Real estate agent should have told buyers
Issued 11 August 2006/020
Real estate agent should have told buyers about apartment building planned for next door: Commission
A Hamilton real estate agent who sold a property described as “out of the hustle and bustle” should have told buyers that an apartment complex was going to be built next door, the Commerce Commission said in a formal warning today.
The real estate company, Monarch Real Estate Ltd, and one of its agents, Shaun Cosgrave, were warned by the Commission that their failure to tell potential buyers about the planned development risked breaching the Fair Trading Act.
“Mr Cosgrave has admitted that he knew about the planned development before the property was listed,” says the Commerce Commission’s Director of Fair Trading Deborah Battell.
“Not only did he fail to disclose this information, the agency’s advertising emphasised the property’s tranquillity and privacy which would almost certainly have been compromised by the planned development,” says Ms Battell.
The buyers provided evidence to the Commission showing they would not have bought the property had they known of the proposed development. They had made their own enquiries about planned developments, but as no resource consent application had been made, they were not able to discover the information themselves.
Ms Battell said that today’s warning highlights concerns that the Commission has with the real estate industry as a whole.
“The Commission’s view is that, where information relevant to a purchaser’s decision to purchase is known to the agent, it may be misleading or deceptive to withhold that information from the purchasers,” Ms Battell says.
The purpose of the Fair Trading Act is to ensure that consumers are fully informed when making purchasing decisions, Ms Battell says.
“The Fair Trading Act prohibits misleading or deceptive conduct so real estate agents should think carefully about the information they give – or fail to give,” says Ms Battell.
“The Commission will continue to monitor the real estate industry and will consider enforcement action where accurate information is not made available.”
The advertisement. The text of the advertisement was: Step out of the hustle and bustle and enter a property that exudes a quality of warmth and tranquillity, quite simply your quiet escape. With fabulous flow this large 4 bedroom character bungalow boasts generous natural timber throughout, 2 spacious living areas, feature kitchen and private outdoor deck and garden area.
The Fair Trading Act. In this instance the Commission considers the relevant sections of the Fair Trading Act are 9 and 14(1)(b) of the Act
9. Misleading and deceptive conduct generally. No person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
14. False misrepresentations and other misleading conduct in relation to land.
(1.) No person shall, in trade, in connection with the sale or grant or possible sale or grant of an interest in land or with the promotion by any means of the sale or grant of an interest in land, -
b. Make a false or misleading representation concerning the nature of the interest in the land, the price payable for the land, the location of the land, the characteristics of the land, the use to which the land is capable of being put or may lawfully be put, or the existence or availability of facilities associated with the land.