New Zealand Agents License Exam

The correct course of action for a property manager when a tenant raises a concern about compliance, such as with the Healthy Homes Standards, is to follow a professional and systematic process. The agent’s primary duties are governed by the Residential Tenancies Act 1986 and the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012. The first step is to acknowledge the tenant’s communication promptly and professionally. This demonstrates good faith and adherence to professional standards. The second, and most critical, step is to independently verify the tenant’s claim. A tenant’s personal research, while potentially well-intentioned, is not a substitute for a formal assessment using the prescribed tools, such as the official Tenancy Services heating calculator, or an assessment by a qualified professional. Acting on an unverified claim could lead to unnecessary expenditure for the landlord client, which would be a failure of the agent’s fiduciary duty. Dismissing the claim without investigation is also improper, as it ignores the landlord’s legal obligation to comply with the Healthy Homes Standards and the agent’s duty to address tenant concerns. Therefore, the agent must inform the tenant that they are taking the concern seriously and will conduct their own verification. This approach manages expectations, ensures decisions are based on accurate information, and protects the interests of both the landlord and the tenant while complying with all relevant legislation.

The Health and Safety at Work Act 2015 establishes a framework of duties for Persons Conducting a Business or Undertaking, known as PCBUs. A fundamental principle of this Act is that of overlapping duties. This occurs when more than one PCBU has a duty in relation to the same matter, such as when a real estate agency (a PCBU) conducts work at a property owned by a landlord (another PCBU). In such situations, Section 34 of the Act mandates that each PCBU must, so far as is reasonably practicable, consult, cooperate with, and coordinate activities with all other PCBUs with whom they share a duty. The purpose of this is to ensure that all risks are collectively managed and that no safety responsibilities are neglected due to assumptions about who is responsible. In the context of preparing a tenanted property for an open home, the real estate agency and the landlord both have a primary duty of care to ensure the health and safety of workers and others affected by the work. Simply identifying a hazard or unilaterally imposing a control measure is insufficient. The most effective and compliant approach involves proactive communication between all duty holders to agree on and implement a coordinated plan for managing known risks, such as structural defects or animals on site. This collaborative process ensures that all parties are aware of the risks and the agreed-upon control measures, fulfilling the legal requirement for consultation and coordination.

The situation described involves a significant change in the client’s risk profile, which triggers specific obligations under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009. Initially, the transaction was low-risk, funded by a registered New Zealand bank, and Standard Customer Due Diligence (CDD) was appropriate. However, the sudden switch to a large cash payment, particularly one sourced from an overseas jurisdiction with potentially weak AML/CFT controls, constitutes a major red flag. According to the Act, when a reporting entity assesses that the level of risk involved is high, it must conduct Enhanced Customer Due Diligence (ECDD). The primary and immediate regulatory requirement is not to jump to conclusions, but to gather more information to properly assess the risk. ECDD requires taking additional measures beyond standard identity verification. In this context, it specifically involves inquiring into and verifying, as far as is reasonable, the source of the funds being used for the transaction and the source of the client’s (or in this case, the funder’s) overall wealth. Only after conducting this enhanced level of inquiry can the compliance officer make an informed decision about whether the activity is genuinely suspicious and warrants a Suspicious Activity Report (SAR), or if the transaction can proceed. Simply relying on the initial CDD would be a serious compliance breach, as it ignores the new risk factors. Terminating the agreement or filing a SAR without first attempting to conduct ECDD would be premature and may not fulfill the entity’s full obligation to assess the situation.

The vendor’s instruction to the agent constitutes unlawful discrimination. The correct course of action is for the agent to identify the instruction as a breach of the Human Rights Act 1993 and refuse to carry it out. The Human Rights Act 1993, under Section 21, lists the prohibited grounds of discrimination, which include family status (such as having children) and marital status. Section 53 of the Act specifically makes it unlawful for a person, on any of the prohibited grounds, to refuse or fail to dispose of an estate or interest in land to another person, or to treat them less favourably in connection with that disposal. The vendor’s preference for a “single professional or a retired couple” and explicit exclusion of a “family with young children” is a clear case of discrimination based on family and marital status. The vendor’s justification, that she is concerned for the quiet enjoyment of the existing tenant, is irrelevant in a legal context. The motive behind a discriminatory action does not make it lawful. The effect of the instruction is to exclude a protected class of people from the opportunity to purchase the property. A real estate agent has a legal and ethical duty to comply with all relevant New Zealand legislation, including the Human Rights Act 1993. An agent must not follow unlawful instructions from a client. The agent’s primary responsibility in this situation is to advise the vendor that her request is unlawful and to refuse to implement any marketing or buyer selection strategy based on these discriminatory criteria. Proceeding with the instruction would expose both the agent and the vendor to legal action and complaints to the Human Rights Commission.

