It is a warning to real estate agents looking to profit from purchasers’ difficulties on long term agreements to buy. Strict disclosure rules governing real estate agents having a personal interest beyond their commission saw contracts for sale of land in south Auckland cancelled; Counties Realty director Ian Croft stepped in as joint buyer after a contract was signed but before later settlement.
The Court of Appeal was told Counties Realty acted as agent for property developer Goldline Properties Ltd in its 2020 sale of four vacant lots to Maree Dawn Marsh, with an agreed delayed settlement. Finding herself short of finance to complete plans of shifting relocatable houses on to the properties, Ms Marsh joined forces with Mr Croft. Over a twelve month period prior to settlement, three separate contract variations were negotiated with Goldline Properties, including a partial reduction in price.
Goldline later cancelled the contracts. Mr Croft’s subsequent involvement as joint purchaser taking a thirty per cent interest in the project was in breach of the Real Estate Agents Act, it said. Cancellation was disputed.
Consumer protection rules in the Act require real estate agents get fully informed consent from vendors whenever they have a personal interest in a sale beyond their commission. These rules focus on the outcome of transactions, the court ruled.
The Court of Appeal said Mr Croft’s Real Estate Act obligations continued after the original contract was signed. When terms were renegotiated prior to settlement, there was a conflict; Goldline was still Mr Croft’s client at a time when he had become joint purchaser and was negotiating variations for his own benefit.
Goldline could cancel, the court ruled.
With cancellation, it was agreed that the Marsh/Croft joint venture was entitled to compensation for work it had done; fencing and landscaping plus relocation of houses on two of the four lots. Goldline disputes their claim for $500,000 compensation.
Goldline Properties Ltd v. Marsh – Court of Appeal (7.07.23)
23.112