This article is a follow up on my previous post following the article published in Stuff last week by Janika ter Ellen. You cannot go past 1 week not to notice 1, 2 or 3 articles published by Stuff or NZ Herald about misdemeanors by real estate agents. I will briefly touch on 3 cases that came up on my table this week. These cases made it to media. There will be hundreds of others that are with the Real Estate Authority and unfortunately we won’t know unless Belinda Moffat would want to release them which she surely won’t. Belinda is the CEO of the Real Estate Authority in New Zealand that regulates the industry. She’s paid by these businesses, she issues licenses to these businesses, she trains them and needles to say this is the last thing she would want the public to know.

The 1st case is ‘Buyer trapped in $3.75M deal after agent failed to disclose boundary issues’. I start with what Belinda had said about private sellers. ‘Private sellers have a legal obligation to share all the relevant information about their property with prospective buyers, such as any issues with the boundary or title, any unconsented building work or alterations, any known weathertightness issues and whether there are any proposed developments that could have an impact on a buyer’s access, views or enjoyment. Failure to do that could put the sale in jeopardy or expose the seller to claims for breach of warranty under the sale agreement’.

Well this wasn’t clearly the case of real estate agent Nicholas Brown who forgot to disclose material facts to the buyer. He failed to update marketing materials or warn a buyer about boundary issues that slashed the number of usable car parks at a property in Takapuna, on Auckland’s North Shore.

The Real Estate Agents Disciplinary Tribunal has found Nicolas Brown guilty of unsatisfactory conduct for misleading the purchaser about the correct boundary and withholding material information.

The property was advertised as having 25 car parks, described as a “significant drawcard”. However, the legal boundary meant only 15 were usable, with the rest sitting on Crown and Auckland Council land.

Brown, a salesperson for Barfoot and Thompson North Shore Commercial at the time, became aware that part of the concreted area was actually reserve land.

Despite this, he did not update the information memorandum or tell the buyer about the discrepancy before an unconditional offer was made.

The tribunal found Brown should have undertaken due diligence to confirm the true position of the boundary once he suspected an error. While the tribunal rejected claims of willful or reckless misconduct, it ruled his failures were negligent. ‘Brown simply did not know what he was selling’, the tribunal said in its decision.

A penalty for the conduct will be determined at a later date. I can tell you now what the penalty is going to be. It’ll be $1,000 or somewhere around that mark.

Here’s the case number 2. Two homes next to each other in Auckland were sold with a nearly $500,000 difference. You might think what’s wrong with that? Well here’s the story. 

A real estate agent sold home for $1.9 million to a developer, but failed to disclose that price to the neighbours before they sold their similar property to the same person for $1.43m.

The Real Estate Agents Disciplinary Tribunal recently found Limin (Eliza) Li guilty of unsatisfactory conduct for withholding information, which it ruled was vital for the neighbours’ market analysis.

The agent at the centre of it sold a house to a developer for $1.9M. Shortly after the neighbours asked Li to act as their agent too. Li prepared a market analysis for her clients on March 1, 2022, but did not include her own recent sale price (she must have forgotten about it). The neighbours then sold their property for $1.43m to the same developer on March 4 only to find out three days later that Li had achieved $1.9m for their neighbours.

The family told the tribunal they wouldn’t have agreed to that price had they known what their neighbour’s house sold for. The property was similar in size, age and zoning.

The tribunal found Li breached professional rules by failing to deal fairly with her clients. It rejected Li’s argument that the information was not material (nah that wasn’t material Li) because the other property had development consents that made it an “outlier”.

Even if the property was an outlier, Li had a duty to explain that to her clients so they could evaluate the relevance to their own sale, the tribunal found.

Li was also criticised for yelling at her clients during a heated discussion (she seems like a nice lady this real estate agent).

The tribunal confirmed a censure against Li and ordered her to pay a $1490 fine and $510 in costs to the complainants. That’s a massive fine isn’t it? That’s going to make that family feel so much better after they’d found out their neighbours sold identical house for $500,000 more with the same real estate agent.

However, the tribunal reversed a $4000 fine and guilty finding against the agency, C Ltd (why can’t they name the agency? I don’t understand?). It ruled the agency had complied with its obligations by appointing a suitably qualified branch manager to supervise Li. Yep and that supervisor did their job at the best as we see in this case.

The 3rd case is about Kainga Ora massive state home selloff. Harcourts linked real estate agency has been reported to the regulators after massive Kainga Ora selloff programme. The case centres around the purchase of $1.9M worth of state housing properties and questions being asked are about:

• Real estate conduct
• Disclosure obligations
• Conflict of interests
• Kainga Ora processes

The situation comes as the Government accelerates one of the largest state housing asset reshuffles seen in decades.

This is going to be a bonanza for some, I can tell you that. 900 state homes, generating $500M annually, one of the most premium Auckland suburbs such as Elleslie, Point Chevalier, Mt Eden, Sandringham, Westmere, Orakei. You can’t get any better than these suburbs. Developers and investors have reportedly viewed many of these sites and refer to them as ‘Goldmine opportunities’. 

Potential conflict questions being raised are:

• Agency disclosure requirements
• Fiduciary responsibilities
• Real Estate ethics (that’s a good one)
• Transparency in state asset sale, particularly where licensed real estate professionals may have direct or indirect involvement in transactions tied to Government property sales

This selloff is controversial and all I can tell you is there will be people involved who will know how to make the most out of it.

These are some 3 case that came up on my radar just this week in my news feed. We talking here about 1 week. Ask Belinda Moffat the CEO of Real Estate Authority how many cases does she know about that did not make it to the public arena? Your guess is as good as mine.

I would like to wrap this article up with what her fellow member of AREINZ and Eve on Cameron branch manager in Tauranga Mr Craig Wilson. This is what he says about licensed agencies. ‘If something goes wrong (with a private sale) you haven’t really got too many places to go back to. Whereas, if it’s a real estate company, a licensed real estate company or sales person then you’ve got quite a lot of protections and provisions that look after you’.

As you can see, yes there are systems in place when a real estate agent does something stupid or outright dodgy, you can refer them to the Real Estate Authority and their subsequent Disciplinary Tribunal and they will hand down penalties somewhere around $1,000.