A fixed-term tenancy agreement is a legally binding contract for a specified period. Under the Residential Tenancies Act 1986, a landlord cannot unilaterally terminate a fixed-term tenancy before its end date, even if the property is sold. The Act provides very limited reasons for a landlord to end a fixed-term tenancy early, and the sale of the property is not one of them. The tenancy agreement and the tenant’s right to occupy the property for the full term remain in effect. When a tenanted property is sold, the tenancy automatically transfers to the new owner on the same terms and conditions, including the original end date of the fixed term. The new owner becomes the new landlord. The only way for the landlord to provide vacant possession to a buyer is to reach a mutual agreement with the tenant to end the tenancy early. This often involves negotiation and the landlord offering some form of compensation to the tenant for the inconvenience and cost of moving unexpectedly. Without the tenant’s explicit agreement, the sale must proceed with the tenancy in place. The rules for termination are different for periodic tenancies, where a landlord can give 90 days’ notice if the property has been sold with a vacant possession requirement. This distinction is a critical aspect of tenancy law in New Zealand.

The core of this scenario is the enduring nature of a licensee’s duty of confidentiality as mandated by the Real Estate Agents (Professional Conduct and Client Care) Rules 2012. The first step is to identify the type of information received. The seller’s personal reasons for selling and their absolute minimum acceptable price, shared during an agency relationship, are unequivocally confidential. This is not public information and was disclosed with the expectation it would be protected. The second step is to determine the duration of this duty. According to Rule 9.2 of the Professional Conduct and Client Care Rules, a licensee’s obligation to maintain confidentiality does not cease when the agency agreement concludes. This duty persists indefinitely after the termination of the professional relationship. Therefore, even though the agency agreement with the former client has expired, the licensee is still bound by this fiduciary duty. The third step is to evaluate the proposed action of sharing this information. Disclosing the former client’s financial desperation and willingness to accept a lower price would directly harm their negotiating position in any subsequent sale attempt. This constitutes a clear breach of the ongoing duty of confidentiality. The licensee must actively refuse to disclose any such information, regardless of who is asking or the passage of time. The only exceptions, such as legal compulsion or client consent, do not apply in this situation. The licensee’s professional responsibility is to protect the interests of their former client with respect to information gained in confidence during the agency period.

This question does not require a mathematical calculation. The core of this issue revolves around a licensee’s fiduciary duties and the specific obligations under the Real Estate Agents (Professional Conduct and Client Care) Rules 2012, which are established under the Real Estate Agents Act 2008. A licensee owes undivided loyalty to their client and must act in the client’s best interests. This includes a strict duty to avoid any situation that could create a conflict of interest. A conflict of interest arises when a licensee’s personal interests, or the interests of a person related to them, could potentially influence their professional duties to the client. The rules define a “person related” broadly, which includes a spouse. Even an indirect or non-controlling financial interest, such as a spouse’s shareholding in a purchasing company, creates a potential conflict. The licensee’s primary obligation upon becoming aware of such a conflict is immediate and transparent disclosure. The disclosure must be made in writing to the client. It is not sufficient to simply mention it verbally. Furthermore, the licensee must explain the nature of the conflict and recommend that the client seek independent legal or other professional advice. The licensee can only continue to act for the client if the client, after receiving the disclosure and having the opportunity to seek advice, provides their informed consent in writing. This process ensures the client is fully aware of the situation and can make an unpressured, informed decision about whether to proceed with the licensee’s services, thereby upholding the integrity of the transaction and the profession.

This is a non-mathematical question. The solution is arrived at through a logical deduction based on legal principles rather than a calculation. 1. Identify the core issue: An agent makes a specific, material claim in marketing materials based solely on the vendor’s verbal assurance. 2. Identify the relevant regulations: The Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012, specifically Rule 10.7, and the Fair Trading Act 1986. 3. Analyze the agent’s duty: Rule 10.7 requires a licensee to take due care when using information and not to mislead. This creates a positive obligation on the agent to verify information, not merely to pass it on. The concept of being a “mere conduit” is not a defense where an agent adopts and presents information as factual. 4. Evaluate the agent’s action: The agent accepted the vendor’s statement about a significant renovation (“completely re-roofed”) without seeking any supporting evidence (e.g., invoices, council permits, warranties). By including this unverified statement in marketing, the agent presented it as a verified fact. 5. Determine the primary breach: The agent’s fundamental error was the failure to exercise the required level of professional care and skill by not attempting to verify the vendor’s material statement before publishing it. This failure directly led to a potential misrepresentation under both the Code of Conduct and the Fair Trading Act. Advising a buyer to do their own checks is a separate, secondary duty and does not absolve the agent of their primary responsibility to ensure their own marketing is accurate. Under the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012, licensees have a significant duty to ensure that information they provide to customers is accurate and not misleading. Specifically, Rule 10.7 states that a licensee must not mislead a customer or client, and must not provide false information or withhold information that should, by law or in fairness, be provided. This duty extends beyond simply relaying what a vendor has said. When an agent includes a statement about a property’s condition, such as a recent major renovation, in their marketing, they are effectively endorsing that statement. Therefore, they have a professional obligation to take reasonable steps to verify its accuracy. This could involve asking the vendor for documentation like receipts, council consents, or a producer statement from the tradesperson who performed the work. Simply relying on a verbal assurance from the vendor for a material fact is insufficient and falls short of the standard of care expected. This principle is also reinforced by the Fair Trading Act 1986, which prohibits misleading and deceptive conduct in trade. An agent’s failure to verify information can lead to a finding of unsatisfactory conduct or misconduct, regardless of whether they intended to mislead. The primary responsibility lies with the agent to ensure the claims they make in their professional capacity are substantiated.

