The Professional Conduct and Client Care Practice Rules (the Code of Conduct) that set the minimum standards for New Zealand’s real estate agents has changed.
The Code of Conduct 2012 came into effect on 8 April 2013.
All licensees need to understand these changes and understand what they need to do to comply with the Code of Conduct 2012.
If you have any questions please email us or call us on 0800 367 7322
or (04) 471 8930.
A number of changes have been made in the Code of Conduct 2012
The key changes are:
- You must explain to clients when an agency agreement will end. This is a new rule - Rule 10.6(b).
- When an agency agreement with a client is cancelled you must give your former client a list of customers who if they sell to, may entitle you to a commission. This is a new rule - Rule 9.11.
- You must recommend to all parties that they seek legal advice before signing agency agreements or sale and purchase agreements. This is an amended rule - Rule 9.7.
- Agents who are operating as a business must ensure that all their salespersons are properly supervised and managed. This is a new rule – Rule 8.3. You must explain to clients in writing when there is no comparable or semi-comparable sales data to base an appraisal on. This is a new rule – Rule 10.3.
- Before an agency agreement is signed, you must explain to the prospective client that how they choose to sell their property can impact on the benefits you receive. This is a new rule – Rule 10.5.
- There are new rules for buyer’s agency agreements on what information must be explained before an agency agreement is signed; only working within the terms agreed with the client; submitting offers; and record keeping obligations. This is a new rule – Rule 11.
There are other minor amendments to some other rules as well as some structural changes to the way the Code of Conduct 2012 is laid out including:
- Amending the requirements for disclosure of defects to:
- put in place a more consistent test on whether you should know about a hidden or underlying defect
- clarify the need for evidence or expert advice when seeking confirmation from a client that there are no hidden or underlying defects.
- Widening the requirement to explain the risks of double commissions to all agency agreements, not just sole agency agreements.
- Ensuring that agencies not only have in-house complaints procedures but that these are kept up to date.
- Modifying your duty to inform agents about complaints made against you to include former agents you worked for when the conduct complained about happened.
Information for agents
As an agent these rules will require some changes to the processes that you and your team use. You should familiarise yourself with the 2012 Code of Conduct 2012.
Some things to consider include:
- What training you will need to provide to your staff to ensure that they have a sound knowledge of the new Code of Conduct.
- How you may need to change business processes to accommodate the new cancellation of agency requirements (rule 9.11).
- How the new Code of Conduct impacts on your agency agreements - you may need to amend them to ensure:
- they reflect the new expectations around double commission warnings (rule 9.10)
- they include adequate information about required cancellation of agency processes (rule 9.11)
- they set out when the agency agreement ends (rules 10.6(b), 11.2(b))
- that where they refer to a rule in the Code of Conduct that it is still the correct reference (rules 6.5, 6.6, 9.6, 9.7, 9.8, 9.13, 9.14, 9.15 & 9.16 from the 2009 Code of Conduct have moved).
In addition, if you are an agent operating as a business you should review your supervision policies. New rule 8.3 means you need to consider how your business ensures that salespersons are supervised and managed.
Download the Code of Conduct 2012
About the consultation process
The Code of Conduct 2012 has been developed in consultation with the industry, consumers and the wider public.
The Authority ran two consultations. The first during December 2011- February 2012 and the second in July 2012. Information on these consultations is below:
Consultation Round 1:
Consultation Document 1 - December 2011 (.pdf 675KB).
Summary of Submissions (.pdf 518KB).
Consultation Round 2:
Consultation Document 2 - June 2012 (.pdf 765KB).