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Real estate agent, admits misleading advertising

Media Release
Issued 14 February 2008/No 106

Real estate agent, and his company, admits misleading advertising

A Wellington real estate agent, and the company he worked for, has admitted advertising a property in a way that was likely to mislead potential buyers, in breach of the Fair Trading Act.

The Commerce Commission launched an investigation in December 2007 following a complaint from the Wellington City Council.

The complaint related to a section of land in Newlands, Wellington being marketed by agent John Willcox of Team Wellington Limited (trading as Harcourts Kilbirnie). On the website www.open2view.co.nz the 1,358m2 property was described as having “provisional resource consent for six executive quality detached town houses”.

The Commission’s investigation found that there is no such thing as “provisional resource consent”, and that no resource consent had been applied for. The Commission did not receive any complaints from the viewing public.

In an out-of-court settlement with the Commission, Mr Willcox and Team Wellington Limited have admitted breaching section 14(1) (b) of the Fair Trading Act 1986. As a condition of the settlement, Mr Willcox is required to undertake at least six compliance training sessions being conducted by Team Wellington Limited or the real estate industry within the next 12 months. Likewise, an independent audit of Team Wellington Limited’s compliance procedures will be conducted, with emphasis placed upon Fair Trading Act compliance. Team

Wellington Limited will be required to institute any recommendations made by the independent auditor.

Commission Chair Paula Rebstock says, “If competition in the real estate market is to be effective, real estate agents must provide accurate information about the properties they sell.”

“Home buyers rely, and are entitled to rely on, claims made by real estate agents in advertising, promotional materials and on websites relating to the property. Real estate agents, and the companies who employ them, must ensure that they do not intentionally or unintentionally mislead those buyers” says Ms Rebstock. In reaching the settlement the Commission has taken into account the immediate action taken by Mr Willcox to remove the offending reference from the website when it was drawn to his attention, and the limited exposure of the offending wording.

Background Section 14(1) (b) of the Fair Trading Act states: (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 of availability of facilities associated with the land.

Breaches of the Fair Trading Act may result in prosecution in court. Companies found guilty of breaching provisions of the Fair Trading Act may be fined up to $200,000 and individuals up to $60,000. Only the courts can decide if the Fair Trading Act has been breached.

ENDS

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