Complainants and the Licensee concerning early access in the week or two

leading up to the contract being confirmed unconditional . The Licensee has confirmed this was discussed with the Vendors and that the request for early access would be considered by the Vendors once the contract was unconditional and the deposit paid.

3.16. On the 17th of November 2020, when the contract was being confirmed unconditional, Complainant 1 again requested early access. The Licensees response advised the

Complainants that they needed to pay the 10% deposit and once that had happened, then he was sure that the Vendor would be happy to give access. The Complainants paid the

deposit on 20 November 2020.

3.17. As it turned out the Vendors were not happy to provide early access. We are satisfied that this occurred as a consequence of the fact that settlement had been extended and the

tensions that had arisen between the parties from that extension. In the circumstances, at

the time the Licensee discussed early access with the Complainants, he did not mislead them. This is confirmed in the Vendor’s email to the Licensee and his email to the Complainants on 23 November 2020.

3.18. No further action is to be taken on this aspect of the complaint.

Other issues

3.19. The complaint also raised concerns in regard to the Complainants understanding that a broken door and leaking roof would be fixed before settlement. As previously advised to the parties the Committee did not inquire into those aspects of the complaint. This was because the information provided by the Complainants disclosed that any failure by the

Vendor/Landlord to address building issues was a contractual matter between the Complaints and the Vendor/Landlord and was not a matter that concerned the Licensee.

4. Publication

4.1. The Committee directs publication of its decision. This 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.

4.2. The Authority will publish the Committee’s decision after the period for filing an appeal has ended, unless the Real Estate Agents Disciplinary Tribunal (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.

4.3. 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.

5. Your right to appeal

5.1. If you are affected by this decision of the Committee, the right to appeal is set out in section 111 of the Act. You may appeal in writing to the Tribunal within 20 working days after the date notice is given 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. The Tribunal has the discretion to accept a late appeal filed within 60 working days after the date notice is given of this decision, but only if it is satisfied that exceptional circumstances prevented the appeal from being made in time.

5.2. The Notice of Appeal form, which includes information on filing an appeal, can be located on the Ministry of Justice’s website: https://www.justice.govt.nz/tribunals/real-estate-

agents/apply/.

6. Provisions of the Act and Rules referred to

6.1. The provisions of the Act and the Rules referred to in this decision are set out in the Appendix.

Signed

Chairperson

Deputy Chairperson

Member

Date: 26 April 2022

Appendix: Provisions of the Act and Rules referred to

The Real Estate Agents Act 2008 provides:

78 Functions of Committees

The functions of each Committee are—

(a) to inquire into and investigate complaints made under section 74:
(b) on its own initiative, to inquire into and investigate allegations about any licensee:
(c) to promote, in appropriate cases, the resolution of complaints by negotiation, conciliation, or mediation:
(d) to make final determinations in relation to complaints, inquiries, or investigations:
(e) to lay, and prosecute, charges before the Disciplinary Tribunal:
(f) in appropriate cases, to refer the complaint to another agency:
(g) to inform the complainant and the person complained about of its decision, reasons for the decision, and appeal rights:
(h) to publish its decisions.

79 Procedure on receipt of complaint

(1) As soon as practicable after receiving a complaint concerning a licensee, a Committee must consider the complaint and determine whether to inquire into it.
(2) The Committee may—

• (a) determine that the complaint alleges neither unsatisfactory conduct nor misconduct and dismiss it accordingly:
• (b) determine that the complaint discloses only an inconsequential matter, and for this reason need not be pursued:
• (c) determine that the complaint is frivolous or vexatious or not made in good faith, and for this reason need not be pursued:
• (d) determine that the complaint should be referred to another agency, and refer it accordingly:
• (e) determine to inquire into the complaint.
  

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 Disciplinary Tribunal against the determination within 20 working days after the day on which

notice of the relevant decision was given under section 81 or 94, except that no appeal may be made against a determination under section 89(2)(a) that a complaint or an allegation be considered by the Disciplinary Tribunal.

(1A) The Disciplinary Tribunal may accept a late appeal no later than 60 working days after the day on which notice was given to the appellant if it is satisfied that exceptional

circumstances prevented the appeal from being made in time.

(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 (ab) the prescribed fee, if any; 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 Rules from the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012 referred to in this decision are:

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

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.