When can a licensee accept commission or other benefits from more than one party to a transaction?
Correct Answer
D) Never, because the rules bar acting in a capacity that attracts more than one commission
Rule 9.14 of the Professional Conduct and Client Care Rules 2012 prohibits a licensee from acting in a capacity that would attract more than one commission in the same transaction. Consent does not make it acceptable: New Zealand does not allow an agency to represent both buyer and seller in one transaction. A licensee must also disclose other benefits they stand to gain under section 136 of the Act.
Why This Is the Correct Answer
Rule 9.14 of the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012 says a licensee must not act in a capacity that would attract more than one commission in the same transaction. New Zealand does not permit an agency to act for both the buyer and the seller in the same deal, even with consent.
Why the Other Options Are Wrong
Option A: When every party gives informed written consent after full disclosure of both commissions
Consent does not cure it. Rule 9.14 is an outright prohibition, and New Zealand does not allow an agency to act for both buyer and seller in one transaction.
Option B: Only when the licensee's main engagement in the deal is to act for the vendor
Acting for the vendor is exactly why a second commission from the buyer is barred; it would put the licensee on both sides.
Option C: When the combined commission stays below 4% of the purchase price
No percentage threshold exists. The prohibition in rule 9.14 applies whatever the size of the commissions.
Deep Analysis of This Professional Conduct Question
The question tests the conflict-of-interest rules. A licensee who could earn from both sides of a deal cannot give undivided loyalty to their client. Unlike some overseas jurisdictions that allow disclosed dual agency, New Zealand's rules prohibit it outright.
Background Knowledge for Professional Conduct
Rule 9.14 of the 2012 Client Care Rules bars acting in a capacity that attracts more than one commission in a transaction, and rule 9.15 bars other business activities that could compromise a licensee's obligations. Section 128 requires agency agreements to disclose rebates, discounts and commissions, and section 136 requires disclosure of other benefits a licensee may gain from a transaction.
Memory Technique
Think 'one deal, one commission'. In New Zealand the answer to 'can I be paid by both sides?' is simply no.
If an option offers consent, disclosure or a percentage cap as a way to earn from both sides, remember rule 9.14 and reject it.
Exam Tip for Professional Conduct
Beware of the overseas 'disclosed dual agency' idea. Under the NZ rules, informed consent does not permit a second commission in the same transaction.
Real World Application in Professional Conduct
A buyer offers the listing salesperson a 'finder's fee' if their offer is accepted. Taking it would mean earning from both sides of the same sale, so rule 9.14 prohibits it however openly it is disclosed.
Common Mistakes to Avoid on Professional Conduct Questions
- •Applying overseas dual agency rules in New Zealand
- •Thinking written consent makes a second commission acceptable
- •Confusing the rebate disclosure rules with permission to take two commissions
Related Topics & Key Terms
Key Terms:
More Professional Conduct Questions
According to the REA Code of Professional Conduct and Client Care, what is the primary duty of a real estate licensee?
A licensee receives confidential information about their client's financial difficulties. When can this information be disclosed to third parties?
During a complaint investigation, what is a licensee's obligation regarding cooperation with the Real Estate Authority?
A licensee discovers that a competing agent has made false statements about a property they have listed. What is the most appropriate course of action?
A licensee is charged with misconduct for serious breaches of the Code. During the disciplinary hearing, they argue that their actions were directed by their branch manager. How will this affect the Tribunal's decision?
- → A licensee keeps working while a complaint against them goes to the Real Estate Agents Disciplinary Tribunal. If misconduct is proved, what can the Tribunal do?
- → A licensee working for Agency A learns confidential information about a client’s financial difficulties. They then move to Agency B and are asked to give market advice on that client’s property to a prospective buyer who is a client of Agency B. How should they handle this situation?
- → A licensee working for Agency A learns confidential information about a client's urgent need to sell due to financial difficulties. The licensee then moves to Agency B and uses this information to approach the former client with a lower offer through a contact. This scenario primarily involves a breach of which professional obligation?
- → An agent receives two written offers on the same property at the same time: one from the agent's personal friend at $50,000 below the asking price, and one from an unknown buyer at the asking price. The agent presents only the friend's offer. Under the Real Estate Agents Act 2008, this most likely amounts to:
- → According to the REA Code of Professional Conduct and Client Care, what is the primary purpose of the Code?
- → In what situation would the Real Estate Agents Disciplinary Tribunal have jurisdiction to hear a complaint against a former licensee?
- → James, a branch manager, becomes aware that one of his salespeople has been providing misleading information to clients about settlement timeframes. Under the REA Code, what is James's primary obligation?
- → Under section 121 of the Real Estate Agents Act 2008, what must appear on every advertisement an agent publishes?
- → When can a licensee disclose confidential client information to a third party?
- → A client asks their real estate agent to not disclose a known flooding issue to potential buyers. What should the agent do?
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