Assessment 3

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School

International College of New Zeland *

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Course

RES420

Subject

Accounting

Date

May 20, 2024

Type

pdf

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Uploaded by SuperHumanCoyotePerson1017

Page 1 Task 1: Fair Trading Act 1986 (FTA) Explain the three different elements of the Fair Trading Act in relation to real estate below, and provide a real estate example for each. a. Misleading and deceptive conduct generally (section 9). Misleading and deceptive conduct are classified as a civil offence. Misleading and deceptive conduct and false representations. Businesses must not mislead or deceive you about the things they sell. This covers anything written or said about products or services, including e.g.: advertising. For example, excessive photoshopping on photographs of the property may be misleading or deceptive, as they give a viewer an impression of the property that is different from its true nature. Or another example is a 'buy one get one free' offer. If you raise the price of one item to make up the cost of the second “free” item, this would be considered to be misleading. People have to remember that, everyone has a different level of knowledge, therefore what you know or understand does not necessarily make sence to somebody. Be clear about advertising something because it is easy to create a misunderstanding. If you did something wrong by accident you still have to face the law. If you have committed misleading or deceptive conduct in trade or in an offer of employment, or if an individual has committed such conduct on your behalf, you will have committed a breach of the law. b. False representations and misleading conduct in relation to land (section 14). It can be a criminal offences when someone making a false representation. In relation to land: prohibits false or misleading representation. Conduct in relation to the sale or possible sale or promotion for sale of an interest in land and also apply to real estate work. Or deceptive or is likely to mislead or deceive. It is against the law if salesperson to knowingly hide or give incorrect information of buying and selling property. For most people, their home is their greatest asset and when it comes time to sell or lease it, they put their trust in a property agent. Honesty and transparency in the real estate industry are essential. For example, giving incorrect information about the area of land belonging to a property, e.g. stating that a property has larger land than it actually has or lies about the true price. Or there is a nice and well designed handcrafted house. It used to be but now it is an old house in a poor/weak condition.

Page 2 c. Unsubstantiated representations (section 12A). If something is unsubstantiated, it has not definitely been proved to be true. Unsubstantiated representation in not established as true by evidence or demonstration . An unsubstantiated representation is a claim made in relation to the sale of property that does not have any reasonable basis whether statements made within on websites, marketing materials, verbal statements made by a salesperson. Real estate agents should look at their advertising and business practices to ensure that they accommodate this change. You need to be vigilant and take steps to ensure that any statements you and your staff make (whether verbally to a prospective purchaser or in advertising) are accurate, genuine and can be substantiated. Note: Please ensure explanations are in your own words and not copied directly from the legislation. (Word count guideline: 75 words per element) Task 2 – Contract and Commercial Law Act 2017 (CCLA) Explain the purpose of the Contract and Commercial Law Act in relation to misrepresentations in real estate. Include in your explanation two remedies that are available to complainants under this Act. (Word count guideline: 100 words) Under the Contract and Commercial Law Act 2017, if a party is induced to enter a contract due to misrepresentation, that party is entitled to damages. It is irrelevant whether the other party made the misrepresentation innocently or fraudulently. The party affected by a serious misrepresentation can cancel the contract. A salesperson It is against the law for either a real estate agent or private seller to knowingly hide or give incorrect information about a property. This is called misrepresentation. Misrepresentation is when one party makes a false statement about a past or existing fact that induces another party to enter into a contract. If there is a finding of misrepresentation, the party misrepresenting the issue may have to pay the other party damages. For example, if the owner tells the buyer there are no leaks when they knows the house has had problems with leaks in the past. If your contract provides a remedy in case of a breach of contract or misrepresentation, that remedy can take effect. For example, your contract may state that if one party fails to fulfil their obligations, that party must provide compensation to cover the loss.

Page 3 Task 3 – Scenarios For each of the five scenarios below, answer the following questions: a. What has the salesperson done wrong? Explain what the salesperson has done that could be cause for rules of the Code or legislation to be breached. b. What section of the Fair-Trading Act 1986 has been breached? If appropriate, what section of the Contract and Commercial Law Act 2017 would enable the customer to claim a remedy? c. Identify three relevant rules from the Real Estate Agents Act (professional Conduct and Client Care) rules 2012 (the Code) that the salesperson has breached. (Word count guideline: 75 words per scenario) Scenario 1, I loved the townhouse in Tui Street and wanted to make an offer on it. There was another townhouse down the same driveway, so I would need to fence the property as I have a dog. When I discussed this with the salesperson, he said, “this would be an easy section to fence, no problem at all”. I also told the salesperson that I was a little nervous to make an offer as I struggled to understand everything he was talking about, and the documents he gave me looked very confusing. He also spoke very quickly and English is not my first language. The salesperson told me ‘everything will be okay’, this is a standard sale and purchase agreement and the home is great, you will love it. The salesperson did not recommend that I seek legal advice but thankfully, I decided to get my lawyer to check the sale and purchase agreement before I signed it. The lawyer told me that the townhouse had a cross lease record of title, and I would need permission from the owner of the other townhouse to put up a fence. If I purchased the home and couldn’t fence it, I would not have been able to keep my dog at the property. I did not go ahead with the purchase and made a complaint to the salesperson’s Branch Manager. a. What has the salesperson done wrong? Explain what the salesperson has done that could be cause for rules of the Code or legislation to be breached. The salesperson who wanted to sell the property had not read the cross lease details. However, it is important to read the lease itself to find anything that might be a problem. For example: restrictions on keeping pets … etc If there is a request all salespersons must make the Code available to anyone. It is very important to always send an email to the client or customer suggesting they seek legal advice. In this way salespersons have evidence of having met their obligation. Salespersons should be careful in situations where the customer or client is unfamiliar with the process of buying and selling properties, especially who isn’t reasonably fluent in English. The Commerce Commission and the Courts expect from any salespersons to be careful not to mislead.

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