A real estate agent has been censured and fined after his wife purchased a client's home without the agent disclosing the conflict of interest to the vendors.
Ray White agent Jinlei "Leo" Zhang even received a commission on the deal, and has now been found to have committed misconduct by the Real Estate Agents Disciplinary Tribunal.
Zhang was working for Pure Reality, trading as Ray White Mt Albert, in January 2015 when the vendor listed a vacant property with Zhang's former Ray White colleague, Aaron Drever, the tribunal's decision says.
Drever asked Zhang if he knew any buyers and Zhang introduced an existing client, "Mr Yan".
Drever presented an offer from Yan of $550,000, which was accepted by the vendors, and Yan paid a $55,000 deposit.
Two months later Yan discovered volcanic rock beneath the property, which meant a different resource consent was required to the one provided by the vendors. He decided to get out of the contract, saying he "would rather lose his deposit than pay an unlimited amount later to build on the property".
About this time Zhang and his wife Fang Liu discussed purchasing or building a new home, the decision says. Zhang mentioned this to Yan who asked if he could nominate his purchase agreement to Zhang.
"Mr Zhang agreed, and paid Mr Yan $55,000 as reimbursement for the deposit. A nomination agreement was then executed by Mr Yan and Fang Liu.
"Mr Zhang explained that the nomination was to his wife, rather than himself, as her parents had provided the funds to complete the purchase. The purchase by Fang Liu was settled on 23 March, 2015."
The following year, the original vendors saw Zhang at the property, telling him this was the first time they had become aware that Zhang was a Ray White agent.
They said Zhang's association with the firm was never disclosed, nor had he provided them with a certified valuation, as required under the Real Estate Agents Act, the decision says.
Zhang advised the agency which reported the matter to the Real Estate Authority.
Zhang accepted he had not informed the vendors that his wife had become the nominated purchaser, nor had he obtained their informed consent.
"He also accepted that he had retained his share of the commission in respect of the sale of the property."
Zhang was charged with misconduct that was seriously incompetent or seriously negligent for failing to comply with conflict of interest provisions of the act and breaching professional conduct rules.
He admitted failing to comply but unsuccessfully argued his failings amounted only to unsatisfactory conduct.
In a penalty decision released publicly last month, prosecutor Simon Waalkens said the tribunal must send a strong message to licensees about the importance of disclosure obligations.
The act placed "critical obligations on licensees in situations where their interest in acquiring property conflicts with those of their vendor clients, and that the acquisition of client property must occur in the most transparent and informed way possible".
Waalkens noted that Zhang made no attempt to alert the vendors that his wife had become the nominated purchaser, yet obtained commission from the sale.
He accepted Zhang's offending was not deliberate or in bad faith, that Zhang had shown remorse and offered to repay his commission money to the vendors.
Zhang's lawyer said her client accepted the prosecutor's submissions and would appreciate further training around managing conflicts of interest. He had also written a letter of apology to the vendors.
The tribunal fined Zhang $3000 but did not order him to repay the commission money, as Yan's offer had been accepted by the vendors before Zhang had any financial interest in the property.
He was also censured and ordered to undertake appropriate conflict of interest training within six months.
Zhang, who now works at Ray White Epsom, told the Herald he regretted not telling the vendors, which he described as a misunderstanding.
He had not tried to hide information and had only wanted to help both parties, by preventing the initial sale from falling through, he said.
"Small mistake make big trouble. Now I know what's wrong, that's why I accept my decision from the tribunal."
Ray White declined to comment.