Most Read Contributor in New Zealand, September 2016
A new Code of Conduct comes into force for real estate agents on
8 April 2013.
Many of the changes respond to issues which have been the
subject of repeated consumer complaints, including the
licensee's responsibility to inform potential buyers about
hidden or underlying defects in a property.
The Real Estate Agents Act (Professional Conduct and Client
Care) Rules 2012 update and replace the 2009 Rules. They set
minimum standards of conduct and client care that licensees are
required to meet when carrying out real estate agency work –
whether in the commercial or the residential market.
The new Rules, which apply to agents, branch managers and
salespersons, further refine the consumer focus of the Real Estate
Agents Act 2008. An underlying driver is that licensees should be
knowledgeable about the products they are selling and a buyer
should be well informed about all aspects of what is typically the
biggest transaction they will ever enter into.
Investigations relating to events on or after 8 April will be
dealt with under the 2012 Rules. Enquiries into events happening
before 8 April will be dealt with under the 2009 Rules.
Significant changes include:
a new requirement to explain to a client when an agency
an obligation for licensees, when their agency agreement is
cancelled, to identify to clients those customers whom they will be
seeking to claim commission in respect of in the event that they
buy the property
extension of the double commission rule beyond sole agencies to
all types of agency agreements. This may require changes to an
a requirement that licensees recommend to all parties entering
an agency or sale and purchase agreement that they seek legal
a requirement for agents operating as a business to ensure that
all their salespersons are properly supervised and managed
where there is no directly or semi-comparable sales data on
which to base an appraisal, a requirement that the agent explain
this to a client in writing
a requirement for agents to explain to clients, before any
agency agreement is entered into, how decisions relating to the way
in which the property is sold may affect the individual benefit to
new rules on what information must be explained before a client
enters into a buyer's agency agreement, and
clarification (in Rule 10.7) of the test for when a licensee
should know about a hidden or underlying defect in the property,
and that the licensee cannot necessarily rely entirely on their
client's word – expert evidence or advice may be
required. Simply conveying in good faith information passed on by a
vendor, without checking that it is correct, is inadequate.
The 2012 Rules may require operational changes as well as
modifications to documents, including agency agreements, to reflect
new obligations and to carry forward correct referencing of Rules
because numbering will be different.
The Rules are to be read in conjunction with the Real Estate
Agents Act 2008.
The Rules are not a code or an exhaustive list of what
constitutes unsatisfactory conduct or misconduct. However, the Real
Estate Agents Authority describes them as a "vitally
important" reference point for Complaints Assessment
Committees and the Disciplinary Tribunal.
Our thanks to Heather McKenzie for writing this Brief
The information in this article is for informative purposes
only and should not be relied on as legal advice. Please contact
Chapman Tripp for advice tailored to your situation.
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Be aware that most modern subdivisions now include land covenants which are registered against the titles.
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