Under the Real Estate Agents Act 2008, the complaints and disciplinary process is tiered to handle matters of varying severity. When a complaint is received by the Real Estate Authority (REA) and is referred to a Complaints Assessment Committee (CAC), the CAC has a specific mandate. Its primary role is to investigate the complaint to determine whether the licensee’s actions constitute “unsatisfactory conduct” as defined in section 72 of the Act. Unsatisfactory conduct is conduct that falls short of the standard a reasonable member of the public is entitled to expect from a licensee. If the CAC investigates a complaint that contains elements of both potential unsatisfactory conduct and more serious potential misconduct, it has a dual function. The CAC can make its own determination on the parts of the complaint that amount to unsatisfactory conduct. For these matters, it can impose penalties such as a censure, a fine, or an order to undertake training. However, the CAC does not have the jurisdiction to make a finding of “misconduct” under section 73, which is a more serious charge. If the CAC believes the evidence supports a charge of misconduct, its role is to lay that charge before the Real Estate Agents Disciplinary Tribunal (READT). Therefore, it is entirely possible and procedurally correct for a CAC to resolve the unsatisfactory conduct aspects of a complaint itself while simultaneously referring the misconduct aspects of the same complaint to the READT for a hearing and determination. This ensures that different levels of alleged wrongdoing are handled by the appropriate body with the correct jurisdiction.

The correct course of action is determined by the obligations set out in the Privacy Act 2020. Specifically, Information Privacy Principle 6 (IPP 6) and Information Privacy Principle 7 (IPP 7) are directly engaged by the individual’s request. First, under IPP 6, an individual has a legally enforceable right to access personal information held about them by an agency. The real estate agency is the ‘agency’ that collected and holds the information, and therefore it is obligated to respond to this access request. The response should confirm what information is held and provide the individual with a copy of it. The agency must also be transparent about how that information has been used and to whom it has been disclosed, which in this case includes the disclosure to the vendor for the purpose of assessing the offer. Second, under IPP 7, an individual has the right to request the correction of their personal information. When the agency receives a correction request, it must take reasonable steps to address it. If the agency is satisfied that the information is inaccurate, it should make the correction. If the agency does not agree that the information is incorrect, it is not required to change the record but must, if the individual requests, attach a statement of the correction sought but not made to the information. This ensures that anyone viewing the file in the future is aware of the dispute. Ignoring the request, deleting the data, or deflecting responsibility to the vendor would be a breach of these principles. The agency’s duties under the Privacy Act are independent of its client’s actions and relate to the information it collects and holds.

The situation presented involves a significant conflict of interest under the Real Estate Agents (Professional Conduct and Client Care) Rules 2012. A conflict arises because the licensee has a personal relationship with a director of the potential purchasing entity, and there is also a direct financial incentive being offered that is contingent on the sale. The licensee’s brother-in-law is considered a “person related to the licensee”, creating a non-negotiable conflict that must be managed according to specific procedures. Under Rule 9.2, if a conflict of interest arises after an agency agreement is signed, the licensee must not continue to act for the client unless they have fully disclosed the conflict and received the client’s written consent to proceed. Rule 9.3 specifies this disclosure must be in writing and clearly explain the nature of the conflict. In this scenario, the nature of the conflict is twofold: the familial relationship and the offer of future business. Both elements must be disclosed to the client, Coastal Logistics Ltd, to allow them to provide truly informed consent. The disclosure must be made promptly upon the licensee becoming aware of the conflict. Simply disclosing one part of the conflict, such as the future business, is insufficient as it does not address the primary conflict arising from the personal relationship. Likewise, verbal disclosure does not meet the standard required by the Rules. The primary and most critical obligation is therefore to provide full, written disclosure of all aspects of the conflict to the client and seek their formal written consent before taking any further steps in the transaction involving Bayview Developments.

