A developer lists 12 new townhouses in one continuous development with an agency under a 6-month sole agency. After 100 days the developer wants to cancel under s 131. What is the likely position?
Correct Answer
C) Section 131 does not apply, since the townhouses fall outside its residential property meaning.
Section 131(6) says residential property for s 131 does not include property developed with other properties in a continuous area and sold by a vendor who also sells, or has sold, some or all of those other properties. A developer selling townhouses in one development falls outside, so the 90-day cancellation right does not apply and the agreement's own terms govern.
Why This Is the Correct Answer
Section 131(6) excludes a developer's units in a continuous development from the 90-day right.
Why the Other Options Are Wrong
Option A: The developer may cancel, as all sole agencies over 90 days can be cancelled after day 90.
Section 131(6) excludes property developed with others and sold by a vendor selling some or all of them.
Option B: The developer may cancel, but only for the townhouses that have not had an open home yet.
The Act draws no line based on open homes; s 131 simply does not apply to this kind of property.
Option D: Section 131 applies, but only the agency, not the developer, may cancel after 90 days.
Where s 131 applies, any party may cancel; here it does not apply at all because of s 131(6).
Background Knowledge for Agency Practice
Source: https://www.legislation.govt.nz/act/public/2008/0066/latest/whole.html
Exam Tip for Agency Practice
The 90-day sole agency right is for ordinary residential sellers, not developers selling a project.
Common Mistakes to Avoid on Agency Practice Questions
- •Applying the 90-day cancellation right to every residential-looking property.
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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