By JANE ZOHRAB and REBECCA WALKER of Simpson Grierson
Q. Three months ago my family and I moved to New Zealand and purchased a property which my real estate agent had found for me.
The agent recommended a lawyer to me and I had him do the necessary legal work. Shortly after purchase I discovered that the house had major problems: no permits for additions, leaking roof and chattels that did not work.
I went back to the lawyer and asked her to take action against the vendor.
She refused, stating that the vendor was one of her best clients. I also found out that my lawyer was the wife of my real estate agent. As a result of the defects in the house, my family and I ended up moving back to England. What can I do?
A. There are several distinct legal issues here: the responsibilities of vendors and purchasers, the duties of real estate agents and the responsibilities of lawyers.
When you are buying a house the principle of caveat emptor, "let the buyer beware", still applies. It is the purchaser's responsibility to check that the property is in good order and condition.
This will usually include obtaining a LIM report and, in the wake of the leaking building debacle, a building report.
The vendor and/or agent have no legal obligation to point out the defects of the property to you.
However, a vendor or agent cannot mislead you as to the standard of the property. If they make misleading statements to you or their conduct gives you a misleading impression, this may be misrepresentation.
If the vendor and/or agent made representations to you about the standard of the property that led you to purchase the property, you can rely upon these (within reason).
However, if the vendor and/or agent did not make any representations to you but also did not tell you about the leaking, etc, the onus is back on you to make the necessary inquiries.
If you had instructed your agent to make these inquiries for you but he failed to do so, you may be able to take action against him for breach of his contract.
If there has been misrepresentation you may be able to sue the vendor and/or agent under the Contractual Remedies Act for damages.
Because the agent is engaging in trade, his misrepresentation may also be a breach of the Fair Trading Act.
Your damages are likely to be the difference between what you paid for the property and what the property was actually worth.
It is unlikely you could claim damages to pay your expenses in moving back to England.
The conduct of the agent and lawyer seems unprofessional. The agent should have informed you the lawyer he was referring you to was his wife.
You may wish to consider making a complaint to the Real Estate Institute, which governs the ethical standards set for agents.
The Rules of Professional Conduct govern the conduct of lawyers.
Under the rules, a lawyer must always act in the best interests of his or her client.
This includes being free from outside influences and avoiding conflicts of interests.
Your lawyer should have disclosed her relationship with the agent and given you the opportunity to decide whether you still wanted her to act.
Your lawyer also has a conflict of interest between you and the house vendor.
A lawyer must not act for more than one party in the same matter without the prior informed consent of both parties.
Given your lawyer's conflicts of interest, it is possible she did not give you proper advice regarding your property purchase.
A conflict of interest is a very serious breach of the rules.
You should obtain advice on making a complaint to the relevant district law society, or taking legal action against the lawyer personally.
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