The core legal principle is found in Section 106 of the Unit Titles Act 2010, which dictates the requirements for body corporate operational rules. Specifically, Section 106(2) states that operational rules must not be inconsistent with the Act or any other enactment. In the scenario, the body corporate rule requiring committee approval for purely cosmetic, internal, non-structural changes directly conflicts with the principles of private ownership within a unit. The Act does not grant bodies corporate the power to regulate minor, internal aesthetic alterations that do not affect the common property, the building’s structure, or its infrastructure. Therefore, such a rule is inconsistent with the Act and is legally unenforceable. A licensee’s professional duty under the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012, particularly Rule 6.4, requires them to exercise skill, care, and competence. This includes having a sufficient understanding of the governing legislation to identify potential legal inconsistencies. While a licensee must not provide legal advice, they have a responsibility to highlight the potential invalidity of the rule to their client and strongly recommend that the client seek independent legal advice to confirm its unenforceability before proceeding. Simply accepting the rule as valid or suggesting it can be easily changed at an AGM would be a failure in this duty. The correct course of action is to inform the client of the conflict with the governing Act and advise them to get a definitive legal opinion.

This is a conceptual question and does not require a mathematical calculation. The core of this issue rests on the intersection of an agent’s duties under the Real Estate Agents (Professional Conduct and Client Care) Rules 2012. Specifically, it tests the agent’s obligation to their client (the vendor) versus their obligation of fairness and honesty to a customer (the potential purchaser). While an agent must act in the best interests of their client, this duty is not absolute and does not permit them to engage in misleading or deceptive conduct. Rule 9.1 states that a licensee must not do anything that is liable to mislead or deceive the customer. Furthermore, Rule 10.7 is explicit: a licensee must not mislead a customer by failing to disclose any known defects. An unconsented structure is considered a latent defect that the agent is aware of. A direct question from a customer about consents requires a truthful answer. Evading the question or following an unlawful instruction from the client to conceal the defect would constitute a breach of these rules. The correct professional conduct is to inform the client of the agent’s legal obligation to disclose the known defect and then proceed to disclose it to the inquiring customer. This upholds the agent’s primary duties of honesty and fairness, which are paramount and cannot be overridden by a client’s instruction.

The correct outcome is that Prestige Realty is entitled to its full commission. A sole agency agreement, as defined under New Zealand real estate practice, grants an agent the exclusive right to market a property for a specified term. A crucial feature of this type of agreement is that the commission becomes payable if an unconditional sale and purchase agreement is entered into during this term, regardless of who was directly responsible for introducing the buyer. In this scenario, the 90-day sole agency agreement was still legally in effect when the sale was agreed upon. Aroha’s email expressing a desire to cancel does not constitute an immediate and legally effective termination of the contract. Contractual termination typically requires mutual consent or adherence to specific termination clauses outlined in the agreement, which may include a notice period. Furthermore, the buyer’s initial connection to the property was established through the agent’s marketing efforts, specifically the open home. This strengthens the agent’s position as the effective cause of the sale, even though the final negotiations did not directly involve the agent. The combination of the sale occurring within the active sole agency period and the buyer’s introduction via the agent’s work solidifies Prestige Realty’s legal entitlement to the agreed-upon commission.

No calculation is required for this question. Under the Real Estate Agents Act 2008 and the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012, a licensee has several overlapping duties of disclosure. The primary fiduciary duty is to the client, in this case, the vendor. A licensee must always act in the best interests of their client. When a licensee becomes aware of a potential conflict of interest, such as a personal relationship with a prospective purchaser, this must be disclosed to the client promptly and in writing. This allows the client to provide informed consent to the licensee continuing to act for them. Concurrently, a licensee has a duty to disclose known defects in a property to customers. Non-consented building work is a significant latent defect. The licensee cannot withhold this material information from any prospective buyer, as doing so would be misleading and a breach of the duty of fairness to customers. The correct procedure requires the licensee to address these issues with their client first. The licensee must inform the vendor of both the potential defect and the conflict of interest. This empowers the vendor to make an informed decision on how to proceed, which may include rectifying the issue, adjusting the price, or simply ensuring full disclosure to all parties. Only after informing the client and receiving instructions can the licensee then ensure the defect is disclosed to all potential purchasers, including those who may not have the expertise to identify it themselves. This sequence ensures the licensee’s primary duty to the client is met while also upholding the standards of fairness and honesty towards all other parties in the transaction.

