That agency listed the property for sale in late 2020 but the buyers subsequently discovered information about a faulty retaining wall which they said would cost $84,000 to fix, the committee found.
Donaldson was verbally told by the vendor there had been cracks and an assessment by an engineer found the retaining wall was in order and there were no concerns.
“Mr Donaldson relied on this information, the vendor being an experienced building inspector. The LIM report contained no adverse comment,” the latest ruling from the Real Estate Agents Disciplinary Committee added.
The assessment committee found Donaldson received information from the vendor that disclosed a concern with a retaining wall at the property and that put him on notice of potential risk.
He had not reviewed or checked the veracity of the vendor’s information but was required to inform potential buyers of a potential risk concerning the retaining wall, the committee found.
Disclosure of potential risk or disclosure of concerns that the vendor considered had been addressed by an engineer’s report, but was also required as a matter of fairness, the committee said.
Donaldson did not provide required disclosure which was a breach of real estate rules and his conduct was ruled to have been unsatisfactory, the committee said.
A handwritten 2011 engineers’ site report noted ground and cladding cracking. The most likely solution was said to be a more substantial retaining wall, subject to geotechnical advice.
A further engineering report in May 2020 found structural integrity of the retaining wall had not been considerably compromised: “The proposal of the owner (vendor) to backfill was an acceptable methodology to control erosion and stop further undermining.”
By December 2020, new buyers discovered ground cracking and the retaining wall compromised. Vertical posts were leaning the wrong way. They raised the issue with Donaldson.
By February 2021, they complained to the authority about Donaldson.
“It was alleged there had been non-disclosure of two engineering reports. There has been misrepresentation as to the retaining wall damage. They sought compensation for repairs to the land and retaining wall,” the committee added.
It was said that compensation was sought as the value of the property was affected by non-disclosure.
The complainants, referred to only as KD and DX, told the committee Donaldson’s failure to disclose a potential risk concerning the retaining wall affected their purchasing decision, the value of the property and caused considerable distress.
“They require compensation to repair and replace the retaining wall and submitted an estimate totalling $84,061.58 to rebuild the wall. They say that land damage and a failed retaining wall within 4 to 8 metres of the dwelling greatly affects the property’s value,” the committee said.
Two decisions in the case have been published, both without names or identifying details of the complainants, including the address of the property they bought with the faulty retaining wall.
The penalty decision against Donaldson noted no previous complaints.
A fine of $5000 as a starting point was imposed, but reduced to $4000 to take into consideration the licensee’s unblemished record over 13 years in the industry, the CAC penalty decision said.
He was ordered to undergo training too.
“While we are satisfied that the licensee is unlikely to repeat the mistake, we also agree that an order for further training is appropriate and meets the act’s objective of maintaining professional standards and protecting the interests of consumers,” it said.
The committee said Donaldson’s unblemished record was a mitigating factor.
“We accept that the licensee’s failure to disclose was not intentional,” it found.
The tribunal said in a decision last updated on June 6 that the complainants were not prevented from taking a civil claim for damages from the loss they had suffered against the agent.
Donaldson’s profile on Bayley’s website said he had more than 20 years of experience in property investment and more than 12 years as a real estate agent around Canterbury.
“He knows about buying and selling houses.”
Comment on the case was sought from Donaldson but he did not respond by the time of publication.
* Anne Gibson has been the Herald’s property editor for 23 years, having won many awards, written books, founded the National Business Review’s property section in 1985 and covered property extensively here and overseas. She joined the Herald in 2000.
