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Posted: 17 Dec 2007
The first reading of the Real Estate Agents Bill in Parliament on 12 December heralds the end of an era for self regulation of the real estate industry in New Zealand. The Bill proposes the removal of regulatory functions from the Real Estate Institute of New Zealand, and membership of the Institute will no longer be mandatory for agents.
An independent Real Estate Agents Authority will be created to oversee licensing, complaints disciplinary and enforcement processes and provide information to consumers. The Authority will have wide investigative powers and will be able to order a wide range of penalties and remedies. There will be no charge for consumers to lay a complaint before the Authority. In addition, a Disciplinary Tribunal will be formed to deal with serious cases. The Tribunal will deal with serious cases and will have the ability to order the cancellation of licences and award compensation. Complainants will not have to hire lawyers as the Authority, through its Compliance Assessment Committee (CAC) will represent their case if it is referred to the Tribunal.
An earlier move by the Justice Department to remove the Independent Contractor status from salespeople appears to have been abandoned. Instead, the Bill prescribes a status review in five years time. However, the intention is to lift entry requirements to the industry for salespeople and to introduce compulsory ongoing professional training.
At the “coal face” the Bill proposes a wide range of mandatory compulsory disclosure requirements, e.g. disclosure to vendors of other rebates, discounts or commissions payable to the agent. Vendors are to be granted a cooling off period for sole agency agreements and an automatic right to cancel the sole agency after 90 days. Prescribed wording will be introduced for agency agreements. There will also be requirements to provide information to buyers and sellers prior to them entering into an agreement. New auction requirements include prescribed Bidders Records, and controls on vendor bidding. Much of the Bill’s proposed “coal face” changes appear to be based on New South Wales legislation.
The Bill also proposes the removal of licensing requirements for Property Managers a move that is strongly opposed by the real estate industry.
The parliamentary opposition has described the Bill is a “sledge-hammer response to a relatively small problem” and has announced that it will oppose it. The government, on the other hand, state that the “Bill delivers on the government’s promise to bring accountability, transparency and openness to the real estate sector, and to establish an independent complaints system that protects consumers and supports honest real estate professionals”. The Real Estate Institute of New Zealand welcomes the government’s intention to tighten regulatory requirement but has expressed grave concerns about some aspects of the Bill, such as the non-requirement for Property Management to be licensed.
The Bill now moves to the Select Committee, under urgency, for consideration of submissions from interested parties, such as agencies who are opposed to any of the changes. Agencies should now review their compliance risk management programmes, and monitoring and supervision processes, to ensure that any necessary changes can be implemented ahead of the legislation being passed.
For more details contact Graham Crews
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