The property market in and around Whanganui is running hot and has been for some time.
Some figures have Whanganui running third in terms of annual growth of property values for the year to January 2019, only just behind close neighbours Rangitikei who are first.
Just about every publication is running stories on "how to prepare your house for sale" or "where is the best place to buy?".
For most, the decision to buy or sell a house is one of the most financially important they will make in their lifetime, but how much do we really know about the real estate agents we trust to buy and sell those houses, and the rules they play by?
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Those of us who listen to the radio will have heard the throwaway line at the end of every real estate agents' ad "licensed under REAA 2008", and it's no surprise therefore that since 2008 and the enactment of the Real Estate Agents Act 2008 ("the Act") all people who carry out real estate agency work must be licenced.
So here is a brief lowdown on the rules and regulations that apply to the real estate industry.
There are three levels of licence - a salesperson, an agent and a branch manager.
A salesperson must be supervised, whilst an agent and branch manager can act on their own account.
In order to obtain a licence you must be at least 18 years old, be a fit and proper person (meaning you don't have a significant criminal or disciplinary history), have the right qualifications (ie. to become a salesperson a New Zealand Certificate in Real Estate (Salesperson) (Level 4) or have obtained a National Certificate in Real Estate (Salesperson) (Level 4) .
To become an agent, the individual must hold a National Diploma in Real Estate (Agent) (Level 5), have carried out three years' work experience and not be prohibited for one of the prescribed reasons (such as being having been convicted of a crime involving dishonesty).
Once licensed, agents must keep up-to-date with licensing requirements through continuing education.
However, most importantly to the consumer, they are bound to the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012.
These rules are governed by the Real Estate Agents' Authority, an independent government agency that regulates the real estate industry, and whose stated purpose is "to promote and protect the interests of consumers buying and selling real estate, and to promote public confidence in the performance of real estate agency work".
The rules include and impose a range of obligations on licensees, including:
• Standards of professional competence
• Standards of professional conduct, such as the obligation to act in good faith and deal fairly and not to mislead a customer or client, provide false information or withhold information that should by law or fairness be provided to a customer or client
• A duty to report misconduct or unsatisfactory conduct
• The requirement to act in the best interests of the client in accordance with a client's instructions (unless contrary to law)
• Not to mislead customers as to the price expectations of clients
• To communicate regularly in a timely manner to keep clients informed
• Keep client information confidential and not disclose unless required to by law or authorised by the client
• Not act in situations where a conflict of interest to arise, usually where more than one commission may be payable on the same property.
• Advise clients to get legal advice before entering agreements
• As well as numerous other obligations
The Act also establishes a Complaints Assessment Committee as well as a Real Estate Agents' Disciplinary Tribunal which is designed to field and deal with complaints and breaches of the Act and conduct and client care rules.
The committee has the power to order licensees to do a range of things including apologise to complainants, undergo training and education, refund fees charged worked or pay a fine not exceeding $10,000 (among other things).
At the tribunal level, stakes are significantly raised with a tribunal having the power to suspend or cancel licences, as well as issue fines up to $30,000 and compensation up to $100,000.
To the real estate agent industry, the added compliance requirements seem likely to have made doing business more onerous.
However, the public in general can take comfort that in such a growth industry where such large and rapidly increasing sums are at stake there is structure and regulation in place to protect them, and that the Act has teeth that can bite an agent hard if an agent's conduct does not meet the standards set by the Act and regulatory regime.