Real estate agents beware – High Court critical of Real Estate Agents Act form

March 4, 2015

in Property

Property: HousingThe High Court recently found that it was not adequate for real estate agents who were purchasing a property from their own clients’ to simply rely on completing what is known as Form 2, which is the declaration and consent form to the transaction as prescribed in the relevant Regulations.  The Court was concerned that the important information for clients referred to in the form does not purport to explain the reason consent is being requested nor what the effect of giving consent might be for the Vendor.

The Court was also concerned that the word “conflict” is not used anywhere in the form.  It found that a client who is given the prescribed form could not possibly understand from it that the reason consent is being sought is that the real estate agent who wishes to acquire the property is acting in a position of conflict and will receive a commission on the sale.  The Court held that only true consent could be given if the full risks were explained explicitly to the client.

Agents and Licensees should therefore be very careful to have these risks explained in detail and preferably in writing if they are buying property from their own vendor clients.

This case is under Appeal but the prudent Agents would be wise to heed the decision carefully.

Farry and Co. deals in all aspects of property transactions and should you find yourself requiring clarification on any matter or legal assistance please contact the lawyer in our firm who normally advises you, or alternatively contact:

Michael Nidd
03 477 8870 or 09 379 0055


The information contained in this publication is intended as a guide only.  It does not constitute legal advice and should not be relied upon as such.  Professional advice should be sought before applying any of the information to particular circumstances.  While every reasonable care has been taken in the preparation of this publication, Farry and Co. does not accept liability for any errors it may contain.

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