When must a real estate agent disclose to a potential purchaser that they have a personal interest in the property being sold?
Correct Answer
C) In writing, no later than when the purchaser receives contract documents
Section 136 of the Real Estate Agents Act 2008 requires a licensee to disclose in writing to every prospective party whether the licensee, or a related person, may benefit financially from the transaction. Under section 136(3) the disclosure must be made before or at the time the licensee provides that party with any contractual documents. Disclosing earlier is good practice, but the statutory deadline is the contract documents.
Why This Is the Correct Answer
Section 136 requires a licensee to disclose in writing to every prospective party whether the licensee, or a related person, may benefit financially from the transaction. Section 136(3) says this must be done before or at the time the licensee provides the party with any contractual documents.
Why the Other Options Are Wrong
Option A: Only if the purchaser asks the agent directly about any interest
Section 136 disclosure is proactive; it is owed to every prospective party whether or not they ask.
Option B: At settlement, once the transfer of the title has been registered with LINZ
Disclosure after the sale is useless to the purchaser and misses the statutory deadline of when contract documents are provided.
Option D: Only if the agent is planning to buy the property for themselves
An agent buying is covered by section 134; section 136 covers any financial benefit to the licensee or a related person, such as the agent selling their own property.
Deep Analysis of This Agency Practice Question
The section fixes a latest point, not an earliest one: the purchaser must have the written disclosure no later than the moment they are handed a sale and purchase agreement. Good practice is to disclose at first contact, so the purchaser can decide how far to rely on the licensee. Ordinary commission is not a benefit that needs disclosing (s 136(4)), and a contract made without the disclosure cannot be cancelled merely for that reason (s 136(5)), though the licensee faces disciplinary exposure.
Background Knowledge for Agency Practice
Sections 134 to 137 of the Real Estate Agents Act 2008 deal with licensee interests. Section 134 covers a licensee or related person acquiring the client's property; section 135 the valuation; section 136 written disclosure of other financial benefits to prospective parties; and section 137 who is a related person.
Memory Technique
Section 136 disclosure: in writing, to every prospective party, no later than the contract documents. Earlier is better; later is a breach.
Use it for any timing question about disclosing a licensee's or relative's financial stake to a buyer.
Exam Tip for Agency Practice
Section 136 timing is 'before or at the time contractual documents are provided', and the disclosure must be in writing.
Real World Application in Agency Practice
A salesperson is selling a unit owned by her father. Her agency's written disclosure form is included in the pack every interested buyer receives, so no buyer is handed a sale and purchase agreement without it.
Common Mistakes to Avoid on Agency Practice Questions
- •Thinking disclosure can wait until the buyer asks
- •Believing a verbal mention satisfies section 136
- •Confusing section 136 disclosure with the section 134 rules for licensee purchases
Related Topics & Key Terms
Key Terms:
More Agency Practice Questions
A real estate agent receives two offers on a property at the same time. What is their primary obligation?
Which of the following situations would create a conflict of interest requiring disclosure by a real estate licensee?
Sarah is a licensed salesperson working for ABC Real Estate. When showing a property to buyers, who does she primarily represent?
Under the Real Estate Agents Act 2008, what is the primary duty that a real estate agent owes to their client?
Which licence allows a person to carry out real estate agency work for an agent, but only under supervision?
- → Under section 126 of the Real Estate Agents Act 2008, what must happen after the client signs an agency agreement for the agent to be entitled to commission?
- → A licensed agent discovers that their salesperson has been providing advice about tax implications of a property investment without appropriate qualifications. What is the agent's responsibility?
- → An agency agreement contains a clause stating that the agent's commission is payable even if the property is sold by the vendor directly to a buyer introduced by the agent during the agency period, but the sale settles after the agency expires. Is this clause enforceable?
- → What must a real estate agent disclose to a potential purchaser when showing a property?
- → Under a sole agency agreement, when is the vendor still liable to pay commission to the agent?
- → Sarah holds a salesperson's licence and works for ABC Real Estate. When presenting an offer to a vendor, who is legally responsible for ensuring all disclosure obligations are met?
- → A real estate agent discovers that a property has a leaky roof after the agency agreement is signed but before any offers are received. What is the agent's obligation?
- → Which of the following allows an agent to end an agency agreement before its expiry date?
- → Under the Real Estate Agents Act 2008, what is the primary fiduciary duty that a real estate agent owes to their client?
- → What must a licensee do when they become aware of a material defect in a property they are marketing?
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