Attention Auckland real estate agents

by | May 29, 2013 | General property Law, Sale and Purchase


A way to ensure potential buyers of residential property receive proper explanations about issues in the title and LIM reports.  Read more about the propertyROOM here.

Do you remember the story about a real estate agent, a sale and a land covenant?  (LB and QB v The Real Estate Agents Authority & Li [2011] NZREADT 39).  Read the full decision here.

A land covenant had been registered on the title of a property prohibiting it from being used as a flat or flats or as a residence for more than one household unit or for any trading or commercial purpose.  The buyer bought the property then found out about the land covenant.  The buyer complained to the Real Estate Agent’s Disciplinary Tribunal.  The Tribunal said:

“We consider that a licensee, upon taking instructions for a sale of the property, should search its title, or have some competent person search it for the licensee, and be familiar with the information gained from such a search… Similarly, the licensee should ascertain such matters as zoning and compliance with town planning regulations or Council requirements.” 

The NZLS and REINZ produced a best practice guide to deal with these issues. 

This guide recommends that real estate agents should get a copy of the title, figure out whether any registered interest should be brought to the attention of the buyer, and recommend that the vendor prepare a pack with information about the property.  Alternatively if the vendor does not want to provide an information pack, the licensee should recommend that the buyer get a pack from an independent source.

Agents must also comply with the revised Real Estate Agents Act (Professional Conduct and Client Care) Rules, which came into force on 8 April 2013.  This emphasises consumer protection and disclosure of defects.

There is a balance between consumer protection and protecting the interests of vendors.  But one thing is clear from these decisions, guides and rules: real estate agents need to ensure they take responsibility for ensuring proper explanations about issues at the property are given to potential buyers.

We can provide proper explanations of the title and LIM reports to buyers, at the same time informing agents and vendors of any issues in the LIM and title that should be raised with buyers.