Under section 134 of the Real Estate Agents Act 2008 (the Act), if a licensee is carrying out real estate agency work directly or indirectly for a client, he or she cannot acquire the property or business concerned without the consent of the client. The same applies to any person related to the licensee.
Section 137 of the Act defines the concept of a 'person related to a licensee' and includes:
- a partner of the licensee under a partnership agreement
- an employee of the licensee
- a branch manager or salesperson engaged by the licensee
- the licensee's spouse, or civil union or de facto partner
- a child, grandchild, brother, sister, nephew, or niece of the licensee, or their spouse, or civil union or de facto partner
- any other child cared for by the licensee or their spouse, or civil union or de facto partner
- any parent of the licensee or their spouse, or civil union or de facto partner
- any entity that has an interest in the licensee or in which the licensee has an interest (and that is not an entity listed on the New Zealand Stock Exchange).
In the case of an agent that is a company, references to licensees above include every officer and shareholder of the company.
What if the client gives their consent?
If the client is prepared to consent to the licensee or related person acquiring the property or an interest in it they:
- must provide this consent in the form prescribed in Form 2 of the Duties of Licensees Regulations 2009 - Form 2: Client consent for licensee to acquire interest in property [PDF, 178.6 kb]
- must receive a valuation from the licensee, made at the licensee's expense (refer section 135 of the Act).
The valuation must be made by:
- an independent registered valuer
- in the case of a business, by an independent chartered accountant.
The licensee must give the client this valuation before seeking consent, or, if the client agrees, within 14 days after obtaining consent. In the latter case, a provisional valuation of the property must be included in the consent form.
Under section 134 of the Act, the client can cancel any contract relating to the property if the agent has not complied with the disclosure requirements, or if the valuation provided is greater than the provisional valuation. The client does not have to pay the commission if the contract is cancelled in these circumstances.
