Written by Nicole Burrows-Healy - Solicitor (Property)

As agents you will frequently assist both purchasers and vendors. While the tasks you undertake for them can come with the best of intentions, you may accidentally become a target. How much assistance can you give a purchaser before you start to incur liability?

In the recent decision (C v Real Estate Agents Authority [2018] NZREADT 20) a purchaser asked an agent to seek permission from the Body Corporate to keep a dog on the premises. The Body Corporate’s reply was that an application could be made once a conditional offer was accepted. However, this was not properly relayed to the purchaser and they made an unconditional offer (which was accepted). Their offer was made under the assumption that they could keep the dog at the property and the purchaser eventually had to sell the home to keep her dog.

The above decision resulted in a penalty which was subsequently quashed. However the agent no doubt suffered reputational damage as a result of this unfortunate experience for the purchaser. The takeaway message here is for agents to be careful with the kind of assistance they give purchasers. 

So what can you do to ensure you can continue to help while avoiding/limiting your liability?

We recommend that you ask the purchaser to consult with their lawyer before signing any offer. This will allow the lawyer to look over all the information you have provided and give the purchaser an impartial view. Remember to always think about how clients will interpret any comments. Regardless of what your terms and conditions say, clients often rely on your comments and opinions when they are feeling vulnerable through a property transaction.

Mistakes are part of life and need to be recognised for what they are. However, to avoid situations like the above in the future, referring purchasers to their lawyer is the best way to limit your liability and protect your reputation. We are always happy to discuss your situation and provide advice where needed, including assisting you with drafting appropriate clauses when you have an unusual scenario.

Written by Louise Maginness - Registered Legal Executive  (Property)

Acting for executors selling a deceased loved one’s property can be difficult.  However if you understand the process it will hopefully be easier for the deceased’s family as well as you as agents.

If you are engaged to sell an estate property then we suggest you consider the following questions:

1. What timeframes do you need to work towards?
The deceased person’s home forms part of their estate and probate (or letters of administration if the deceased had no Will) will need to be obtained from the High Court before the property can be legally transferred.  You need find out if probate has been issued or when it is likely to issue.  Probate can take weeks (provided there are no objections) to be granted, so the agreement’s deadlines need to allow for this eventuality.

Once probate has issued the lawyer can complete a transmission to get the property transferred into the executors names.  Only then will the executors be able to transfer the property to a new owner.

2. Are you receiving instructions from the correct people?
It is very important to ensure that you are receiving your instructions to sell from the executors in the estate, rather than the estate’s beneficiaries.  Only the executors will have the power to sell the property, and so their signatures should be on your listing agreement. 

3. Do your clients need to obtain a market valuation?
The executors may wish to consult with the beneficiaries before signing any sale and purchase agreement, however the executors should obtain their own legal advice in that regard.  If the parties are unable to agree on the purchase price, then the executors may wish to obtain a current market valuation to ensure the purchase price being offered accurately reflects the property’s current value.  An auction with an appropriate reserve may be preferable as an auction will allow the executors to dictate the terms under which the property is offered and would usually result in an unconditional sale. 

4. Are there any barriers to the sale?
It may also be prudent to check with the estate’s lawyer whether there are any barriers to prevent a sale (i.e. caveat/notice of claim) so these can be dealt with early.

5. Does the agreement need to limit the executor’s knowledge?
Our firm always adds additional further terms into the agreement when acting for an estate including advising that although the property is currently in the executor’s names, they did not previously own the property. If so the agreement should include an acknowledgement that the executors do not necessarily know about any alterations that may have been done to the property and they will not be required to certify that the property’s boundaries are accurate.

6. Will the property remain insured?
It is important to make sure that the deceased homeowner’s insurance remains current and that the insurers are advised if the property will be unoccupied.  The estate’s lawyer will be able to liaise with the insurance company direct but it may be prudent to double check this.

By taking the time early on in the selling process can ensure that the sale of an estate property goes smoothly for those left behind.

Written by James Leggat - Solicitor (Property)

We have had several recent incidents where clients have been unsatisfied with their pre-settlement inspections, but they have raised the issues too late to require the vendor to attend to repairs or provide compensation.

Under a standard sale and purchase agreement, any claims for compensation must be raised at least one working day prior to settlement, and we must remember that the agreement defines a working day as finishing at 5 pm. Practically then we always advise our purchaser clients to complete their final inspection and advise us if they want us to raise any issues before 4 pm at least 2 working days prior to settlement. This will then allow us to communicate with the vendor’s solicitor before the 5 pm cut-off.

In one recent transaction, the purchaser’s lawyer failed to notify us of a significant issue with the property until the morning of settlement. While parties will often agree to fix an issue in good faith, on this occasion the relationship had become very strained between the vendor and purchaser. Our vendor client’s instructions, which were justified in this instance, were that they would not attend to the issue. This cost the purchaser an estimated $20,000.00.

As the agent, you will be called upon to help facilitate the purchaser completing their final inspection in a timely fashion. Remember it is the purchaser’s right to inspect the property before settlement. If a purchaser wants to waive this right, then we recommend that to protect yourself you should get clear instructions to this effect from them in writing, and suggest they speak to their lawyer first.

Similarly, we also recommend that you record your attempts to make yourself available to meet with the purchasers at the property in the lead-up to settlement. Again, we suggest you document these communications so that you do not face accusations that a purchaser was denied access to the property prior to settlement, and missed out on compensation as a result.

Partner - Property

Phone: +64 3 339 5642

Email: janine.ballinger@cavell.co.nz

Solicitor - Property

Phone: +64 3 339 5614

Email: james.leggat@cavell.co.nz

Solicitor - Property

Phone: +64 3 335 6470

Email: nicole.burrows-healy@cavell.co.nz

Registered Legal Executive - Property

Phone: +64 3 339 5643

Email: louise.maginness@cavell.co.nz

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