The couple denied any knowledge of the altered LIM report before pleading guilty this week. Photo / Getty Images
An Auckland couple have admitted doctoring a LIM report by removing reference to major moisture defects in order to hoodwink prospective buyers and sell their "leaky" North Shore home.
The husband later became a top-selling real estate agent for Barfoot & Thompson and continued selling houses for nearly a year while facing a serious criminal charge over the ruse.
The case, which could see the couple jailed for up to 10 years for using an altered document to defraud, has exposed the potential risk of buyers relying on property documents supplied by vendors or their real estate firm.
It has also raised questions about the involvement of the couple's then real estate agent after a police investigation uncovered incriminating emails to her saying, "Just waiting on the LIM to be corrected", and another stating, "You will be relieved to hear the nasty thing has been removed".
The husband - who was not an agent at the time - and his wife listed their North Shore home for sale with Barfoot & Thompson in 2015.
Court documents obtained by the Herald show the couple ordered a copy of the property's LIM report from Auckland Council. The report was emailed to their shared email account on June 4.
Page 16 of the report stated that the council had received a letter from the previous owner's solicitor in 2004 "informing of major moisture-related cladding defects".
Four days later, the wife sent an electronic copy of the report to their Barfoot & Thompson listing agent Yvonne Wang, which was subsequently uploaded to the company's website and made available to prospective buyers.
In this version, reference to major moisture-related cladding defects had been removed and replaced with a blank space.
House hunters Mandy Clough, 54, and Mark Dansey, 60, viewed the property on June 22, 2015. Two days later they learned the auction had been brought forward and would be held on June 26.
That left them with less than two days to either commit to the purchase or withdraw from tendering an offer.
The next day, on June 25, Clough and Dansey obtained a copy of the report from Barfoot & Thompson's website and forwarded it to their lawyer as part of their due diligence, a summary of facts states.
Believing the LIM was "full and correct", the couple purchased the property on June 26 for $1.19 million, "a decision they would not have made had they sighted the original LIM documents".
Four years later the couple decided to sell the home through Barfoot & Thompson.
Their agents requested a copy of the LIM report direct from Auckland Council and discovered the reference to moisture defects.
They were shocked to learn their property was leaky and decided to sell it "as is" on July 22, 2019 for $1.165m - a $25,000 loss from the 2015 purchase price.
The house was otherwise valued at between $1.3m and $1.5m if there had been no issues with the LIM, meaning Clough and Dansey suffered potential financial damage of up to $335,000.
In a formal police statement obtained by the Herald, Clough said they believed they could rely on the authenticity of property documents sourced from and uploaded by a reputable real estate firm.
"At the time, it did not cross my mind to request my own copy of the LIM direct from the council as I thought it was safe coming directly from Barfoot & Thompson."
Clough described the moment they learned the LIM report had been altered while preparing to sell their home four years later.
"This was a massive surprise to me. A complete shock. I did not know of any weather tightness issues stated on the LIM when we bought the property and there were no water tightness additions to the LIM over the time we owned the property."
Learning of the moisture defect statement raised major issues with the sale and severely affected the property's value, Clough said.
"Had there been no issues with the LIM I would not have sold the house for less than $1.3m.
"Had the comments been on the LIM that I sighted when I purchased the property I would definitely have not bought it."
After selling their home for a loss, the couple contacted police.
In May 2020, police visited the husband and wife at their new home where they were arrested and taken to North Shore Police Centre for questioning.
They denied any knowledge of the altered LIM report, with the wife telling a constable "she believed everyone knew it was a leaky home".
Fearing evidence could be deleted or destroyed now police had shown their hand, the officers returned to the couple's home to search their laptop computer under the Search and Surveillance Act.
"Evidential material in the form of an email sent to Barfoot & Thompson on the 8th of June 2015 with a copy of the altered LIM attached was discovered in the [couple's] email account," Constable Glen Randall said in an affidavit.
The laptop was seized and sent to the Police Digital Forensic Unit for examination.
An email chain between the couple's email account and Wang's Barfoot & Thompson email address was eventually discovered dated June 8, 2015.
"In the last email of the chain, written by [the wife] I observed the sentence, 'Will send you the LIM shortly ... you will be relieved to hear the nasty thing has been removed'."
A second email to Wang signed by the husband and wife, and dated June 25, 2015, read: "Just waiting on the LIM to be corrected and then we are set to go."
The couple, who have been fighting for name suppression since the Herald learned of the case last year, tried twice unsuccessfully to have the email evidence ruled inadmissible, claiming it was obtained unlawfully without a search warrant.
However, two separate judges ruled in police's favour.
The couple were due to defend the joint charge at a trial next month but instead pleaded guilty this week to using an altered document with intent to defraud. They will be sentenced in October.
The husband's real estate licence is currently suspended.
The couple have had interim suppression for the last year, with their lawyer claiming significant health problems meant publicity could cause a relapse of cancer or fatal heart attack.
They plan to apply for permanent name suppression at sentencing.
The husband earlier told the Herald the case was a "storm in a teacup" and "quite ridiculous", with the complainants "hell-bent on making life difficult for us".
Wang no longer works for Barfoot & Thompson and is now based in Australia.
A signed affidavit by her dated September 2020 claimed she had no knowledge of the LIM report being altered and no recollection of receiving the two incriminating emails from the couple.
"It was not usual for me to read the LIM reports as I was usually too busy," she told police.
"I do not recall if there were any weather tightness issues with this property as it was too long ago to remember any details."
Barfoot & Thompson declined to comment while the matter was before the courts.
Police argued the case was important given the country's leaky building crisis, which had caused victims substantial financial loss and "ruinous financial stress".
A police prosecutor said there was public interest in the defendants being identified given concerns about leaky homes and the fact one of the accused "subsequently became a real estate agent".
