Conflict of interest
If you are carrying out real estate agency work and you or someone connected to you personally or professionally has an interest in the property or business being sold or wants to buy it, you must follow specific procedures set out in the Act.
If you are engaged, directly or indirectly, in selling a property or business that you or anyone connected to you personally or professionally owns or has a financial interest in, then you must disclose that conflict of interest to the buyer in writing. You must inform the buyer if you or the person(s) connected to you will benefit financially from the transaction.
You can use the disclosure of other benefits template.
If you are engaged, directly or indirectly, in selling a property or business that you or anyone connected to you personally or professionally is interested in buying, you must take the steps described below.
We also recommend that you no longer act for the vendor and that another agent from your agency represents them. It is important that the vendor has someone independent working for them to sell their property.
If you are a one-person agency, we recommend the vendor goes to another agency or that you deal directly with the vendor's lawyer.
The Real Estate Agents Act 2008 sets out specific rules to protect buyers and vendors in the event of a conflict of interest. The Act defines someone connected to you personally or professionally as:
- any partner you may have under a partnership agreement
- anyone in your employment
- a branch manager or salesperson engaged by you
- your spouse or civil union or de facto partner
- your child, grandchild, brother, sister, nephew or niece or their spouse or civil union or de facto partner
- a grandparent, parent, aunt or uncle of the licensee or their partner (under a partnership agreement), their employee or a salesperson or branch manager engaged by them or their partner (spouse, civil union or de facto partner)
- any other child cared for by you, your spouse or your civil union or de facto partner
- your parent(s) or spouse of your parent(s) or their civil union or de facto partner
- any entity that has an interest in you or in which you have an interest (that is not an entity listed on the New Zealand Stock Exchange).
In the case of an agent that is a company, the above will include every employee, contractor and shareholder of the company.
Things you must do
Inform the vendor of the conflict of interest in writing and ask them to sign the consent form
It is important that the vendor has informed consent about the conflict of interest — simply declaring that there is a conflict and asking them to sign the form isn't enough. You must explain to the vendor what the conflict means. This means that having received disclosure from you, they give their consent to their property or business being sold to you or someone connected to you.
You must give the vendor an independent valuation
You must provide the vendor with a valuation of the property by an independent registered valuer or, if it is a business, by an independent chartered accountant.
This must be provided at your expense and is additional to the appraisal of the value of the property that you have already provided.
If the vendor decides to sign the consent form before receiving the independent valuation
You must indicate a provisional valuation of the property on the consent form and then give the vendor the valuation made by an independent registered valuer or chartered accountant within 14 days of the vendor signing the consent form.
Read more about provisional valuation here.
If the independent valuation is greater than the provisional valuation you have provided
The vendor can cancel the contract for the sale of the property.