Purchasers of an Auckland property that turned out to have no legal vehicle access have won their appeal against a ruling the salespeople who sold it to them had done nothing wrong.
The purchasers, whose identity has not been revealed, took their case to the Real Estate Agents Disciplinary Tribunal.
They bought the Auckland flat in 2021 and moved tenants in. It was one of three flats, all of which had a street address of number seven. They shared a driveway from the road that was also the access for two flats at number five.
At the time of the purchase, none of the three units at number seven had a right of easement over the common land of number five, which would have allowed them to use the driveway.
The salespeople, Kim Rule and Bruce Rule of Barfoot & Thompson Royal Oak, argued they were not aware of the issue. There was no physical impediment to the driveway being used.
It was not until the following year that a real estate agent selling another of the flats alerted the purchaser to the problem. The solicitor for the owner of flat two had written to the agent highlighting the problem.
The purchasers wrote to the Real Estate Authority and explained the situation. They received a response saying a manager had reviewed the titles and there was nothing to indicate the property did not have access.
The solicitor for the owner of flat 2/7 wanted to start the process of formalising access to the driveway, with each owner paying a third of the costs. This would also involve an application to council for consent.
Barfoot & Thompson again said there was nothing on the titles indicating a problem and nothing had been disclosed by the vendors at the time.
The purchasers complained it would cost a lot to remedy the situation and they had been misled by the advertisement highlighting a garage on the property.
Agents ‘couldn’t disclose what they didn’t know’
The salespeople told the Real Estate Authority the documents relating to the property did not make it clear any further investigation was needed and there was no suggestion of hidden or underlying defects.
“They did not misrepresent the property and could not disclose what they did not know,” the tribunal noted of their argument.
“The issue was discovered on the marketing by another agent of flat two, as someone told that agent an ex-surveyor considered there may be a problem with the driveway. The vendors of flat one were dumbfounded on learning this. In 50 years of the property being bought and sold, the problem had not been discovered. Even the purchaser – who is a real estate agent himself – did not see anything wrong with the title and had the benefit of twice visiting the property.”
The authority’s committee found the licensees acted with appropriate skill and care, and the defect was likely to have only been apparent to a surveyor.
But the tribunal said it did not accept that it was “virtually impossible” for the licensees to identify the issue when physically viewing the property, or that only a specialist could be expected to do so.
Tribunal: ‘Dual single entry raises an obvious issue’
“Indeed we find that a reasonably competent licensee would have identified the significant risk posed by dual access to the properties at both number seven and the neighbouring number five.
“It seems to us that a dual single entry (for two sets of properties with different street addresses), of itself, raises an obvious issue for a licensee, being ‘Over whose property is the driveway entrance?'”
The tribunal said a solicitor would not be expected to identify the problem from the documents, but it should have been noted when the property was viewed.
“Accordingly, we find that the licensees should have specifically raised the vehicle access issue in the first place with the vendors.
“Unless satisfied with the vendors’ response, supported by evidence, they should have warned the purchasers of the potential problem. Since it is now known the vendors were unaware of the issue, the licensees were required to make disclosure to the purchasers.
“Despite the photographs of the entrance and the aerial view being available to the [Real Estate Authority] committee, it did not even consider whether the licensees might have identified the potential problem from a physical viewing of the property. The sole focus of the committee was whether the licensees had diligently reviewed the relevant documents.
“The committee also wrongly found that the defect would have been apparent only to a surveyor. We have found the defect would have been discovered by a reasonably competent licensee.”
The tribunal said a decision about penalties and compensation would be made at a later date.
rnz.co.nz
