A property was listed last year, but a sale fell through after a building report found weathertightness problems. The vendor has had repairs done and gives the agency a new clean report, asking that the old report not be mentioned. What does REA's guidance on a Tribunal decision say?
Correct Answer
D) Buyers should be told of the earlier report and failed sale, not just the new report.
REA describes a Tribunal decision where a licensee gave buyers a new building report but did not tell them about an earlier report identifying weathertightness problems or that a previous sale had collapsed because of it. The Tribunal found unsatisfactory conduct: licensees must be proactive and cannot rely on a later positive report. Rule 10.8 also bars acting for a client who directs that such information be withheld.
Why This Is the Correct Answer
The Tribunal held that the earlier adverse report and failed sale were material and had to be disclosed.
Why the Other Options Are Wrong
Option A: Only the new report need be disclosed, since it shows the problems have been fixed.
The Tribunal held the licensee could not rely on the later positive report to avoid disclosing the earlier one.
Option B: Nothing need be disclosed, because the repairs mean there is no longer a known defect.
The history is material information; withholding it breached rule 6.4 in the case REA describes.
Option C: The earlier report may be disclosed only if a buyer asks directly about building reports.
The Tribunal said the licensee must be proactive in giving buyers all material information.
Background Knowledge for Agency Practice
Source: https://www.rea.govt.nz/real-estate-professionals/industry-guidance-and-information/disclosures/weathertightness-issues/
Exam Tip for Agency Practice
A later clean report does not erase an earlier adverse one; disclose the full history.
Common Mistakes to Avoid on Agency Practice Questions
- •Treating repaired defects as having no disclosure history.
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- → 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?
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