“Defects” – being made aware of such things!

complaints & consumers

Licensee must ‘ensure’ Purchaser is aware of Defect 


This is a CAC decision concerning the application of Rule 10.7 of the Client Care Rules. The Complainant owned number X (‘Property X’), which is next door to the vendor’s property (‘the Property’). Two days before settlement of the Property, the Complainant informed the listing Licensee that he was in dispute with the vendor over the encroachment of a retaining wall.

The Licensee declined the Complainant’s request to disclose the purchaser’s contact details. On the same day, the Complainant emailed surveying evidence of the retaining wall’s encroachment to the Licensee. Settlement of the Property took place as scheduled but the purchasers were not aware of the encroachment until after settlement.

The Licensee and the Agency responded to the complaint by explaining the steps they had taken after learning of the encroachment. This included emailing the vendor’s husband immediately advising that their solicitor will need to be contacted about the issue, and various telephone calls to follow up. In one call, the vendor’s husband expressed he saw no issues with the wall. The Licensee said she trusted the boundary issue would be passed on to the purchasers.


Decision: The CAC determined that the Licensee and the Agency had engaged in unsatisfactory conduct. It also found they had breached Rule 10.7 of the Client Care Rules.

The CAC considered that the alleged encroachment was a defect in terms of Rule 10.7. The Licensee and the Agency did not satisfy paragraph (a) of the Rule because they did not obtain evidence through the vendor to prove there was no defect, nor did they satisfy paragraph (b) because they did not ‘ensure’ the purchasers were aware of the wall issue.

(Licensees should bear in mind that in some instances ‘ensuring’ the purchaser is aware of a defect may go beyond merely expecting the vendor would pass on the information.)REINZ.


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