A real estate agent has been fined for misleading a buyer about the cost of council sign-off for a sleep-out and failing to tell her the house was previously a gang pad.

Rotorua agent Teresa Gahan, who works for LJ Hooker, came before the Real Estate Agents Authority in relation to the sale of a property in 2010.

The house included a sleep-out that had not been built to council standard.

The buyer said in her complaint that Ms Gahan told her it would cost $400 to $500 to obtain a code compliance certificate.

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After the sale, the new owner obtained a quote for the work and found it would cost $9000.

She also learned the house had been extensively renovated after being trashed by previous tenants, who were Black Power gang members.

The owner said this was confirmed by gang members trying to enter the house and bailiffs trying to serve court documents for the former residents.

When she contacted Ms Gahan in November 2011 to try to resolve the issues, the agent initially seemed concerned.

But the buyer told the authority Ms Gahan later rang back and warned she would deny everything, and said: "Rotorua is too small a place and word gets around".

Ms Gahan told the authority that she did not tell the buyer how much the code of compliance for the sleep-out would cost.

She was not aware of any gang activity in the area and was surprised to learn the property had been a gang house.

Ms Gahan denied that she made the threatening comments when the buyer tried to raise the issues

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"This is totally out of character, is not the way I conduct my business, and I have never been in receipt of a single complaint laid against me in my time in real estate."

The authority found that on the balance of probabilities, it was likely the agent had made the comments about the sleep-out cost.

As Ms Gahan had sold the property previously, she would have known the house had been extensively renovated since, and had a responsibility to make the new buyer aware.

However, there was insufficient evidence the threatening conversation took place.

The agent was found to have breached the code of conduct by misleading the complainant about the cost of obtaining a code compliance certificate, and by withholding that the property had been extensively damaged by gang members and undergone a major renovation.

She was censured, fined $500, and ordered to pay the complainant $1631.85 for legal fees and the cost of an inspection report.