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NZ Real Estate Agent (L6) study materials
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NZ Real Estate Agent (L6) practice questions

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Question 1Real estate agency work and the regulatory framework

Under the Real Estate Agents Act 2008, which body is responsible for licensing real estate agents, branch managers and salespersons?

  1. The Real Estate Institute of New Zealand
  2. The Disputes Tribunal
  3. The Real Estate Agents Authority Correct answer.
  4. The Commerce Commission

Explanation

The Real Estate Agents Authority (REAA) is the independent Crown entity established by the Real Estate Agents Act 2008 to license and regulate the industry. It issues licences, sets conduct expectations and oversees the complaints process. The other bodies listed have different statutory functions and do not license agents.

Question 2Real estate agency work and the regulatory framework

A salesperson wants to move from one licensed agency to another. Who must apply for the new licence or licence variation reflecting that change of employer?

  1. The Real Estate Institute of New Zealand automatically on notification
  2. The former agency's branch manager on the salesperson's behalf
  3. The new agency's client, as part of the agency agreement
  4. The salesperson, with the application made through the new agency's branch manager Correct answer.

Explanation

A salesperson's licence is tied to the agency they work for, so a change of employer requires the licence to be updated. The salesperson applies, and the application is made through the branch manager of the new agency who supervises them. Neither the old employer nor a client has any role in applying.

Question 3Real estate agency work and the regulatory framework

Which statement best describes the fiduciary duty an agent owes a client under the agency relationship?

  1. The agent owes the same duty to the buyer as to the seller
  2. The agent must obtain the highest possible price regardless of the client's instructions
  3. The agent must act in the client's best interests and avoid conflicts of interest Correct answer.
  4. The agent may accept a secret commission from a buyer if it benefits the client

Explanation

An agent is a fiduciary and must put the client's interests ahead of their own, disclose conflicts and not profit secretly from the relationship. The duty is defined by loyalty and good faith, not by a guarantee of a particular price. Buyers are generally not the agent's client and do not receive the same fiduciary duty.

Question 4Real estate agency work and the regulatory framework

A licensee is completing a written agency agreement. Which element is required for the agreement to be enforceable against the client?

  1. It must be in writing and signed by the client and the agent Correct answer.
  2. It must be approved in advance by the Authority
  3. It must state a fixed commission amount in dollars
  4. It must be witnessed by a Justice of the Peace

Explanation

The Real Estate Agents Act requires agency agreements to be in writing and signed by the parties before the agent can claim commission. There is no requirement for a Justice of the Peace or prior Authority approval, and commission may be expressed as a percentage or fixed amount.

Question 5Real estate agency work and the regulatory framework

Under the Act, after what period may either party cancel a residential sole agency agreement if its agreed term extends beyond that period?

  1. 24 months
  2. 90 days Correct answer.
  3. 12 months
  4. 30 days

Explanation

For a residential sole agency agreement with a term longer than 90 days, either party may cancel after 90 days. This is a cancellation right, not a maximum term or automatic expiry. The agreement can specify a longer term, but that does not remove this right.

Question 6Real estate agency work and the regulatory framework

Under the Act, when must a licensee provide a prospective buyer with a written disclosure of any rebate, commission or benefit the licensee will receive in connection with the sale?

  1. Within 10 working days after settlement
  2. Only if the buyer asks for it in writing
  3. Only when the buyer is represented by another agent
  4. Before the buyer enters into the sale and purchase agreement Correct answer.

Explanation

Licensees must disclose any rebate, commission or benefit they receive in connection with a transaction before the buyer becomes bound. Disclosure must be made proactively, not only on request, and must occur before the agreement is signed. Post-settlement disclosure would defeat the purpose of informed consent.

Question 7Real estate agency work and the regulatory framework

Which of the following is a ground on which the Complaints Assessment Committee may find a licensee guilty of unsatisfactory conduct?

  1. The licensee charged a commission the client considers too high
  2. The licensee declined to reduce their fee after negotiation
  3. The licensee carried out work with a lack of care or competence Correct answer.
  4. The licensee advertised a property on a weekend

Explanation

Unsatisfactory conduct includes conduct that falls short of the standard a reasonable member of the public is entitled to expect, including a lack of care or competence. Charging a lawful commission or choosing when to advertise are not, by themselves, grounds for a finding. The test is about standards of conduct and skill, not client dissatisfaction alone.

Question 8Real estate agency work and the regulatory framework

What is the key distinction between 'unsatisfactory conduct' and 'misconduct' under the Real Estate Agents Act 2008?

