Real Estate Agent Wins Appeal over Non-disclosure

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Wednesday, November 19th, 2014
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Auckland real estate agency Barfoot & Thompson has won a High Court appeal against a censure it received for selling a Flat Bush property without disclosing a suicide had occurred there a year earlier.

In a reserved judgment, Justice Susan Thomas has reversed a ruling by the Real Estate Agents Disciplinary Tribunal that the agency had engaged in unsatisfactory conduct, although she said the decision was “finely balanced”.

The case followed a complaint by Richard and Evette Campbell who had bought the south Auckland house in 2012 without being told about a suicide in the garage by a tenant the year before.

Under scrutiny is the fairness test for disclosure in the conduct rules of the Real Estate Agents Act, which set minimum standards for licensees to protect consumers.

While both Barfoot & Thompson and the Real Estate Agents Authority had asked the High Court for guidance on applying the fairness test in the case of suicides, Justice Thomas said the industry should undertake that exercise itself through wider consultation.

“Because the decision is so finely balanced and because there was no industry standard or guidance available, I conclude that it is inappropriate to find the appellant in breach of the rule,” she said.

She provided a range of relevant considerations on disclosure the industry could take into account in future:

  • whether a murder, manslaughter, or suicide had occurred
  • location of the event, as on the grounds may be different to within the house
  • how long since the event occurred
  • circumstances of the tragedy including whether the house had been lived in and for how long
  • whether the death had a degree of notoriety
  • likely reaction of potential purchasers
  • possible impact on price.

The tribunal had upheld a ruling that Barfoot & Thompson should have told prospective buyers about the death, but declined to award any damages.

The couple told the tribunal they had put the house on the market five months after moving in as they felt uneasy living there and that the house was “dark and felt sad and depressing”.

When they learned from neighbours about the suicide, they told a subsequent purchaser who then decided against moving into the property and relisted it.

The other joint agent on the property, Century 21, had told potential buyers about the suicide and failed to sell it.

By Fiona Rotherham
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