It is against the law for either a real estate agent or private seller to knowingly hide or give incorrect information about a property. This is called misrepresentation. For example, if the owner tells the buyer there are no leaks when they knows the house has had problems with leaks in the past.
If the owner or real estate agent seriously misrepresents the house, you may be able to cancel your sale and purchase agreement.
To be serious enough to cancel, the misrepresentation must be:
- Significant: something which could cost a lot to fix, eg re-cladding the entire house due to leaky house syndrome.
- Influential in your decision to buy the house: you would not have made an offer if you had known about this issue.
Misrepresentation is the only thing that allows the buyer to cancel the agreement when it has gone unconditional.
The best time to deal with major issues like this is before the sale has settled. At this point you could either get compensation for the work that might need to be done, or the sale itself could be cancelled.
After the sale has settled, you need to take the seller to the disputes tribunal or district court.
Real estate agents
Although they work for the seller, buying from a real estate agent can offer additional protection to a buyer. As professionals they are expected to:
- understand the house-buying process
- know how sale and purchase agreements work
- recognise issues in different kinds of houses
- tell you about any issues.
Real estate agents follow a code of conduct. They must:
- treat buyers fairly
- not put unfair pressure on buyers
- keep the buyer updated on what's happening
- not withhold or give information that is inaccurate about a property to a buyer
- not make statements they can’t prove with evidence
- not mislead buyers about the seller’s pricing expectations
- avoid conflicts of interest.
Legally, they must not:
- mislead you or give false information — in what they say, how they behave or in any advertising
- use unfair sales practices, eg put pressure on you to buy
- put unfair contract terms in the sale and purchase agreement or their contract.
Real estate agents must tell you about any issues they know of with the house before you sign the sale and purchase agreement.
Sorting out problems
If you bought privately
- Talk to the vendor — you might be able to solve the problem simply.
- Talk to your lawyer — sales and purchase agreements are legal contracts, with complex terms and language. If there's a problem, your lawyer will know if you can dispute parts of the sale before it settles, or help you build a court case after settlement.
- Make a claim through the Disputes Tribunal or District Court — if the sale has settled, your only avenue to resolve a dispute is through the court system.
Talking to a lawyer and taking the claim to court both have costs attached.
If you bought through a real estate agent
You have the same options as a private sale, but because real estate agents are part of a regulated business with a code of conduct they must follow, you can also:
1. Make a complaint to the real estate agent
Every licensed real estate agent must have a complaint's process. Many issues can be solved at this step.
When you complain:
- Put it in writing, many real estate agencies will ask for this.
- Use the word 'complaint', so your letter isn't treated as feedback.
- Take notes and save any emails/letters in case you need to take your complaint further.
- Gather proof, eg your sale and purchase agreement, dates and details of conversations with the agent, photos of damage, advertisements, texts, emails, building reports.
- Decide your ideal outcome, egan apology, damage repaired.
2. Contact the Real Estate Authority
If you cannot resolve the issue with the real estate agent yourself, get advice and help from this government regulator.
Real Estate Authority (REA)
You can contact REA at any stage of a problem to get information. If the problem isn't a breach of the code of conduct, they can still help you resolve the issue with the agent or agency, eg poor customer service.
If you make a complaint to them before talking to the real estate agent first, they may suggest you to go back and do this, but they can help you with information at this stage.
After you complain to REA, they will either:
- Work with you and the real estate agent to sort out your concern through their early resolution process.
- Refer your complaint to a Complaints Assessment Committee (CAC) — an independent legal panel that investigates and makes decisions on complaints.
Make a complaint(external external link) (external external link) — Real Estate Authority