  1. Unsatisfactory conduct can only be found by a court, not the Committee
  2. Misconduct applies only to licensees who hold a branch manager licence
  3. Misconduct is conduct that is seriously incompetent or seriously negligent, or that brings the industry into disrepute Correct answer.
  4. Misconduct requires proof of dishonesty in every case

Explanation

Misconduct is the more serious category and captures conduct that is seriously incompetent, seriously negligent, or that brings the industry into disrepute. Unsatisfactory conduct covers lesser departures from expected standards. Both can be determined through the disciplinary process, and dishonesty is not a necessary element of every misconduct finding.

Question 9Real estate agency work and the regulatory framework

A licensee receives a complaint that has been referred to the Complaints Assessment Committee. Which outcome is available to the Committee if it finds unsatisfactory conduct?

  1. Award damages to the complainant for emotional harm
  2. Cancel the complainant's sale and purchase agreement
  3. Order the licensee to undergo training and pay a fine Correct answer.
  4. Impose a term of imprisonment

Explanation

The Committee can impose a range of penalties including censure, orders for training, fines and conditions on the licence. It cannot cancel a private sale and purchase agreement, award general damages, or imprison anyone. Those powers sit elsewhere or do not exist in this disciplinary framework.

Question 10Real estate agency work and the regulatory framework

Under the Real Estate Agents Act, a licensee must not act for both the seller and the buyer in the same transaction without what?

  1. A reduced commission for both parties
  2. The approval of the Authority's chief executive
  3. A statutory declaration filed with the Registrar
  4. The informed written consent of both parties Correct answer.

Explanation

Acting for both parties creates a conflict of interest, so the Act requires informed written consent from both before the licensee can proceed. Approval from the Authority's chief executive is not part of the process. Reduced commission or a statutory declaration would not cure the conflict.

Question 11Real estate agency work and the regulatory framework

Which document must a licensee provide to a client before the client signs an agency agreement, explaining the nature of the agency relationship?

  1. A copy of the licensee's academic transcript
  2. A property inspection report
  3. A written explanation of the agency agreement and the services to be provided Correct answer.
  4. A valuation report prepared by a registered valuer

Explanation

Before a client signs, the licensee must explain in writing the nature of the agency agreement and the services being provided. This supports informed decision-making by the client. An academic transcript, valuation or inspection report is not a prescribed pre-signing disclosure.

Question 12Real estate agency work and the regulatory framework

A licensee is advertising a residential property. Which practice is consistent with the Act's advertising standards?

  1. Using a photograph of a different property that looks similar
  2. Clearly identifying the agency and the licensee in the advertisement Correct answer.
  3. Omitting the agency's name to keep the advertisement clean
  4. Describing the property as 'guaranteed leak-free' without evidence

Explanation

Advertisements must identify the agency and the licensee and must not be misleading or deceptive. Using a different property's photo or making unevidenced guarantees would breach fair dealing requirements. Omitting the agency name also fails the identification requirement.

Question 13Real estate agency work and the regulatory framework

What does 'customer' mean in the context of a real estate transaction under the Act?

  1. Any person who attends an open home
  2. A party the licensee deals with who is not the licensee's client Correct answer.
  3. A person who has signed an agency agreement
  4. A lender who provides finance for the purchase

Explanation

A customer is someone the licensee deals with in a transaction but who is not the licensee's client. A client is the party the licensee acts for under an agency agreement. Attending an open home or providing finance does not create a client relationship.

Question 14Real estate agency work and the regulatory framework

A licensee suspects that a colleague has misappropriated funds held in the agency's trust account. What is the licensee's obligation?

  1. Wait until the annual audit to raise it
  2. Report the matter to the Authority without delay Correct answer.
  3. Return the funds personally and keep the matter confidential
  4. Discuss it only within the agency and take no further action

Explanation

Licensees have a duty to report suspected misconduct, including trust account irregularities, to the Authority promptly. Waiting for an audit or handling it internally risks further loss and breaches the reporting obligation. Personally repaying funds does not discharge the duty to report.

Question 15Real estate agency work and the regulatory framework

Which statement about an agency's trust account is correct?

  1. Trust account funds may be used for agency operating expenses if repaid within 30 days
  2. Trust account records need only be kept for 12 months
  3. Client money must be paid into a trust account and kept separate from the agency's own funds Correct answer.
  4. Trust accounts are optional if the agency holds money for less than a week

Explanation

Money held on behalf of clients must go into a trust account and be kept separate from the agency's operating funds. Using trust money for agency expenses is a serious breach, and trust accounts are not optional based on short holding periods. Records must be retained for the period required by the regulations, which is longer than 12 months.

Question 16Real estate agency work and the regulatory framework

Under the Act, which of the following best describes the standard of conduct expected of a licensee in their dealings with the public?

