Real estate agentsmust ensure properties they market have the building consents the vendors believe they have, two cases before the Real Estate Agents Authority complaints assessment committee have shown.
Real estate agentsmust ensure properties they market have the building consents the vendors believe they have, two cases before the Real Estate Agents Authority complaints assessment committee have shown.
Both cases involve what “a home and income” really means.
In one case, involving Mackys Real Estate Ltd trading as Bayleys North, which is now under appeal, the committee found the firm guilty of unsatisfactory conduct over its marketing of a property as “home and income” and as two bedroom flats.
A complainant who viewed the property said she was told the kitchen in the “granny flat” did not have a final signoff from the district council and that the current owner was receiving an income from the “flat.” But “Ms C” visited the local council and found the downstairs development was only allowed under limited “special circumstances.”
The building permit for the downstairs kitchen, which allowed a kitchen sink to be installed due to special circumstances, stated that no approval was granted for the creation of an additional flat. There was also a provision requiring the sink to be removed if the property were sold.
Bayleys North told the committee it believed the flat was legally established. It was unaware of the conditions of the building permit, which were not noted on the LIM. Neither the vendor nor the vendor’s solicitor was aware of the conditions. Despite the council holding a copy of the consent, it had failed to record it on the LIM and had not made the owners aware of the special conditions, which dated back to the 1980s.
Bayleys North believed that as it had seen the LIM and had made a check to see if the flat was legal, it had done all it could to verify the information. As soon as it learned the correct position, it cancelled an open home, ordered the sign to be removed and immediately withdrew the property from sale. It stopped further ads.
The committee said it took into account that the special circumstances of the building permit were not easily discoverable.
However it said the term “granny flat” should convey the intended use of this type of development. It was wellknown in the industry that local authorities had the power to grant dispensation so property owners could create accommodation for extended family that would not be approved as a subdivision. This type of dispensation was usually called a “granny flat” by members of the industry and public. The dispensation terminated when the granny flat was no longer used by a family member. Describing a property with a granny flat as “home and income” was likely to mislead potential buyers
The committee said a “reasonably competent licensee” should have known it could not advertise a property with a granny flat as “home and income.”
The committee also noted a cross-lease dwelling cannot be legally divided in this situation to provide two two bedroom flat or home and income.
The committee considered the agency’s conduct indicated a lack of knowledge of important aspects of real estate practice and ordered the principal agent of the agency to undergo training in three unit standards. The committee made an order reprimanding the agency and ordered it to pay a $500 fine to the Real Estate Agents Authority,
In another case, also being appealed, a real estate agent was found guilty of unsatisfactory conduct by advertising a property as “home and income” when it did not have the necessary consents to be called that. Emma Donkin, manager at Barfoot & Thompson, Mairangi Bay was ordered to apologise to a complainant and pay $1294.92 as rectification for costs and expenses incurred.
A complainant said he had signed a sales and purchase agreement for a property advertised as “home and income” but he had discovered there were no consents issued by the council for the property to be used as such.
Barfoot & Thompson acknowledged that the property had been advertised as “Home and income – urgent sale.” This information was obtained from the vendors. The vendors had been unaware the property was not issued with a code of compliance but had established with the council that it would be possible to obtain one and they were able and willing to remedy the situation.
The property was marketed as a home and income as the vendor was “absolutely adamant that it was such” and had signed a listing authority stating this. The real estate firm said the property had all the hallmarks of a home and income – separate power meters, no access between the home and income, totally self-contained with full kitchen and laundry facilities.”
The complaints assessment committee said the complainant was entitled to rely on the information advertised about the property. In its view, general practice by agents in marketing a property was for the agent to request that the vendor provide a LIM. It was then the firm’s responsibility to confirm details in the LIM before advertising any such details.
The committee said the firm should not have advertised the property as home and income without confirming this information on the LIM.
