A recent decision of the Real Estate Agents Disciplinary Tribunal has imposed new requirements on real estate agents.
In several recent decisions, the Tribunal has mentioned that section 3 of the Real Estate Agents Act 2008 states that the emphasises of the Act is on the protection of consumers and the public, whereas in the past, agents were focussed on the interests of the vendor.
In a decision from December 2011, the Tribunal said that a licensee is likely to be guilty of unsatisfactory conduct, or even misconduct, unless the licensee:
- Searches the title to the property when a listing is received, and any land covenants on the title, and becomes familiar with them, so that the licensee can explain clearly and simply the effect of any covenants or restrictions to a buyer.
- Knows the zoning and “compliance with town planning regulations or Council requirements”.
- Checks the title to make sure the seller actually owns the property.
The Tribunal said the licensee cannot leave those issues entirely to the buyer’s lawyer, and cannot simply relay advice from the seller without further checks.
Facts
A residential property had a separate one bedroom flat, and was marketed as a “Home and Income”.
The Council plan and consents allowed the unit to be rented out, but a covenant registered against the title to the property prevented it from being used, amongst other things, for any commercial purposes or for more than one household unit.
Before buying, the buyers told the licensee that their single most important requirement was to find a property where their son could live separately in a unit while they rented out the main dwelling when they moved overseas.
Recommendations
- When you receive a new listing, you must get a copy of the title yourself, or ask the seller’s lawyer to provide you with one.
- If there are any land covenants or building restrictions noted on the title, you must also get a copy of those documents and read them, so you can explain what they mean to a buyer.
- If you market a property as having any particular quality, that statement must be true, or it is likely you will be liable if a complaint is made, or under the Fair Trading Act.
- Do not rely on statements made to you be the seller – check with the seller’s lawyer or with Council.
