The decision might shock some agents and would be a wake-up call about getting the details right when promoting property for sale, a real estate barrister said.
“They often don’t realise – some say more than they should,” barrister John Waymouth said.
The committee ordered Malloy to undertake further training and pay $1000 to the authority.
“This case shows … the loss that the buyer suffered was substantially higher [than $1000], and the tribunal can make that award,” Waymouth said.
“Don’t say something as an agent if you don’t know it’s true.”
Real estate barrister John Waymouth.
While Malloy’s conduct was not deliberate, she should have exercised skill, care, competence and diligence by advising that the place had only two legal car parks, the committee found.
Failing to do so breached the Real Estate Agents Act and rules.
The tribunal said the buyer, only identified as MY, claimed to have suffered a loss of $83,282 because of the misrepresentation.
The listing included photographs showing a car parked in a gravel car park within the property’s garden.
Yet the written text in the marketing material stated the property had two car parks, not three.
“The committee was of the view that Ms Malloy ought to have undertaken due diligence on the property before any marketing commenced and had she reviewed the rules she would have been alerted that the third car park area should not have been paved or sealed,” the tribunal noted.
The property was listed with Barfoot and Thompson Northcote and Blue Fern Realty of Henderson.
The buyer met Malloy at a viewing.
Malloy told her there were three car parks: one in the single car garage, one in the driveway in front of the garage, and a third in the gravel area within the garden.
The buyer bought the place for $810,000.
After settlement, the body corporate told the buyer there was no car park area in the garden.
The buyer was told she must remove the car park and reinstate the garden as soon as possible.
The buyer complained to the authority about the loss of the third car park, valued at $45,000.
She said it cost $12,400 in garden restoration and claimed a loss of property marketability of $25,000 and a property valuation report costing $860.
She said she paid a premium of about $70,000 or more on the basis the place had three usable car parks and incurred the additional cost of converting the third car park back to a garden.
Malloy told the committee she followed her vendor’s instructions not to advertise the third car park space in any of the advertising, as they had received previous legal advice not to.
She said the Body Corporate had sent a letter to the vendor advising him he was not to advertise the property as having three car parks.
But the vendor suggested to Malloy she may like to mention the third car park to potential purchasers as being guest car parking.
“The view of the committee is that when the vendor confirmed there were only two legal car parks, Ms Malloy was under an obligation to inquire further as to whether it would appear likely to a reasonable licensee that the land may be subject to a hidden, or underlying defect.
“Had Ms Malloy requested further information from the Body Corporate she would have been advised that the car park in the garden area was unconsented,” it found.
Malloy’s counsel told the tribunal any fine should be made on the basis that the unsatisfactory conduct was an innocent misrepresentation.
The committee found Malloy did not intentionally break the rules and her conduct was in the mid to low range. Her conduct was not deliberate or dishonest.
Malloy’s lawyer also sought a 15% reduction in compensation on the basis that marketing for the property only included two parking spaces – one covered, one uncovered – on the front page and the listing summary.
Counsel submitted the buyer should have been placed on notice by the marketing that a third car park may have issues worthy of further inquiries or investigation.
But the tribunal found Malloy must pay the buyer for what she did.
Her failure to investigate the Body Corporate position about car park numbers came after the vendor told her there were only two legal car parks.
It ordered Malloy to pay the property buyer $23,000 within a month.
Suzy Bray, owner of Blue Fern Realty, said she was disappointed with the authority’s decision.
The tribunal noted Malloy’s conduct was “low-level and, taking into account that Nicky had no prior disciplinary history.
“We accepted the decision, and the fine was paid,” Bray said.
The tribunal case was about compensation.
“We worked with the tribunal to assess the compensation sought by the complainant,” Bray said.
Malloy considered there were arguments available to dismiss the claim, and those were put to the tribunal, she said.
“We have accepted the outcome and will look to take the decision into account in our work,” Bray said.
Anne Gibson has been the Herald’s property editor for 26 years, written books and covered property extensively here and overseas.
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