Misconduct in Real Estate – What are the red flags you should look out for?

Shine Lawyers New Zealand - Right Wrong

In New Zealand, licensed real estate agents must comply with the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012 (REA Code of Conduct). The REA Code of Conduct was established under the Real Estate Agents Act 2008 (the Act). It applies to licensed real estate agents in relation to any property, whether residential, rural, commercial or industrial.  

Here we uncover what the professional standard of conduct for real estate agents in New Zealand is and what unsatisfactory conduct and misconduct in real estate looks like.  

Real estate agents’ responsibilities in New Zealand

You may be a seller, buyer or renter looking for a New Zealand home. With the housing affordability crisis and shortage in rental accommodation, you want reassurance that your real estate agent conducts themselves professionally and honestly. So, what are a real estate agent’s responsibilities?  

In New Zealand, under the REA Code of Conduct a licensed real estate agent’s responsibilities include to: 

  • Act in the best interests of their client and in accordance with their client’s instructions 
  • Not put undue or unfair pressure on a prospective client, client or customer 
  • Communicate regularly and in a timely manner, to keep their client well informed of relevant matters 
  • Not mislead customers regarding their client’s price expectations 
  • Not place a sign on a property or website offering it for sale, unless authorised by their client 
  • Recommend that a prospective client, client or customer seek legal advice prior to signing an agency agreement, a sale and purchase agreement or another contractual document 
  • Not take advantage of a prospective client’s, client’s or customer’s reasonable apparent inability to understand relevant property documents 

What is unsatisfactory conduct and misconduct in real estate

Under the Act, the ‘red flags’ for unsatisfactory conduct by a licensed real estate agent include if their conduct: 

  • Falls short of the standard expected by a reasonable member of the public, or a reasonably competent licensed real estate agent 
  • Breaches the professional standards detailed in the legislation or the REA Code of Conduct 
  • Is incompetent or negligent or unacceptable 

Examples of unsatisfactory conduct in real estate could include if a licensed agent 

  • Doesn’t disclose a defect of which they’re aware, to a potential customer 
  • Gives a potential customer incorrect information about a property  
  • Has a conflict of interest relevant to the property (such as if the licensed real estate agent or their relative will benefit from the sale or purchase of a property) 

Misconduct in real estate in New Zealand

In New Zealand, a licenced real estate agent is guilty of misconduct in real estate if: 

  • Their conduct can reasonably be regarded (by licensed real estate agents of good standing or reasonable members of the public) as disgraceful, seriously incompetent or seriously negligent   
  • Their conduct is a wilful (or intentional) breach of their professional standards of conduct under New Zealand law 
  • They have been convicted of an offence, and that offence adversely reflects on their fitness to be a licensed real estate agent 

In practical terms, ‘red flag’ examples of misconduct in real estate could include: 

  • Falsifying property documents or records 
  • Inserting a client’s signature or initials into a property agreement without their client’s consent 
  • Inappropriate dealing with trust account funds 
  • Sexual harassment (as a licensed real estate agent or away from their work) 

What can you do if you suspect misconduct in real estate?

If as a client either selling, buying or renting a homeor as a licensed real estate agent you reasonably believe a licensed agent may be guilty of misconduct in real estate you can make a complaint. This can be made to the Real Estate Authority (Te Mana Papawhenua) 

If a licensed real estate agent’s misconduct in real estate has caused you loss, we can help. 

Whether you’ve suffered loss as a vendor or purchaser, our experienced team has the expertise and knowledge to take on negligent real estate agents. Get in touch for a confidential, obligation-free consultation 

Shine Lawyers are experienced in real estate agent negligence

Our professional negligence and real estate agent negligence teams have experience in bringing compensation claims across a broad range of industries including real estate. 

We have a proven track record and are dedicated to delivering justice to our clients who have suffered a financial loss as a result of negligent professionals, including licensed real estate agents. 

We will help you to understand your rights and access your full entitlements, ensuring you receive the best outcome for your situation. 

Contact us today, and we can assess your case, to see where we can help you on a No Win No Fee* basis.  

*Conditions apply 

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