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  1. #1

    Question Bought house - Dispute with agents. Any advice?

    Hi all,

    We went unconditional on a home a few months ago. The property shares a boundary with an undeveloped piece of land covered in native trees and scrub. In all marketing (online and pamphlets etc), that land was referred to as Reserve land. We took that in good faith and it was a driving factor to our purchasing the property. A few weeks after signing up, we learned that it was actually privately owned as part of a (huge) residential title further up the street.

    We have discussed our rights to compensation with the real estate (RE) company. They are telling us that our sale and purchase agreement has clauses which enable compensation to be claimed from the vendors before settlement date. The entire S&P contract is the standard REINZ and ADLS, as is widely used across NZ.

    The clause they refer is under Title, boundaries and requisitions:
    6.4 - Except as provided by sections 36 to 42 of the Contract and Commercial Law Act 2017, no error, omission, or misdescription of the property or the title shall
    enable the purchaser to cancel this agreement but compensation, if claimed by notice before settlement in accordance with subclause 8.1 but not otherwise, shall
    be made or given as the case may require.

    and Claims for compensation:8.1 - If the purchaser claims a right to compensation either under subclause 6.4 or for an equitable set-off:
    (1) the purchaser must serve notice of the claim on the vendor on or before the last working day prior to settlement; and
    (2) the notice must:
    (a) in the case of a claim for compensation under subclause 6.4, state the particular error, omission, or misdescription of the property or title in respect of
    which compensation is claimed;
    (b) in the case of a claim to an equitable set-off, state the particular matters in respect of which compensation is claimed;
    (c) comprise a genuine pre-estimate of the loss suffered by the purchaser; and
    (d) be particularised and quantified to the extent reasonably possible as at the date of the notice.

    We initially made a claim for compensation under these clauses through our solicitor. The vendors solicitor replied stating that these clauses are only relevant to the title that is being sold, and not to erroneous statements made about an adjacent title during the marketing of the property. Our solicitor agreed, and on that basis we retracted the claim and decided the appropriate steps would be to lay a complaint with the REA and pursue action under the Fair Trade Act, due to unsubstantiated representations made in trade. I have since received a letter from the RE company's solicitor who also note that there is an argument to be made that the misrepresentation did not include the (sale) property, so we cannot rely on clause 6.4. That makes three independent solicitors who say it is not applicable.

    Despite this, the RE company continues to push us toward taking action within the S&P agreement against the vendors. They say this is the only path to an outcome that we desire (some monetary compensation). They say that the vendors are culpable: "our Vendor provided the representation to our sales consultant, all (we) have done is made that same information available to prospective buyers" and "I just need them to come back to me with your claim, and get in a room with them (vendors) so I can talk them around to an outcome of compensation". He has advised compensation will not be a likely outcome outside of the Sale and Purchase Agreement.

    I believe the RE company had a duty to ensure the material they provided to potential buyers is accurate, and my impression through the entire thing is that they are trying to have us engage in a costly legal proceeding to cause us to give up. The company director has made it clear that there are initial costs we will need to cover to make a case. $500 for a letter of compensation, proof of the value of the loss (valuation) etc.

    Does anyone have experience in these matters?

    Is there an argument to be made for an Equitable Set Off - as the reserve land relating to the purchase of the property is not actually there?

    I would also really appreciate any feedback on how a legal proceeding might look - in terms of cost and time. It is the single biggest factor limiting our taking action within the S&P agreement (as requested by the RE director). Our solicitor does not want to retract his agreement with the earlier compensation letter and lodge a new one - so we are up for $200+ for a new lawyer just to look at the file..

    If you have read all of this, thank you.
    Last edited by Cally_jay; 14-11-2018 at 04:30 PM.

  2. #2


    why didnt your lawyer pick this up when he looked at the title prior to settlement?

  3. #3
    Join Date
    May 2007


    Quote Originally Posted by John the builder View Post
    why didnt your lawyer pick this up when he looked at the title prior to settlement?
    Guessing the lawyer looked at the property being purchased, titles etc which is their job. And was probably completely unaware of any representation about a neighboring property - why would the lawyer know about this unless they had been specifically asked to check it?
    Not sure where to start, book a free chat for 5-10 minutes https://cswaikato.co.nz/services-pro...s-hamilton/201
    Ross Barnett - Coombe Smith Property Accountants

  4. #4
    Join Date
    May 2007


    Hi Cally-jay,

    I would start with establishing facts

    1) Do you have written proof that the agents represented the neighboring property as a reserve?

    2) If so, do you have written proof that the vendor represented the property as a reserve to the agent?

    Without these two bits of proof, you will probably be struggling!

