Real Estate watchdog recommends clauses to protect sellers of rural property

 
 
4/03/2015
​The Real Estate Agents Authority (REAA) is recommending real estate agents selling rural property use new standard clauses in their terms and conditions to better protect consumers. The clauses were developed jointly by the REAA and the Real Estate Institute of New Zealand (REINZ).

As with the clauses for the residential sector that were introduced late last year, the voluntary clauses for rural agency agreements give sellers of rural property more certainty about when an agency agreement ends and which agent can claim a commission when sellers change real estate agencies.

“We are very pleased with the industry’s response to the residential clauses” said Kevin Lampen-Smith, Chief Executive of the REAA. “Over 700 agencies​ are now using the residential clauses”.

“The rural sector asked for these clauses. This is a great outcome as it means that sellers of rural property can now have the same level of certainty about their agency agreements as their residential counterparts.” 

“These clauses make it clear who is owed a commission when a rural property sells and will avoid sellers getting the nasty surprise of being asked to pay more than one commission ” said Mr Lampen- Smith.

“Using these clauses is a simple way to avoid confusion, disagreements and complaints to the REAA and REINZ. The clauses provide clarity and protect both the seller and the agent, so everybody wins.”

While these clauses are voluntary the REAA recommends that sellers wishing to sell their rural property use real estate agencies that include these standard clauses. The REAA is publishing a list of these agencies on their website

Key aspects of the rural standard clauses include:
  • ​Only one agent can claim a commission, and only when the buyer and seller have signed a sale and purchase agreement (even with conditions) at the time that the agent is acting for the seller.

  • If the seller cancels their contract with the agent and then sells privately to a buyer previously introduced, the agent can only claim a commission for 12 months after the contract ended.
This is six months in the residential clauses and is the main difference between the residential and rural clauses. The extended period in the rural clauses allows for the time it can take to negotiate the sale of a rural property.

Examples of rural property are farms, orchards, forestry plantations and vineyards.

More information is available on the REAA website including:

Contact:
Ngaire Vanderhoof
021 0222 0835