Step 1: Identify the central professional obligation. The licensee, Anaru, has discovered information that is material to his client’s property. This information pertains to a future infrastructure project that could affect the property’s value and marketability. Step 2: Consult the relevant regulations. The Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012, particularly Rule 6, governs this situation. Rule 6.1 requires a licensee to act in the best interests of the client. Rule 6.2 mandates that a licensee must exercise skill, care, competence, and diligence. Rule 6.4 requires the licensee to communicate with the client in a timely manner and keep them informed of matters relevant to their property. Step 3: Analyze the conflict. The client, Mei, has expressed a desire for a quick sale and has given a general instruction not to deter buyers. However, the licensee’s discovery of the planned interchange is a significant material fact. Withholding this information from the client would be a breach of the duty to keep the client fully informed (Rule 6.4) and to act with competence and care (Rule 6.2). Acting in the client’s best interests (Rule 6.1) is not simply about achieving the fastest sale, but about enabling the client to make fully informed decisions and to transact in a way that is lawful and avoids future liability. Step 4: Determine the correct course of action. The licensee’s professional and legal obligations override the client’s informal instruction. Anaru must provide the information to Mei. This allows Mei to understand the full context of her property’s position in the market. Furthermore, it enables a discussion about her own disclosure obligations to potential purchasers, which is a critical part of a competent agent’s service. Failure to inform the client would be a failure of professional duty. The core principle at stake is the licensee’s fundamental duty of care and communication to their client as outlined in the Professional Conduct and Client Care Rules 2012. A licensee is obligated to provide their client with all material information they are aware of concerning the client’s property. This duty exists to ensure the client can make fully informed decisions. In this case, the information about the planned motorway interchange is material, as it could reasonably be expected to influence the decisions of a client regarding marketing strategy, pricing, and disclosure. The licensee’s duty is not to interpret or filter the information based on their own assessment of its impact, but to present the facts to the client. This aligns with the requirement to act with skill, care, and competence. It also protects the client from potential future claims from a purchaser who might later discover the information was known but not disclosed. The client’s instruction to avoid scaring off buyers does not absolve the licensee of their professional and ethical obligations to provide full and frank information to their own client. The best interests of the client are served by empowering them with knowledge, not by shielding them from potentially inconvenient facts that are relevant to the transaction.

The core of this issue rests on the conflict between a licensee’s fiduciary duties to their client and their general obligations of fairness to a customer. The primary fiduciary duties in play are the duty of confidentiality and the duty of loyalty to the vendor, Anika. The duty of confidentiality is absolute regarding the client’s personal information shared in confidence, unless disclosure is legally required or authorized by the client. Anika’s financial distress is sensitive, personal information, and she has explicitly instructed Kenji to keep it confidential. Disclosing this would be a direct breach. Furthermore, the duty of loyalty requires Kenji to act in Anika’s best interests, which includes securing the best possible price and terms. Revealing her financial desperation would severely undermine her negotiating position, directly contravening this duty. While Rule 6.4 of the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012 requires a licensee to be fair to all parties, and Rule 10.7 requires the disclosure of known defects, the vendor’s personal motivation for selling is not considered a ‘defect’ in the property. The obligation is to not mislead or deceive a customer. A response that politely declines to share personal information is neither misleading nor deceptive. It is the professionally mandated course of action. Fabricating a reason for the sale would be an act of deception. Disclosing the information, even with the intention of facilitating a sale, would be a fundamental breach of the trust placed in the licensee by their client. Therefore, the correct action is to protect the client’s confidential information while remaining professional and non-deceptive towards the customer.

The final step in a comparable sales analysis, after adjusting the sale prices of comparable properties, is the reconciliation process. This involves assigning a weight to each adjusted price to arrive at a single, final value estimate for the subject property. This is not a simple mathematical average. The weighting is a critical application of an agent’s professional judgment. The guiding principle is that the most reliable comparable property is the one that is most similar to the subject property and therefore requires the fewest and smallest adjustments. The purpose of adjustments is to account for differences, but each adjustment introduces a degree of subjectivity and potential for error. A comparable property that requires large adjustments, whether for location, physical condition, features, or time, is inherently less reliable as an indicator of value than a comparable that requires minimal adjustments. Therefore, in the reconciliation process, the comparable with the lowest total or gross value of adjustments should be given the most weight. This property provides the most direct and defensible evidence of the subject property’s market value. Relying most heavily on the sale that needed the least correction ensures the final appraisal is grounded in the strongest available market data, aligning with the professional standards of care and diligence required under the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012.

The core issue with applying the Sales Comparison Approach to a unique property like a converted historic woolshed is the fundamental lack of comparable data. The principle of substitution, which underpins this method, posits that a prudent buyer will not pay more for a property than it would cost to purchase a comparable substitute property. For this principle to be effective, a market must exist with a reasonable number of recent sales of similar properties. In the case of a one-of-a-kind historic commercial conversion, such direct substitutes do not exist. An appraiser would be unable to find other restored 19th-century woolsheds operating as wedding venues that have recently sold. Any attempt to use sales of other types of properties, such as modern function centres or even other types of historic building conversions, would require massive and highly subjective adjustments. These adjustments for factors like historic significance, architectural uniqueness, quality of restoration, specific use, and location would be so substantial that they would overwhelm the actual sales price data, making the final value conclusion unreliable and difficult to defend. While other valuation methods have their own challenges for such a property, the Sales Comparison Approach is most fundamentally compromised by the absence of a market of similar properties. The Cost Approach could estimate replacement cost, and the Income Approach could analyze the business’s cash flow, but the Sales Comparison Approach is critically dependent on data that is simply not available.

