Conflict of interest
If you or someone related to you, personally or professionally, has an interest in a property or business you have listed, there is a conflict of interest and you must follow specific procedures set out in the Act.
Topics covered on this page
A licensee must not act in a capacity that would attract more than 1 commission in the same transaction.
Licensees cannot be employed by both a buyer and seller in the same transaction.
A licensee must not engage in business or professional activity other than real estate agency work where the business or activity would, or could reasonably be expected to, compromise the discharge of the licensee’s obligations.
This rule addresses the issue of you acting outside your role as a licensed real estate professional when involved in a transaction.
An example is a licensee who is giving advice as a mortgage advisor or valuer, because they may be able to influence someone to buy or sell a property to earn a commission.
Licensee failed to outline conflict of interest to vendors
The licensee accepted that he allowed the sale to himself and his partner to proceed without getting the complainant’s consent in the prescribed form, and without providing them with a written (or any) valuation by a registered valuer, as required by section 134(1) and (3), and 135. He also accepted that he did not tell the complainants that because of his failure to comply with the requirements of section 134 and 135, they could cancel the sale contract.
The Tribunal rejected the suggestion that the licensee genuinely believed he was acting correctly given the importance of the obligations and the fact that he was a very experienced licensee and licensed as a branch manager. It noted that these provisions were well known to licensees, and fundamental to the Act’s purpose of promoting public confidence in the performance of real estate agency work, and a breach must be regarded seriously.
The licensee did not lose his obligations by calling the transaction a "private sale" on the Agreement for Sale and Purchase, and not charging commission. He was still required to comply with the Act and follow the correct process.
Didn’t act in the vendor’s best interest
This allegation was based on the prospective buyers’ evidence that the licensee had said that the sale price for the property was not expected to go above its rateable value.
The Tribunal accepted this evidence and therefore found that the licensee had significantly reduced the possibility that the property would sell for the price the complainants (his clients) wished to achieve.
Further, because the licensee made an offer on the same day the prospective purchasers’ offer had been rejected the Tribunal:
- doubted that all potential buyers had been or would be exhausted
- noted that there was no opportunity for any potential buyers who were not already on the database to show themselves.
Section 134: The licensee failed to obtain the complainants’ informed consent to continue acting on the sale when he had a conflict of interest arising out of his decision to purchase the property for himself.
Section 135: The licensee failed to provide the complainants with a written (or any) independent valuation of the property.
Rule 10.2: The licensee ‘failed to provide them with a written (or any) appraisal of the property’.
Rule 10.3: The licensee ‘failed to advise the complainants how the properties referred to in documents provided to them had been selected and how that information could be reflected in the price for the property’.
Rule 9.1: Licensee ‘failed to act in the complainant’s best interests’.
What this means for you
You cannot assume the client is knowledgeable and understands and it’s not acceptable for a licensee to assume that the requirements of the Act and Rules do not need to be complied within a case.[TB1]You must comply with your obligations under section 134 of the Act in every case. You must provide the vendor with an independent valuation and written appraisal as well as their written informed consent to move forward with the sale.
If you are unsure if you need to supply this to a vendor, talk with your manager or contact us.