The Real Estate Agents Act 2008 sets out specific rules to protect buyers and sellers in the event of a conflict of interest.
If you are carrying out real estate agency work and you, or someone connected to you personally or professionally, has an interest in the property or business being sold or wants to buy it, then you must follow specific procedures set out in the Act.
The Real Estate Act 2008 defines someone connected to you personally or professionally as:
- Any partner you may have under a partnership agreement
- Anyone in your employment
- A branch manager or salesperson engaged by you
- Your spouse or civil union or defacto partner
- Your child, grandchild, brother, sister, nephew or niece or their spouse or civil union or de factor partner
- A grandparent, a parent, or an aunt or uncle of the licensee or their partner (under a partnership agreement), their employee or a salesperson or branch manager engaged by them, or their partner (spouse, civil union, or de facto partner)
- Any other child cared for by you, your spouse or your civil union or de facto partner
- Your parent(s) or spouse of your parent(s) or their civil union or defacto partner
- Any entity that has an interest in you or in which you have an interest (that is not an entity listed on the New Zealand Stock Exchange)
- In the case of an agent that is a company, the above will include every officer and shareholder of the company
Disclosure to buyers
If you are engaged, directly or indirectly, in selling a property or business in which you, or anyone connected to you personally or professionally owns or has a financial interest, then you must disclose that conflict of interest to the buyer in writing and inform them if you or the person(s) connected to you will benefit financially from the transaction. There is a form below that you can use for this disclosure.
Disclosure to sellers
If you are engaged, directly or indirectly, in selling a property or business which you, or anyone connected to you personally or professionally, is interested in buying then you must take the steps below.
We also recommend that you no longer act for the seller and that another agent from your agency represents them. It is important that the seller has somone independent working for them to sell their property.
If you are a one person agency then we recommend that the seller goes to another agency or that you deal directly with the seller's lawyer.
Things you must do
You must inform the seller and get their consent
Before any transaction can go ahead you must inform the seller of the conflict of interest in writing and ask them to sign the consent form below:
It is important that the seller has informed consent about the conflict of interest - simply declaring that there is a conflict and asking them to sign the form isn't enough. You must explain to the seller what the conflict means.
This will mean that, having received disclosure from you, they give their consent to their property or business being sold to you or someone connected to you.
You must give the seller an independent valuation
You must provide the seller with a valuation of the property by an independent registered valuer or, if it is a business, by an independent chartered accountant.
This must be provided at your expense and is additional to the appraisal of the value of the property that you have already provided.
If the seller decides to sign the consent form before receiving the independent valuation
You must indicate a provisional valuation of the property on the consent form and then give the seller the valuation made by an independent registered valuer or chartered accountant within 14 days of them signing the consent form.
If the independent valuation is greater than the provisional valuation you have provided
The seller can cancel the contract for the sale of the property.