The situation described involves a potential conflict of interest under the Real Estate Agents Act 2008. Specifically, sections 134 to 137 of the Act govern transactions where a licensee, or a person related to them, acquires an interest in a property the licensee is commissioned to sell. The primary obligation is to act in the best interests of the client, the vendor. To manage this conflict transparently and legally, a strict procedure must be followed. First, the licensee must immediately disclose their relationship with the potential purchaser to their client in writing. This disclosure must be clear and unambiguous. Second, the licensee must cease to act for the vendor in the transaction. However, they may proceed if the client gives informed, written consent after the disclosure. Third, and critically, before any contract is entered into, the licensee must provide the client with a valuation of the property from an independent registered valuer. This valuation must be provided at the licensee’s expense. The purpose of this valuation is to ensure the vendor is fully informed about the property’s market value, protecting them from potentially selling at an undervalued price due to the licensee’s conflict of interest. These steps are mandated by law to ensure fairness and transparency, upholding the licensee’s fiduciary duties and the integrity of the transaction. Failure to follow this precise procedure constitutes unsatisfactory conduct or misconduct and can lead to severe penalties from the Real Estate Authority.

The vendor’s instruction to the licensee constitutes a direction to discriminate based on family status, which is one of the prohibited grounds of discrimination under Section 21 of the Human Rights Act 1993. Section 53 of this Act makes it unlawful for any person, on their own behalf or on behalf of another, to refuse or fail to dispose of an estate or interest in land to another person because of their family status. The instruction to filter out buyers with young children is a direct breach of this provision. Furthermore, Section 65 of the Act makes it unlawful for a person to instruct, procure, or induce another person to do anything which is an act of discrimination. Therefore, the vendor’s instruction is itself unlawful. A licensee’s primary duty is to act in accordance with the law. While the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012 requires a licensee to act in the best interests of their client, this duty is always subordinate to the licensee’s statutory obligations. Carrying out an unlawful instruction is a breach of a licensee’s professional duties and the law. The correct course of action is to identify the instruction as unlawful, refuse to carry it out, and clearly explain the legal position to the client. The exception for shared residential accommodation found in Section 54 of the Human Rights Act 1993 does not apply here. That exception is specific to situations where the person providing the accommodation (or their relative) also lives in and intends to continue living in the accommodation and share it with others. In this scenario, the vendors are selling a separate dwelling entirely, not offering to share their own immediate living space.

The core principle being tested is the enduring nature of a licensee’s duty of confidentiality under New Zealand law. According to Rule 9.7 of the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012, a licensee has an obligation to protect confidential information relating to a client. This rule explicitly states that a licensee must not use or disclose confidential information obtained from a client or a former client for any purpose other than that for which the information was provided. The information about the vendor’s personal and financial situation was provided to the licensee during the course of the agency agreement for the purpose of selling the property. The termination of that agency agreement does not extinguish the duty of confidentiality. The duty persists indefinitely. Therefore, using this sensitive information to benefit a new client (the buyer) would constitute a breach of the licensee’s professional obligations to the former client (the vendor). The licensee’s current duty to the buyer does not override the pre-existing and ongoing duty of confidentiality to the vendor. The correct course of action is to refrain from disclosing any of the confidential information and to advise the current client based on publicly available information and general market knowledge.

Step 1: Identify the governing legislation and the specific power being exercised. The council is creating a bylaw, a power granted under Part 8 of the Local Government Act 2002 (LGA 2002). Section 145 of the LGA 2002 allows a territorial authority to make bylaws for the good rule and government of its district. Step 2: Identify the legal grounds for challenging a bylaw. While bylaws are a legitimate tool, they are subject to judicial review. A bylaw can be challenged in the High Court and struck down if it is found to be ultra vires (beyond the power of the council), repugnant to the laws of New Zealand, uncertain, or unreasonable. Step 3: Apply the legal test of unreasonableness to the scenario. The concept of unreasonableness, in this legal context, means the bylaw is so oppressive or gratuitously interfering with the rights of those subject to it that no conscientious council acting in good faith could have made it. The scenario describes a bylaw imposing a blanket requirement for expensive commercial-grade infrastructure on all affected properties, regardless of their specific risk profile, size, or intensity of use. Step 4: Formulate the conclusion. The requirement is not tailored to the specific risk and imposes a significant, uniform financial burden. A court would likely assess whether this blanket imposition is a disproportionate and oppressive response to the public good issue the council is trying to address. If the burden is found to be manifestly excessive compared to the benefit, the bylaw could be invalidated on the grounds of being unreasonable. This is a substantive challenge to the content and effect of the bylaw itself, rather than a procedural or jurisdictional issue. While other grounds might be argued, the disproportionate and oppressive nature of the obligations points most directly to the legal test of unreasonableness.

