Case spotlight — C14720

Case background

CAC 414 charges

The complainant contacted the licensee about an earthquake-damaged property owned by the complainant’s fiancée. They arranged to meet with the licensee, at the property and the complainant provided the licensee with a scope of works document.

The licensee had a list of buyers interested in purchasing earthquake-damaged properties and brought one of these buyers with her without informing the complainant ahead of time. The licensee introduced the potential buyer as an EQC specialist rather than a potential buyer.

The licensee and complainant then discussed price expectations, and after leaving the property, the licensee called the complainant and said that she could get them an offer that afternoon within the price range they had discussed. The complainant was concerned with his interactions with the licensee and contacted the agency to discuss these. Following this, the licensee admitted that the buyer was actually another licensee at her agency.

The agency investigated the concerns. The licensee falsely named another licensee as having been present at the property, and she later admitted this was a false statement. The licensee had also provided the scope of works document to the buyer without the complainant’s authorisation.

CAC 416 charges

In a separate matter, REA sent the licensee a compliance letter in response to another complaint received about the licensee. The complaint alleged she had contacted the owner of a property directly and discussed the pricing of the property with a prospective buyer when she didn’t have an agency agreement in place.

Despite the receipt of the compliance letter, the licensee sent emails to the prospective buyer and others from her ‘as is’ list, giving details of eight ‘as is’ properties. This information included the addresses of the eight properties, comparative market appraisals and vendors’ price expectations. The licensee did not have agency agreements in place for any of these properties.

Findings

CAC 414 charges

The Disciplinary Tribunal found that the licensee had engaged in disgraceful conduct under section 73(a) of the Real Estate Agents Act 2008(external link) by lying to the complainant about the identity of the buyer. The licensee had:

• breached rule 6.2 (duty to act in good faith and deal fairly with all parties) by bringing the buyer to the property without prior consent or authority
• breached rule 6.4 (duty to not mislead a customer or client) by misleading the complainant as to the purpose of the buyer being present at the property
• breached rule 6.2 by disclosing confidential information to the buyer (the scope of works document, the visit to the property, and information about the complainant’s price expectations)
• breached rule 6.3 (conduct likely to bring the industry into disrepute) in all of the above
• breached rule 9.6 (marketing without an agency agreement).

These breaches amounted to a finding of high-end unsatisfactory conduct under section 72 of the Act(external link).

You can read the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012 (Code of Conduct) here [PDF, 208 KB].

CAC 416 charges

The Disciplinary Tribunal considered that the licensee had engaged in marketing when she sent information about the eight properties to people on her ‘as is’ buyer list. The licensee had received a compliance letter warning her about this type of conduct immediately before she engaged in the conduct in question. The Disciplinary Tribunal considered that the licensee had engaged in misconduct under section 73(c)(iii) for a reckless breach of rule 9.6 (marketing without an agency agreement).

The penalty

The Disciplinary Tribunal made the following orders in respect of the licensee’s rule breaches:

• Censure (formal reprimand).
• A fine of $6,500.
• A 90-day licence suspension.

What this means for you

Marketing refers to any action taken to make information about a property available so that a sale may occur.

The Disciplinary Tribunal held that ‘marketing’ should be given a broad interpretation for the purposes of rule 9.6 that is consistent with the consumer protection objectives of the Act. ‘Marketing’ therefore refers to any action taken to make information about a property available (publicly or otherwise), by whatever means, with the intention of stimulating interest in that property so that a sale may occur.

Sending information on a property (price guides, RV, general information on the property condition etc.) to a closed list of potentially interested buyers amounted to marketing for the purposes of rule 9.6.

An agency agreement is necessary before any viewings take place.

The Disciplinary Tribunal, in this case, disagreed with the findings of a prior CAC decision in relation to industry practice for marketing properties.

An earlier CAC decision said that it’s not uncommon in the industry for prospective purchasers to view a property before a listing agreement is in place and that the key point is ensuring the listing agreement is signed before any negotiations take place. The Disciplinary Tribunal disagreed and considered that an agency agreement is necessary at the outset before any viewings take place, not just before negotiations take place. It commented that if what the CAC had said was common industry practice, that practice is contrary to the purpose of the Act and is misconceived.

You can read the full decision here(external link).
(external link)