'Legal sleepout' and the separated vendor: advertising and confidentiality
Lisa at Harbour Homes lists Peter's three-bedroom home with a converted garage advertised as a 'legal sleepout'. Peter mentioned at the listing appointment that he and his wife had separated and that he needed a quick sale, but asked Lisa to keep that private. The council file shows no building consent for the garage conversion. Lisa's online ad reads: '4 bedrooms, legal sleepout, motivated vendors - relationship breakdown forces sale.' Peter never approved the wording. Buyer Tania inspects, checks the council file, and complains to the agency and the Real Estate Agents Authority. Lisa tells Peter the ad is 'just marketing' and that the separation detail makes the property more appealing. The agency's branch manager is on leave; Lisa is the most experienced salesperson in the office. The ad has been live for six days and has had 1,800 views.
1. Identify the Code of Conduct breaches in Lisa's advertising and conduct. What should she have done before the ad went live?
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Lisa's conduct breaches several Code obligations:
- Confidentiality (Rule 6). Peter told Lisa about his separation and asked her to keep it private. Using 'relationship breakdown forces sale' in the ad is a direct disclosure of confidential personal information. Marketing appeal does not justify it.
- Misleading advertising (Rule 9). 'Legal sleepout' and '4 bedrooms' are misleading if the garage conversion has no building consent. A reasonable buyer would rely on those words. Lisa had a duty to check the council file and describe the property accurately, for example 'sleepout (unconsented)'.
- Vendor approval. Lisa published wording Peter never approved. She should have obtained written approval of the ad and the use of any personal information.
- Supervision (Rule 15). With the branch manager away, Lisa was the most experienced person in the office. The agency still needed an effective supervision and advertising-check process.
Lisa's 'just marketing' response compounds the problem because it shows she does not recognise the accuracy and confidentiality issues.
2. What should Lisa have done before advertising, and how should the property have been described?
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Before advertising, Lisa should have:
- Checked the council file for the garage conversion and any code compliance certificate. If there is no consent, the ad must not say 'legal sleepout'.
- Obtained Peter's written approval of the final wording and the marketing channels.
- Separated marketing facts from private information. 'Motivated vendor' may be acceptable if Peter agrees; 'relationship breakdown' is private and should not be used without specific written consent.
- Recorded the instructions and given Peter a copy of the ad before it went live.
- Escalated to a manager or compliance officer if she was unsure about the consent status.
The correct description would focus on verifiable features: 'three-bedroom home with converted garage/sleepout - buyers to make their own enquiries about consent'. That is accurate and still marketable.
3. What are the likely consequences, and what remediation should the agency undertake?
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Remediation and consequences:
- Correct the ad immediately and keep a record of the correction.
- Apologise to Peter and Tania and explain what went wrong.
- Provide Tania with the council information and do not pressure her.
- Report the matter to the branch manager and the agency's complaints process; the REAA may treat it as unsatisfactory conduct.
- Consider a written apology and training on Rule 6 and Rule 9.
- Review supervision so that ads are checked by a manager when the branch manager is away.
The key exam point is that 'motivated vendor' marketing can be legitimate, but private reasons for sale and unverified legal features are not. Accuracy and consent are the tests.