KEY POINTS:
A couple must pay $300,000 to the people they planned to buy a property from after a judge ruled they did not try hard enough to sell their home.
Carol and Bill Fleming took a low-key approach to selling their property, refusing to put up for sale signs
or have a marketing campaign run.
But their house failed to sell so they were unable to go ahead and purchase the lifestyle block near Whangarei.
A High Court judge has now ruled they did not do everything reasonably necessary to sell their home within the 90-day period set when they agreed to buy the block.
The decision could cost them $400,000 in total once legal fees are included.
Lawyers say the court decision means people who enter conditional agreements must make reasonable efforts to ensure that any condition is met. Methods such as selling a home on the web may not meet these conditions.
The Flemings, who are lawn-mowing contractors, signed an $860,000 deal in October 2004 using the standard form of the Real Estate Institute and the Auckland District Law Society.
It was conditional on the Flemings doing everything reasonably necessary to sell their home at Beachlands, south-east of Auckland, on terms acceptable to them by the end of the year.
When they did not sell the home, the Whangarei seller, Tania Mana Family Trust, cancelled its contract and sold its property to another buyer for $770,000.
Tania Mana and her mother Robyn Jury then sued the Flemings for the shortfall on the sale and interest.
The trust claimed in the High Court that the Flemings failed in their contractual obligation, particularly by not listing their property for sale with a real estate agent and advertising and marketing it in the usual way.
The Flemings said they contacted two local real estate agents and instructed them to find buyers.
They made it known confidentially to several Beachlands residents that the property was for sale.
When a similar property in the street was auctioned in November 2004, the Flemings told the sales agent they would like possible buyers to be referred to their property after the auction.
In October, the Flemings told an agent not to advertise the property, not to put signs outside, not to put pictures in the office window and not to organise open homes.
This type of listing is known in the industry as silent or covert.
The trust was awarded the difference between the two net sale prices, plus interest at 14 per cent until a new sale date of December 9, 2005, the cost of the trust's legal bills, and $382 for advertising the resale.
But the trust went to the Court of Appeal, claiming it was entitled to more and a new award was made.
Mr Fleming yesterday said the low-key approach was because he did not want his lawn-mowing customers to know he intended moving until his plans were firm.
"When people see you are moving ... it's very competitive lawn mowing out here and before you know it you have lost all the lawns that you have worked hard for," he said.
"So we had that in mind plus we had good agents we thought were capable of doing the job."
He had not believed that a marketing campaign was necessary and was opposed to "open homes" because of the risk of theft.
At the time, he and his wife believed their property was worth at least $1.4 million, and did not want to sell for less.
They still own the property.
"We don't feel we have done anything wrong," he said. "We didn't know the law of real estate. We are only general people and here we are having to fork out over $400,000."
Real estate licensee Reg Blakey said the court decision had huge implications, and could lead to others being sued.
He said many clients did not want signs and publicity about property sales.
"Every company, or person, has a right to make their decision on privacy," said Mr Blakey.
Hamilton solicitor Shiree Blackwell, who has reviewed the case, said that to avoid the pitfalls of the Fleming case it was prudent to have any contract reviewed by a lawyer to ensure intentions and obligations were understood.
Tania Mana said last night that the judgment in her favour "is what we expected".
She said: "What most people don't realise, and that includes real estate agents, is that if you have a conditional agreement, the law is quite specific you have to make your best efforts to meet that condition."
Buyers and sellers beware
* Have any contract reviewed by a lawyer to ensure your intentions are met.
* Make sure you know your obligations under that agreement.
* Be aware the lawyer can include provisions to permit unconventional sale methods.
* Be aware of critical dates in the process to meet obligations.
