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October 21, 2016

Rules around disclosure when selling

Topics: Press Release, Selling, Buying 0

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A real estate sales consultant will always act in the best interests of the seller when marketing a property, however, it does not mean they are able to misrepresent or hold back any information from potential buyers.

Harcourts CEO Chris Kennedy says real estate professionals must follow the Real Estate Agents Act 2008, our own industry Code of Conduct and the Fair Trading Act.

The real estate Code of Conduct states a sales consultant must not “mislead a customer or client, nor provide false information, nor withhold information that should by law or in fairness be provided to a customer or client.”

To this end Harcourts sales consultants will alert buyers to any potential problems that they are aware of, Kennedy says.

These may include issues such things as weather tightness problems; boundary issues, alterations that have been carried out without local body permission, the potential impact that proposed developments may have on the property, and if there is a risk of methamphetamine contamination.

Any misleading statements about a property are also prohibited under the Fair Trading Act.

Kennedy says this means any claims must be able to be backed up with evidence.

“So while a sales consultant will want to present a property in a positive light, they have to be realistic and honest in the language they use.”

But however fair and transparent a salesperson tries to be, inevitably there are disagreements around disclosure.

Kennedy says if you believe a property has been misrepresented to you, you should take your complaint to the Real Estate Agent’s Authority (REAA), which is an independent government agency. The REAA’s Complaints Assessment Committee will review the complaint and decide if misconduct charges should be laid.

If charges are laid, the Ministry of Justice’s Real Estate Agents Disciplinary Tribunal will hear the case and make a ruling.

The tribunal has the power to impose heavy penalties, including fines of up to $15,000 for individuals and $30,000 for companies, payment of compensation for actual loss (up to $100,000), and the cancellation of real estate licences.

“These penalties are tough, and so it’s in the best interest of sales consultants, and real estate companies, to make sure full disclosure is adhered to at all times,” Kennedy says.