Selling Your Property
The need for disclosure when listing with an Agent
By Angus Campbell. Angus is a Solicitor at our Papakura office specialising in Property Law.
When looking at a real estate advertisement, it is obvious that you are being shown what the sellers want you to see; the best aspects of the property. However, that does not mean a purchaser should not be made aware of any of the less desirous aspects as well.
According to the Real Estate Institute of New Zealand, in July 2019, 6118 homes were purchased and sold domestically, with Auckland alone accounted for nearly 2000 of these. That equates to a significant number of listing authorities. We recommend obtaining legal advice before entering into any agreement with a real estate agent (for both sellers and buyers) including the listing authority (where applicable) and the Agreement for Sale and Purchase, as it is wise to be informed of your obligations. For sellers of property there are particular obligations to be considered.
The role of the Real Estate Agent
Under the Real Estate Agents Act 2008, any agent acting on a seller’s behalf must advise potential buyers of any risks, otherwise they may be misleading that purchaser. If they do sell a property with undisclosed defects, they may be found to be liable as negligent. Therefore, an agent is only acting with due diligence if they ask about defects to your home. An agent cannot disclose any problems with the home to a purchaser without your consent, but if you refuse to disclose any information about potential defects, then under the law they may not continue to operate to sell your home.
Defects and the need for disclosure
Defects can vary from weathertightness due to age or cladding to a higher propensity for flooding due to run-off from newly erected nearby developments. They can be minor such as a door that does not close properly or major such as a new addition that alters the house’s dimensions such as an extension or deck that is not on the plan for a cross-lease or unit title. A defect does not have to be prevalent now; if it is known that the property will require re-roofing or re-wiring in only a few years, this should be disclosed to all parties involved. Issues that might not be considered defects but are expected to be disclosed can include a previous death on the property, whether the property has tested positive for methamphetamine or whether there is significant construction coming to the area soon.
Warranties and Consents
Your listing authority with the agent is your confirmation that you have not withheld any information about defects on the property, or that you are not aware of any. You must also warrant that any work you have had done on the property has all the proper consents and compliance certificates, and that you have not given any consents for similar work to be done at a neighbour’s property. When in doubt, disclosing any outstanding consents to your agent will reduce the risk of actionable claims being made against you.
Every problem varies on how it is to be best dealt with; whether it is better to solve the problem yourself or to disclose it to buyers and sell your property as is for a reduced price. Accordingly, we consider that it is prudent to consult with us about all of the above matters at as earlier stage as possible to minimise such problems.