    3) Proof the property is worth less and the dollar value of the reduction in value- ie if reserve next door compared to actual situation. Something like a valuer should be able to help.

    Under $5k - is it worth the effort?
    Under $50k - You could try simple approaches if you have proof under 1) and 2), but if you try pushing this legal matter you might find you spend over the $50k. Unfortunately the lawyers normal win, and even if you win you still often lose financially.

    My first step would be to meet with a good lawyer, and be prepared to spend $1,000 or more on some good advice, so that you understand the situation and the rules.

    Good luck

    Not sure where to start, book a free chat for 5-10 minutes https://cswaikato.co.nz/services-pro...s-hamilton/201
    Ross Barnett - Coombe Smith Property Accountants

  5. #5


    Has your solicitor looked as s72 Real Estate Agents Act 2008? The RE wants you to go to the vendor but I would have thought even if the RE was advised that is was reserve by the vendor, it quite simple for them to check, as could any person, and it is more prudent for them to certainly check, and so misrepresented (s72(a) and (c)). A vendor could tell an agent anything but they would be stupid to go on to advertise it without confirming.

    I would never buy any property without finding out what is around it, and certainly checking the District/City Plan, or enquiring with the council's planner. Caveat emptor.

    That 'reserve' (in this case it wasn't) could actually just be council land earmarked for future development. Even reserve status land is never guaranteed to remain reserve although it is a more tedious and public process for removal of the reserve status.

    I would check the REA complaint decisions to see if there has been a similiar case

    Real estate Professional Conduct and Client Care Rules 2012 Rule 6.4

    A licensee must not mislead a customer or client, nor provide false information, nor withhold information that should by law or in fairness be provided to a customer or client.
    This rule addresses the other information you may need to share about a property that is broader than physical defects, for example, a development happening in the neighbourhood, or whether there has been a violent crime in the property.

    Real Estate Agents Act 2008

    Unsatisfactory conduct and misconduct72 Unsatisfactory conduct

    For the purposes of this Act, a licensee is guilty of unsatisfactory conduct if the licensee carries out real estate agency work that—
    (a) falls short of the standard that a reasonable member of the public is entitled to expect from a reasonably competent licensee; or

    (b) contravenes a provision of this Act or of any regulations or rules made under this Act; or

    (c) is incompetent or negligent; or

    (d) would reasonably be regarded by agents of good standing as being unacceptable.

  6. #6


    Thanks Roscoe,
    1) We have extensive proof of the claims made by the RE company. On line marketing and in the pamphlets under both description and features states "property borders a reserve". It was a selling point, and no one is denying it.

    2) We haven't seen anything from the vendors to the RE agent - but have been told by the RE company director that they represented the property as described by the vendors - in good faith.

    3) Short of paying $800 for a new valuation (a desktop was carried out by QV under the premise of it being reserve land), would a banks valuation or some other lower cost/free valuation suffice? During a conversation the RE director actually put a dollar value on the discrepancy himself - He said he could sell the property right now, without reserve land in the description for $X to $XX (which was $5000 to $15,000 less than we had offered).

    From what your saying - I take that the clauses 6.4 and 8.1 do apply in this situation.

  7. #7


    Thank you RollingCloud - we have placed a complaint with the REA but it is on hold at present unless nothing is achieved pre-settlement with the RE agency. I think that since my dealings have been exclusively with the company Director since raising the issue, I should expand the complaint to include the company as well (not just the agent).

    I note your comment about reserve land not being a permanent fixture.

    The REA complaint handler mentioned those rules too. It's a simple thing to check LINZ or the council website, and it is a reasonable expectation that claiming reserve land as a selling point would entail checking this against a map. We did not do this, it's true - and wish we had. The vendor's solicitor mentioned due diligence on our part, to which our solicitor's response was “Due diligence” has little to do with Misdescription or misreprestation of land adjoining the vendor’s property and simply put, at law my client was entitled to rely upon the descriptions or representations made by your client the vendor or his agent to my client in these circumstances.

    Is it appropriate to be seeking a claim against the vendors, or the RE company in this situation?

  8. #8


    Hi - I'm sorry for the delayed replies. I have to wait for moderator approval for my posts due to being a new account.
    Last edited by Perry; 16-11-2018 at 03:53 PM.

  9. #9
    Join Date
    Sep 2007


    If it's less than $15k, go to the Disputes Tribunal...
    Squadly dinky do!

  10. #10
    Join Date
    Mar 2015
    Brisbane Wellington Auckland


    Quote Originally Posted by Davo36 View Post
    If it's less than $15k, go to the Disputes Tribunal...
    This is best idea
    Show a valuation from a reputable registered valuer to quantify the loss.


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