Anne Gibson

Anne Gibson is the Property editor of the NZ Herald

Hammer falls on errant agents

The Weekend Herald can reveal the year's worst cases of real estate agents who broke the rules of their profession and misled the public. Property editor Anne Gibson reports

Former real estate agent Mark Ferguson no longer works in the sector.
Former real estate agent Mark Ferguson no longer works in the sector.

The list makes for alarming reading - real estate agents forging signatures, bad-mouthing properties for sale and giving false or misleading information when they were under investigation.

Details of fraudulent mortgage ramping schemes and commission disputes also feature in decisions of the Real Estate Agents Authority.

The sector's disciplinary body has released a list of agents' most serious offending at the Weekend Herald's request, based on licences cancelled and suspended, biggest fines, most financial compensation and those agents receiving more than unsatisfactory conduct or misconduct decisions.

But chief executive Kevin Lampen-Smith has urged New Zealanders to keep the offences in perspective, saying most sales by the country's 13,000 agents had no issues.

"Only a small percentage of agents have been found to have breached the rules - approximately 1 per cent in the last 12 months. The industry knows that it is accountable for its actions and that if they do breach the rules that this is taken very seriously and there will be consequences."

The authority was formed in 2009 amid growing consumer discontent about bad agent behaviour and a lack of confidence in the industry's in-house body that previously dealt with complaints.

It has handed out more penalties and taken a more activist role in naming agents guilty of breaching the rules. While there have been some complaints from agents, others believe the greater transparency is good for the industry as well as consumers.

The worst recent cases seen by the authority, most of which occurred in the past year, were:

• Mark Ferguson, formerly of Ray White Taranaki has had three decisions against him, including one of misconduct involving six charges. However, no penalty was given because he is bankrupt and has already removed himself from the sector.

In the most serious decision of misconduct, a buyer paid only $185,000 for a place on which the maximum offer would have been $205,000 had Ferguson not told him he wouldn't "touch [the property] with a barge pole" because "there have been some serious drug issues with that place", according to evidence presented to the Real Estate Agents Disciplinary Tribunal.

The authority said there was no evidence to support Ferguson's claim. It said he "bad-mouthed a property that had previously been listed with him to potential purchasers, did not provide a written appraisal, failed to honour a promise made to a vendor in return for her listing with him, removed pages from a LIM report before providing it to a potential purchaser, published a purported client testimonial on the internet and in marketing material without the client's knowledge or consent and invited parties to sign documents authorising the early release of funds without advising them of the consequences of doing this".

LIM report pages removed would have revealed a right-of-way dispute between a vendor and neighbours and Ferguson promised a vendor a $500 travel voucher for a listing.

The tribunal said six charges against him raised issues of dishonesty and some of the offending was very serious. One tribunal member cited the Ray White franchise for failing to supervise him.

• The name of a salesperson in a case relating to Downtown Apartments was suppressed but the issue was over drawing funds paid into a trust account before the purchase of a Lorne St apartment went unconditional. The tribunal said such actions were at the high end of disgraceful conduct, which struck at the very heart of a real estate agent's duties.

• Tairua's John Lloyd worked at Harcourts when he tried to develop his own property and sell part of it but he forged complainants' initials on a memorandum of understanding.

• Janine Wallace of Auckland "sold a carpark she did not own and failed to refund the deposit relating to that carpark, acted as a licensee when unlicensed and was seriously incompetent or negligent when entering into a written contract of agency with, and placing undue pressure on, the vendors of a property". A Princes Wharf carpark and apartments in Shed 22 and Shed 24 on Auckland's waterfront were involved.

• Murray Ross Cooper of Rotorua "deducted commission from deposit funds received into his trust account on six occasions before the expiry of 10 working days and without authorisation. On one occasion this was despite instructions from his client not to release the funds early," the tribunal said, adding that he had shifted to Sydney and had applied for a real estate agents' licence there.

• Delwar Hoosain Kumandan of Harcourts Howick (Eastzone Realty) "forged a signature on a settlement notice for the purposes of showing that a sale had taken place when it hadn't".

• Levani Lum-On of First Home NZ, South Auckland, was found guilty of misconduct after seminars on budgeting and finance at a Ray White office and Republic Bar in Manukau, where he promoted a "lay-by" arrangement as an agent when he was not licensed to do the work.

• Jenner Real Estate, trading as Harcourts Remuera, incurred the biggest compensation order of $137,607.99 for "releasing deposit funds to a third party before the expiry of 10 working days and without its client's authorisation" during the $1.8 million sale of a Remuera home as the result of a relationship breakdown. The authority said the business was ordered to repay deposit funds to a client and was fined $7500.

• Rajneel Raj of Re/Max Henderson Valley got the second biggest order, to pay $89,574.46 compensation for creating real estate sales in a fraudulent manner with a view to making a profit because he was involved in a mortgage ramping scheme and he incurred significant penalties. He has been the subject of extensive publicity, also incurring a fine of $10,000 for misconduct. His licence has been cancelled.

• West Auckland's Sant Raj gave false or misleading information to an authority investigator probing the Rajneel Raj mortgage ramping fraud case.

• The case against CD Cox, trading as Cox Partners in Napier, drew one of the higher penalties. The firm was ordered to pay $18,000 and agent Lukas Hilterscheid was ordered to pay $500. The authority said he failed to exercise reasonable skill and care by persuading the owner to sign a sale and purchase agreement while it was still under a sole agency agreement with another firm.

• Geoffrey Hill of Motel Sales in Tauranga passed information on to buyers without clarification or verification, despite that being contrary to the previously known position of parties involved and he was said not to have acted in the best interests of those he represented.

The authority advises buyers and sellers to arm themselves with information and provides an online public register of licensed real estate agents "to see if your agent is licensed and whether they have had any complaints upheld against them".

Clients felt 'bullied' by real estate agent

A couple whose 26-year-old daughter had died only four months previously - leaving them to raise their young grandchildren - said they felt "extremely pressured" by ex-Ray White Taranaki real estate agent Mark Ferguson.

The Real Estate Agents Disciplinary Tribunal said Ferguson applied undue pressure to force them to drop their listing price of $330,000 to $315,000.

"I had a screaming 17-month-old child in the background and I've been under terrible stress," said the complainant. Names of all victims were suppressed to protect their identity.

In a separate case, an unidentified complainant said Ferguson emailed her at work, which she found distracting. Although she asked him not to, he continued with this.

"I felt bullied and threatened by his emails," she said. "I didn't appreciate his tone."

Ferguson told authorities he had been a salesperson, auctioneer, trainer and business development manager with the Ray White and Harcourts group, as well as a business owner.

"I have been in the real estate industry since 1994 with not one complaint directed to me until we opened our office in Inglewood," Ferguson said.

The tribunal said he seemed to be emphasising the hardship resulting to him from the charges being brought.

"I have removed myself from the industry out of respect to the office I was working in. I didn't want them being affected by the charges laid," the tribunal quoted Ferguson saying.

• To read a case in full, go to reaa.govt.nz and click on "search complaint decisions"

- NZ Herald

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