Watch what you say - law firm warns real estate agents

Photo / Greg Bowker

A law firm is warning real estate agents that law changes looming through the Consumer Law Reform Bill mean they'll need to have the paperwork, or other solid evidence, available to back up claims made about a property for sale or lease.

Kensington Swan senior associate Karen Dwyer says the Bill proposes adding a new section to the Fair Trading Act. Dwyer says this section makes it illegal to make an "unsubstantiated representation" in connection with providing any goods or services. Furthermore it expressly includes any such representation being made in relation to any sale or grant of an interest in land.

"If you are a real estate salesperson, a leasing agent, or you sell or lease your property in trade (including your own property), you will be caught by this section," says Dwyer.

She says an "unsubstantiated representation" is a representation made where the person, at the time of making the claim, doesn't have reasonable grounds for it. An offence will occur whether or not the representation is in fact correct.

"This means that, before making any representation about a property for sale or lease, you will need to have documented research, or other evidence that gives you reasonable grounds for making that representation," Dwyer adds.

"If you sell or lease in real estate, whether on your own behalf, as a leasing agent, real estate salesperson or auctioneer, this Bill will affect you. (Furthermore) even if you only deal with commercial property, any representations about the commercial property must comply with this new section."

In a note on the Bill, Dwyer says it incorporates the most far-reaching changes to consumer law in nearly 20 years. It's open for submissions from the public via Parliament's Commerce Select Committee until March 29.

In the first reading of the Bill in Parliament on February 9, Minister of Consumer Affairs Chris Tremain said the Bill's main objectives are to strengthen consumers' rights, to simplify business compliance, and to make consumer legislation more accessible and understandable for both consumers and businesses through effective and enforceable consumer laws.

"Another key objective of the Bill is to update and modernise consumer legislation," said Tremain. "The three main consumer laws - the Fair Trading Act, the Consumer Guarantees Act and the Weights and Measures Act - are all sound but have not been amended in over 20 years."

"Over the same time period, there have been many changes to the way consumers transact with businesses. As a result, our consumer laws are not adequately dealing with a number of modern transactions such as Trade Me-style auctions, supermarket self-service systems, door to door and telephone sales using credit cards, and the sale of extended warranties."

Tremain added that a further objective is to achieve harmonisation with Australian consumer law, where appropriate, in line with the Government's plans for a Single Economic Market with Australia.

"I would like to acknowledge the support that has been received from our Australian Ministerial colleagues and their officials in the policy development for the Consumer Law Reform Bill," Tremain added.

INTEREST.CO.NZ