a. What, if, anything, has been done wrong by the salesperson?

b. What legislation (if any) has been breached? (identify the section and subsection as
required). Note, more than one act may apply in some situations.
c. Has the real estate agents act (professional conduct and client care) rules 2012 (the code)
been breached? If so, state the rule(s) that apply.

1. Barba Bullock phones the office and says, “We drove from the other side of town to see
the property at 17 Sentinel Drive because it was advertised as five double bedrooms, and
we’ve got a large family. But when we got there, it was more like three double bedrooms,
one single bedroom, and another room that I could only describe as a small study. We are
very disappointed and annoyed that we wasted our time.
a. The prospective buyer, Ms. Bullock was deceived by the seller’s representations.
'Representations' can include any verbal or written advice, advertising or other
statements you make. Representations must be accurate and complete. Not providing
all relevant facts, can be misleading in certain circumstances.
b. Part 6: Miscellaneous provisions, Subpart1, Offences and penalties— 144 Offence to
provide false or misleading information.
c.
 Rule no. 6: Standards of professional conduct— 6.4 “A licensee must not mislead
a customer or client, nor provide false information, nor withhold information that
should by law or in fairness be provided to a customer or client.”
 Rule No. 10: Client and customer care for sellers’ agents— 10.9 “A licensee must
not advertise any land or business on terms that are different from those
authorized by the client.”
2. Steve Smith comes to the office and complains, “When we listed our home we gave the
salesperson a copy of the registered valuation we had done about a year ago. He said that
because we had that, he didn’t need to do an appraisal. That seemed strange – is it
acceptable?”
a. None. Pre-sale appraisals are recommended. Before someone puts their house up for
sale they should have it appraised to estimate the true market value. Knowing the
value of property is a vital part of the decision-making process of all buyers, sellers
and users of real estate. Therefore, valuation is an integral part of all real estate
activity. It is needed for your personal planning. Also, zoning, community planning,
taxation require a knowledge and use of appraisal.
b.
 Part 4: Complaints and discipline— 80 Decision to take no action on complaint
c. No.
3. When preparing an offer for Mr. and Mrs. Kongoola, recent immigrants with limited
English skills who are purchasing their first New Zealand business, the salesperson failed
to explain the meanings of “plus GST” or “unconditional”. The offer was accepted by the
client, and the customers will now have to pay $112,500 more than they had expected to
pay.
 a. The salesperson failed to perform due diligence, a process of evaluating a business
from all aspects before making a purchase decision. Every real estate transaction is
different and requires a unique due diligence plan. Failing to perform comprehensive
due diligence—can create problems for even the most experienced investors.
b.
 Part 6: Miscellaneous provisions, Subpart1, Offences and penalties— 144
Offence to provide false or misleading information.
 Part 6: Miscellaneous provisions, Subpart1, Offences and penalties— 148
Offence to fail to provide information or document.
 Part 5 Duties relating to real estate agency work, Business to be identified— 128
Agency agreement must disclose rebates, discounts, and commissions.
 Rule No. 10: Client and customer care for sellers’ agents— 10.9 “A licensee must
not advertise any land or business on terms that are different from those
authorized by the client.”
c.
 Rule No. 6: Duties and obligations of agents— 6.4 “A licensee must not mislead a
customer or client, nor provide false information, nor withhold information that
should by law or in fairness be provided to a customer or client.”
 Rule No. 9: Client and customer care— 9.4 “A licensee must not mislead
customers as to the price expectations of the client.”
 Rule No. 9: Client and customer care—9.8 “A licensee must not take advantage
of a prospective client’s, client’s, or customer’s inability to understand relevant
documents where such inability is reasonably apparent.”
 Rule No. 10: Client and customer care for sellers’ agents— 10.4 “An advertised
price must clearly reflect the pricing expectations agreed with the client.”
 Rule No. 10: Client and customer care for sellers’ agents— 10.6 “Before a
prospective client signs an agency agreement, a licensee must explain to the
prospective client and set out in writing— (a) the conditions under which
commission must be paid and how commission is calculated, including an
estimated cost (actual $ amount) of commission payable by the client, based on
the appraisal provided under rule 10.2.”
 Rule No. 11: Client and customer care for buyers’ agents— 11.2 “Before a
prospective client signs a buyer’s agency agreement, a licensee must explain to
the prospective client and set out in writing— a.) the conditions under which
commission must be paid and how commission is calculated, including an
estimated cost (actual $ amount) of commission payable by the client, based on
the average of the estimated price range of the land or business that the client is
seeking to purchase:”
4. Bevan Hall phones and says, “Our neighbor, John has recently put his lifestyle block on
the market. It’s a good property, but there’s a massive power pylon in the front paddock.