David and Emily, as bona fide purchasers for value without notice of the fraud, acquire an indefeasible title upon registration under section 51 of the Land Transfer Act 2017. The fraud exception in section 52(1)(a) applies to the person who committed the fraud (Hana), making her title defeasible. However, this exception does not carry over to a subsequent innocent purchaser. The principle of immediate indefeasibility protects David and Emily. While Wiremu has been deprived of his land through fraud, his claim against the title itself is extinguished once it is transferred to a good faith purchaser. The manifest injustice provisions under sections 54-57 are unlikely to succeed because section 55(4) explicitly states that the court must not make an order if the estate or interest has been transferred to a third person acting in good faith. Wiremu’s primary recourse would be to seek compensation from the Crown for his loss. This situation tests the core principle of indefeasibility of title under the Land Transfer Act 2017. Section 51 of the Act establishes that the title of a registered proprietor is paramount and cannot be challenged, subject to specific exceptions. One major exception, outlined in section 52, is fraud. In this case, Hana acquired the title through fraud, meaning her registered title was defeasible and could have been overturned by Wiremu had he discovered the fraud before the subsequent sale. However, the protection of indefeasibility is extended to subsequent purchasers who acquire the title in good faith and for valuable consideration, without any knowledge of the prior fraud. This is known as the principle of immediate indefeasibility, a cornerstone of the Torrens system in New Zealand, affirmed in cases like Frazer v Walker. David and Emily, being bona fide purchasers for value, are therefore protected. Their registered title is considered indefeasible. While the Act introduced a new pathway under section 54 for the court to correct the register in cases of manifest injustice, section 55(4) creates a significant limitation: an order cannot be made if the property has been transferred to a third person acting in good faith. Consequently, Wiremu cannot reclaim the title from David and Emily. His legal remedy lies in seeking compensation from the state guarantee fund for the loss of his interest in the land due to the fraud.

Calculation: Replacement Cost New (RCN): \$950,000 Land Value: \$1,500,000 Depreciation due to Functional Obsolescence (incurable floor plan): \$120,000 Depreciation due to External Obsolescence (new adjacent building): \$80,000 Total Accrued Depreciation = \$120,000 + \$80,000 = \$200,000 Depreciated Value of Improvements = RCN – Total Accrued Depreciation \[\$950,000 – \$200,000 = \$750,000\] Indicated Value by Cost Approach = Depreciated Value of Improvements + Land Value \[\$750,000 + \$1,500,000 = \$2,250,000\] The cost approach to valuation is a method that establishes a property’s value by calculating the cost to replace the improvements, subtracting any accrued depreciation, and then adding the value of the land. Depreciation represents the loss of value for any reason and is categorized into three types: physical deterioration, functional obsolescence, and external obsolescence. Functional obsolescence relates to a loss in value resulting from deficiencies in the design, layout, or features of the property itself, relative to current market standards and tastes. This can include an outdated floor plan, inadequate room sizes, or insufficient amenities. This form of depreciation can be either curable or incurable. It is considered curable if the cost to fix the problem is less than the resulting increase in the property’s value. Conversely, it is deemed incurable if the cost of the remedy is greater than the value it would add, making the correction economically impractical. A flawed internal layout, such as requiring passage through one bedroom to access another, is a classic example of a design deficiency. Correcting such a fundamental flaw would likely require extensive and costly structural changes that would not be justified by the increase in market value, thus classifying it as incurable functional obsolescence. This is distinct from external obsolescence, which arises from factors outside the property’s boundaries, such as zoning changes or the development of adjacent properties.

The logical determination of the property’s value proceeds as follows: 1. Initial State Analysis: The property is currently used as a single-family home on a large section. Its value in this state is determined by comparing it to similar single-family homes. 2. Regulatory Change Analysis: The local District Plan, under the Resource Management Act 1991, has rezoned the area to ‘Mixed Housing Urban’. This change makes a new use legally permissible: multi-unit development (e.g., townhouses). 3. Feasibility and Productivity Analysis: A comparison must be made between the value generated by the existing use and the potential new use. – Value as a single-family home (Use 1). – Value as a development site for multiple townhouses (Use 2). 4. Conclusion: Given the high demand for new housing in urban areas, the value of the land for development (Use 2) will almost certainly be greater than its value supporting only the existing house (Use 1). 5. Governing Principle: The analysis that determines which legally permissible and physically possible use will yield the highest value for a property is the principle of highest and best use. The principle of highest and best use is a fundamental concept in property valuation. It refers to the most probable use of a property that is legally permissible, physically possible, financially feasible, and results in the highest value. In this scenario, the agent must consider the change in legal permissibility brought about by the District Plan’s rezoning. While the property is physically a single-family home, its highest and best use has likely shifted to that of a development site. An appraisal based solely on its current use would fail to capture its full market value. The agent has a professional obligation under the Real Estate Agents Act 2008 to provide competent advice, which includes informing the vendor about the significant value impact of this development potential. The market value is what a willing buyer would pay, and in a market with housing shortages, developers are often the willing buyers who will pay the most for the potential to build multiple dwellings. This is distinct from investment value, which is specific to a particular investor, or the principle of substitution, which, while relevant, is secondary to first establishing the use against which substitutes should be compared.

