The Commerce Commission has launched a formal investigation into an Auckland property trader accused of targeting vulnerable homeowners in 'no commission, no fees' private house buying deals.
It can also be revealed that the Companies Office has warned Peter Lee he could face prosecution for potential breaches of the Companies Act.
The revelations follow complaints by top law firm MinterEllisonRuddWatts on behalf of traumatic brain injury victim Pamela Baucke, 61, whose Massey house was saved earlier this year after publicity in the Weekend Herald.
"Ms Baucke brings this issue to the Commission's attention because she is concerned about the financial and emotional harm caused by participants in the growing 'private house buyer' market who appear to target vulnerable homeowners like her," the law firm's partner Zane Kennedy wrote to the Commission in September.
"This type of conduct is not confined to the single instance involving our client but has reached national prominence."
Lee purchased Baucke's three bedroom home in May for $515,000 through his company PWG Ltd after she clicked on an online advertisement for his company Auckland House Buyers, which also trades as Propertywise.
Lee arrived at her home "bearing custard squares", Kennedy told the Commission. He was "very charismatic", made small talk about his love of cats and repeatedly stressed he would offer Baucke a "fair price" for her home.
Online estimates put the property's then worth at between $650,000 and $730,000. It's newly released July 2017 council valuation is $670,000.
Lee refused to comment yesterday and hung up. He has denied acting unethically or outside the law.
Kennedy's letter alleges "four key aspects of Mr Lee's conduct, which we regard as objectionable".
•Lee is accused of concluding the transaction and securing Baucke's signature "within an hour of meeting her" and within a day of his initial contact.
•He allegedly "took advantage of her evident vulnerability".
•Lee "counselled" Baucke against seeking legal advice, saying "lawyers would charge her high fees", the letter claims.
•He is accused of convincing her to sign a sale contract by agreeing to find a replacement property then later "prevailing upon her to delete the relevant terms of the agreement".
Kennedy said Baucke had no immediate family in Auckland and been a long-term ACC recipient since suffering permanent physical injuries and a traumatic brain injury during a car accident in 1983.
"As a result, Ms Baucke has reduced short-term memory and cognitive function. We understand that she is particularly affected and suggestible when she is in unfamiliar situations. She confuses details and gets anxious and stressed with new people."
Baucke "felt pressured" to sign the agreement and was deeply embarrassed and upset after receiving independent advice about the sale, the letter says.
Lee abandoned the contract after Kennedy's firm took up Baucke's case pro bono, asserting to Lee that his conduct was in breach of the Fair Trading Act.
It was the second time Lee had backed out of a deal following Weekend Herald publicity.
He cancelled the contract on a sick Mangere pensioner's home in May amid allegations he'd taken advantage of the widowed great-grandmother.
The Commerce Commission dismissed an original complaint by Baucke earlier this year. But in response to Kennedy's six-page complaint, a Commission spokeswoman confirmed an "active investigation" had now been launched.
A Companies Office spokesman said it had also written to Lee warning he risked prosecution for failing to ensure his company name, PWG Ltd, was clearly stated in communications issued by the company.
"Mr Lee subsequently arranged for the websites to be updated so that both now correctly identify them as trading names for PWG Limited.
"In light of Mr Lee's actions to remedy the non-compliance it was determined that no further action was necessary."
Earlier this year, the now Housing Minister Phil Twyford labelled companies like Lee's "the real estate equivalent of clothing trucks and finance companies".
His colleague Michael Wood has called on enforcement agencies to act and requested a Parliamentary inquiry into predatory practices across the investment property market.
Wood welcomed news of the Commerce Commission probe yesterday.
"It seems on the face of it there's enough evidence of a more than isolated problem with private home buyers and vulnerable people being targeted. We need to have a look at this to understand the scale of the problem."