Imagine our surprise when we saw the first ad in the newspaper. It showed the house and
paddock, but there was no sign of the pylon. Can a salesperson really delete something
like that from a photo?”
 a. False advertising. The salesperson advertised an inaccurate representation of his
lifestyle block. Marketing a property for sale at a representation at which the property
is not likely convenient as it is in real life. Misleading and deceptive advertising
encompasses anything that objectively causes a false impression of a property or its
features.
b. Part 5: Duties relating to real estate agency work— Business to be identified: 121
Agent to display required name information “(2) Every agent must ensure that the
required name information is displayed in a prominent place— on all notices,
advertisements, and other material published by or on behalf of the agent in the
course of the business; and”
c.
 Rule No. 10: Client and customer care for sellers’ agent— 10.6 “Before a
prospective client signs an agency agreement, a licensee must explain to the
prospective client and set out in writing— (c) how the land or business will be
marketed and advertised, including any additional expenses that such advertising
and marketing will incur:”
 Rule No. 10: Client and customer care for sellers’ agent— 10.9 “A licensee must
not advertise any land or business on terms that are different from those
authorized by the client.”
5. A salesperson is listing the home of the Harkness family, which is held in trust. The
signatories are Mr. and Mrs. Harkness and their solicitor, Jack Dawson. Mrs. Harkness
asks whether she and her husband can sign the agency agreement, rather than bothering
the solicitor, “because he’s very expensive”. The salesperson agrees that there’s no need
to involve the solicitor until there’s a sale and purchase agreement to be signed. He also
approved Guide or advise them to seek legal advice before signing the agency agreement.
a. None. An agency agreement is a legally binding contract between the client and the
real estate agency only, involvement of solicitor is unnecessary except for sale and
purchase agreement.
b. None.
c. No.
6. Maria Tang calls and says, “When we bought our first investment property 3 weeks ago,
the salesperson assured us that it would rent for at least $480 per week, and that we’d
probably get $520 without any difficulty. We relied on that information when working
out our budget. But we’ve since found out that this isn’t a popular area for rentals, and
our property manager is struggling to find us a tenant who’ll pay more than $440 per
week.”
a. The salesperson misrepresents the sale or lease price of a property. The advertised
price must be fair and reasonable and reflect the current market value and
expectations of the client. Any changes during a marketing campaign likely to affect
the selling price must be reflected in the advertised price.
b. Part 6: Miscellaneous provisions, Subpart1, Offences and penalties— 144 Offence to
provide false or misleading information.
c.
  Rule No. 6: Standards of professional conduct— 6.4 “A licensee must not mislead
a customer or client, nor provide false information, nor withhold information that
should by law or in fairness be provided to a customer or client.”
 Rule No. 9: Client and customer care— 9.2 “A licensee must not engage in any
conduct that would put a prospective client, client, or customer under undue or
unfair pressure.”
 Rule No. 9: Client and customer care— 9.4 “A licensee must not mislead
customers as to the price expectations of the client.”
 Rule No. 9: Client and customer care— 9.5 “A licensee must take due care to—
(b) avoid risks of damage that may arise from customers, or clients that are not the
owner of the land or business, accessing the land or business.”
 Rule No. 9: Client and customer care— 9.13 “When authorized by a client to
incur expenses, a licensee must seek to obtain the best value for the client.”
 Rule No. 10: Client and customer care for sellers’ agents— 10.2 “An appraisal of
land or a business must— (b) realistically reflect current market conditions; and
(c) be supported by comparable information on sales of similar land in similar
locations or businesses.”
 Rule No. 10: Client and customer care for sellers’ agents— 10.4 “An advertised
price must clearly reflect the pricing expectations agreed with the client.”
 Rule No. 10: Client and customer care for sellers’ agents— 10.9 “A licensee must
not advertise any land or business on terms that are different from those
authorized by the client.”
7. A salesperson is showing a 5-hectare lifestyle property to James. When pointing out the
boundaries, the salesperson refers to a large, flat paddock on the eastern side as being
included in the property. James comments that paddock is exactly what he wants to
develop an equestrian facility, including a dressage arena. The size of the paddock is
approximately half a hectare.
a. None. The salesperson has established a clear boundary. Paddock, being a small field
is just an inclusion of the 5-hectare lifestyle property, the size of it doesn’t matter but
only the total-hectare of the marketed land.
b. None.
c. No.