Argument over whether building work was consented ends in $3k fine for realtor

Charlotte Wilson is a real estate agent in Mangawhai. She has been partially successful in an appeal against a finding of unsatisfactory conduct.

A real estate agent fined for misleadingly advertising a house for sale as “home and income” when the downstairs kitchen was unconsented says she is beaten and exhausted by the disciplinary process.

Charlotte Carlyle Wilson was found guilty of unsatisfactory conduct and fined $5000 by the Real Estate Agents Authority. However, she appealed and was partially successful, getting the fine reduced to $3000.

Wilson told the Herald she found the process exhausting, saying she had spent 240 hours fighting the complaint.

She also claimed the buyer had a copy of the LIM which would have shown whether the kitchen work was consented or not.

The two-storey Kaipara house went on the market in November 2016, advertised by Wilson as being a home and income with a self-contained downstairs area including its own bathroom, kitchen, bedroom and dining.

Wilson, who was working for Sotheby’s, obtained a rental appraisal that gave a rent range of $180 to $195 per week for the “Downstairs self-contained flat”, which she gave to the prospective buyer, according to a decision of the Real Estate Agents Disciplinary Tribunal published on Wednesday.

The buyer, whose name is redacted from the decision, signed a sale and purchase agreement with the vendor in mid-January 2017, and in late January asked for a price reduction for problems identified during due diligence. The downstairs area was not listed.

In late February, Wilson provided a transaction report to Sotheby’s, and under “What representations were made?”, she recorded: “Kitchen downstairs not consented, including the oven.”

The sale settled the next month and the buyer rented out the house as two self-contained flats.

In late 2020, the council notified the purchaser that the downstairs kitchen was unconsented and would have to be removed.

On December 16, almost four years after settlement, the purchaser emailed Wilson saying he had consulted his lawyer and believed the unconsented work on the second kitchen should have been disclosed.

He asserted the remediation costs would have to be met by the vendor or agent.

In February 2021, he made a complaint to the Real Estate Agents Authority, and two months later he put the property up for sale, marketed under the slogan “Beach, Sun and Income”.

The advertisement referred to the recently refurbished downstairs area as ideal for long-term rental or holiday accommodation.

The buyer said the council issued him an abatement notice to stop him renting out part of a house because of unconsented works, but the real estate agent said there was no evidence of the notice. Photo / Doug Sherring

On May 4, 2021, the authority notified Wilson the complaint would be referred to the Complaints Assessment Committee (CAC).

The next day, Wilson emailed the purchaser asking him to withdraw the complaint about false advertising given he was marketing the property in the same way.

She asked him to pay her $3000 in legal fees she had incurred addressing his accusations.

Wilson added that she had marketed the property as a business rental, not accommodation, which was allowed by the council.

The committee decided later that month to investigate the complaint.

Wilson told the authority the property was marketed as “Home and Income” as the downstairs area was ideally located for a business, being just 150 metres from the shops.

The council’s rules allowed people to run businesses from their homes or to rent out space to a tenant to run a business, she said.

Wilson said she was unaware that there was nothing on the council’s plans for the downstairs area, as the vendor did not provide the LIM report.

She was certain she had discussed with the purchaser issues with the downstairs kitchen because of the state of the ceiling tiles, the wiring, the scaffolding poles, the water damage and the oven not fitting.

As for the email to the purchaser, Wilson told the authority she did not know at the time the complaint had gone to the committee and she did not contact the complainant once the CAC investigation began.

She told an investigator she thought she was covered by inserting a due diligence clause, and also since the transaction was subject to a LIM report.

The purchaser said he had never discussed with Wilson running the property as a business and that it was a residential property.

The authority found Wilson guilty of unsatisfactory conduct for misleading advertising and for sending the email. It censured and reprimanded her and imposed a $5000 fine.

In her appeal to the tribunal, Wilson argued the downstairs area was and remains consented, and that there was no abatement notice from the council to the purchaser to cease renting the downstairs.

She said it was only when the buyer applied to the council for resource consent to subdivide the property and build another house on it that the downstairs area could no longer be used for commercial purposes.

However, the tribunal said the LIM showed the downstairs was only consented for a rumpus room and laundry, and pointed out that Wilson’s submission the kitchen was always consented was inconsistent with her evidence to the authority and the transaction note to the agency.

However, it agreed with her that her email to the purchaser asking him to withdraw the complaint was not unsatisfactory conduct.

The tribunal said it could not be because it was not real estate agency work, and that the committee did not read the email and therefore did not know its content and context, which it should have done.

“It failed to have regard to the context of the email, namely that Ms Wilson had discovered that the purchaser had put the property back on the market and was advertising it as ‘Home and Income’, the very matter she was being accused of wrongly doing.”

The tribunal retained the censure and reprimand but reduced the fine to $3000.

Wilson said she was “beaten ‘round the head and let down” and had been “put through the wringer” by the authority’s process.

Though she still had her real estate agent’s licence, she had taken a step back from her career of 10 years.

Rules around disclosure were not as clear-cut at the time of the sale and Wilson now took extra precautions, she said.

The outcome had left her $6500 out of pocket.

“I just have to pay the fine and take the slap on the wrist.”

Natalie Akoorie is the Open Justice deputy editor, based in the Waikato and covering crime and justice nationally. Natalie first joined the Herald in 2011 and has been a journalist in New Zealand and overseas for 27 years, recently covering health, social issues, local government and the regions.