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Commerce Commission warns property company

Media Release

Issued 16 May 2008/no 143

Commerce Commission warns property company

A Wellington property investment company and one of its directors have been warned by the Commerce Commission for making a misleading representation about a property they were selling.

Commission investigations found that Eva Properties Partnership Limited and one of its directors, Jitesh Mistry, told the real estate agent marketing a Wellington inner city property on their behalf that they had resource consent to build four apartments and ground floor commercial space. The advertisements for the property included this information. The property was advertised through the real estate agency’s website, in the Property Press and the Dominion Post. At the time of advertising, although resource consent had been applied for, the Wellington City Council had not granted consent for the property to be developed into commercial space and apartments.

Adrian Sparrow, the Commerce Commission’s Director of Fair Trading said, “When making a decision to buy a property, whether it is commercial or residential, a potential buyer is entitled to be provided with the correct information relating to the property.”

“Real estate agents, when marketing properties for sale, often rely on the vendor to provide them with accurate information. In recent times the Commission has intervened when real estate agents have misled potential buyers when marketing properties. This investigation is a reminder that vendors also have the same responsibilities to tell the truth, or risk breaching the Fair Trading Act,” Mr Sparrow said.
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“Real estate agents should also be reminded that publishing misleading representations on behalf of their clients may also lead the agent to be liable under the Fair Trading Act,” said Mr Sparrow.

“We are pleased that the real estate company, when they were advised of the allegation of the misleading information, made their own inquiries. When they had confirmed that the property did not in fact have the consent claimed, they immediately suspended all advertising in relation to the property,” said Mr Sparrow. The Commission will not be taking any further action against Eva Properties Partnership Limited or Jitesh Mistry at this stage, but will continue to monitor how they market future properties.

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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