This scenario involves a direct conflict of interest, which is governed by specific provisions within the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012. The key rules are 9.14 and 9.15. These rules are designed to protect the vendor from any potential disadvantage when a licensee, who holds a position of trust and has access to privileged information, wishes to personally acquire an interest in the property they are responsible for marketing. The rules stipulate a clear and non-negotiable process. A licensee must not, directly or indirectly, acquire an interest in any land or business that they or their agency have been engaged to act as an agent for. There is an exception, but it requires strict adherence to a specific procedure. Before the client enters into any contract, the licensee must provide the client with an independent valuation of the property from a registered valuer. This valuation must be provided at the licensee’s own expense. Following the provision of the valuation, the licensee must obtain the client’s written consent to the transaction on the prescribed statutory form. In this case, the licensee’s verbal disclosure to the vendor and his principal agent is insufficient to meet these legal requirements. The vendor’s verbal agreement does not constitute informed consent in the eyes of the law, as it was not based on an independent valuation and was not captured on the prescribed form. The obligation applies to any licensee involved with the agency’s engagement, not just the primary listing agent. The failure to provide the valuation and obtain consent on the correct form before the agreement was signed constitutes a breach of the professional conduct rules, regardless of the final sale price or the vendor’s apparent satisfaction at the time.

The correct procedure is dictated by sections 134 and 135 of the Real Estate Agents Act 2008. When a licensee, or a person related to the licensee, is interested in acquiring a client’s property, a strict process must be followed to manage this significant conflict of interest. A brother-in-law falls under the definition of a “person related to a licensee”. The first step is for the licensee to immediately disclose the nature of the relationship and the conflict of interest to the client in writing. Crucially, before the client can agree to the transaction, the licensee must provide the client with a valuation of the property prepared by an independent registered valuer. This valuation must be provided at the expense of the licensee or the related person, not the client. Following the provision of the valuation, the licensee must obtain the client’s written consent to proceed with the transaction. The consent form must acknowledge that the client has received the independent valuation and has been advised to seek independent legal advice before signing. Upon this conflict arising, the licensee must cease to act for the client in the capacity of an agent for that specific transaction. They are no longer advocating for the client’s best interest in negotiations with the related party; instead, they are facilitating a transaction under strict legislative controls designed to protect the client from any potential disadvantage. Simply disclosing the relationship or getting consent without the independent valuation is a serious breach of the Act.

The legal framework governing this scenario is found in the Property Law Act 2007, specifically sections 137 to 145, which deal with relief against cancellation of an agreement for the sale and purchase of land. When a purchaser, Aroha, defaults on a payment and the vendor, Liam, validly cancels the contract after serving a settlement notice, Aroha may apply to the court for relief. The court has a broad discretion to grant relief under section 140. Section 140(4) explicitly directs the court on what to consider. It must have regard to the conduct of the parties, the extent to which the vendor was or would be prejudiced by the granting of the relief, and any other matter the court thinks is relevant. The central task for the court is to conduct a balancing exercise. It weighs the consequences for the purchaser if relief is denied (such as the loss of their deposit and the opportunity to complete the purchase) against the prejudice the vendor would suffer if relief were granted (such as delays, costs, or a lost opportunity to sell to another party, especially in a falling market). The court is not bound to uphold the cancellation simply because the vendor acted within their contractual rights. The overarching goal is to achieve a just and equitable outcome between the parties based on all the circumstances of the specific case.

The core issue revolves around a licensee’s obligations under the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012, specifically concerning the communication of information that has not been independently verified. Rule 6.4 mandates that a licensee must not mislead a customer or client, nor provide false information, nor withhold information that should in fairness be provided. The vendor’s claim about a “commercial use right” is a material statement that could significantly influence a buyer’s decision and the property’s perceived value. While Rule 10.7 states that a licensee is not required to have specialist knowledge or independently verify every piece of information provided by a client, it imposes a critical condition. If a licensee passes on information, they must clearly state its source and must not present it as their own verified statement. Crucially, if the licensee has any reason to doubt the accuracy of the information, they must disclose these doubts. Given the ambiguity in the council’s online records and the lack of official documentation from the vendor, the licensee has reasonable grounds to doubt the claim. Therefore, simply repeating the vendor’s claim, even with attribution, without further qualification could be deemed misleading by omission. The licensee’s primary duty of fairness to all parties requires them to manage this information carefully. The most appropriate course of action is to explicitly state that the information regarding the commercial use right is an unverified claim made by the vendor, that the licensee has not confirmed its accuracy, and to strongly recommend that any interested party conduct their own independent due diligence, such as obtaining a Land Information Memorandum (LIM) report and seeking legal advice, to verify the permitted use of the shed before making any commitment. This approach ensures transparency and protects the buyer from being misled, thereby fulfilling the licensee’s professional and ethical obligations.