  1. The licensee must disclose only information that a court orders
  2. The licensee must follow the instructions of any party who pays a fee
  3. The licensee must prioritise the agency's revenue over client interests
  4. The licensee must act honestly and fairly and in accordance with good industry practice Correct answer.

Explanation

The Act sets a standard of honesty, fairness and good industry practice in all dealings. Revenue maximisation or following whoever pays is inconsistent with that standard. Disclosure obligations arise from the Act and the agency relationship, not only from court orders.

Question 17Real estate agency work and the regulatory framework

A licensee is asked by a seller to withhold from buyers the fact that the property has a known weathertightness defect. What is the correct response?

  1. Explain that the licensee must not mislead buyers and the defect should be disclosed Correct answer.
  2. Remain silent and let the seller handle all communication with buyers
  3. Agree, provided the buyer does not ask directly about leaks
  4. Agree, because the seller is the client and controls all disclosure

Explanation

A licensee must not mislead or deceive buyers, and silence about a known material defect can amount to misleading conduct. The client's instructions cannot override the licensee's duty of honesty to other parties. The licensee should advise disclosure and decline to participate in concealment.

Question 18Real estate agency work and the regulatory framework

Which of the following is required for a person to be eligible to hold a salesperson's licence?

  1. They must hold a university degree in property
  2. They must be at least 18 years old and supervised by a branch manager Correct answer.
  3. They must have five years of industry experience
  4. They must own a property themselves

Explanation

A salesperson must be at least 18 and must work under the supervision of a licensed branch manager. There is no degree, experience or property-ownership requirement for a salesperson's licence. The supervision requirement reflects the entry-level nature of the role.

Question 19Real estate agency work and the regulatory framework

A licensee is offered a gift by a buyer after a successful purchase. Which approach is most consistent with the Act's conflict of interest rules?

  1. Accept it privately as a personal matter unrelated to the transaction
  2. Accept it and record it only in the licensee's personal diary
  3. Decline or disclose the gift to the client and the agency so there is no undisclosed benefit Correct answer.
  4. Accept it and split it with the buyer's solicitor

Explanation

Any benefit connected with a transaction must be disclosed to the client and handled transparently to avoid an undisclosed conflict. Accepting privately or recording it only in a personal diary fails the transparency requirement. Sharing it with a solicitor would compound the problem.

Question 20Real estate agency work and the regulatory framework

What is the primary purpose of the Real Estate Agents Act 2008?

  1. To regulate property prices in the market
  2. To replace the sale and purchase agreement process
  3. To promote and protect the interests of consumers and the public in real estate transactions Correct answer.
  4. To maximise commission income for licensed agents

Explanation

The Act's stated purpose is to promote and protect consumer and public interests in real estate agency work. It does this through licensing, conduct standards and a complaints and discipline regime. It does not set prices or replace the sale and purchase process.

Question 21Real estate agency work and the regulatory framework

A licensee receives a written complaint about their conduct. Within what general timeframe should the licensee respond to the Authority's request for information?

  1. Within 6 months of the complaint being received
  2. Within the period specified in the Authority's notice, which is typically 10 working days Correct answer.
  3. Only after the Complaints Assessment Committee makes a finding
  4. Whenever the licensee is next available, with no deadline

Explanation

The Authority sets a response period in its notice, commonly 10 working days, and licensees are expected to respond promptly and fully. Ignoring the deadline or waiting for a finding undermines the process and can itself be treated as a conduct issue. There is no open-ended timeframe.

Question 22Real estate agency work and the regulatory framework

Which situation would most likely amount to 'seriously incompetent' conduct supporting a misconduct finding?

  1. Declining to work with a particular buyer
  2. Advertising a property with a slightly dated photograph
  3. Repeatedly failing to lodge client funds and losing track of trust account records Correct answer.
  4. Charging a commission rate the client later regrets

Explanation

Serious incompetence involves a gross departure from expected standards, such as mishandling client funds and trust records. A regretted commission rate, a dated photograph or declining a particular buyer does not reach that threshold. The focus is on the seriousness of the failure, not on client regret.

Question 23Real estate agency work and the regulatory framework

A branch manager is responsible for supervising salespersons. Which duty is central to that role under the Act?

  1. Setting the commission rate for every transaction
  2. Approving every buyer's finance application
  3. Ensuring salespersons comply with the Act and the agency's obligations Correct answer.
  4. Personally attending every open home held by the agency

Explanation

A branch manager must supervise salespersons so that work is carried out in compliance with the Act and the agency's obligations. That does not extend to attending every open home, setting every commission, or approving buyers' finance. Supervision is about compliance and competence, not doing every task personally.

Question 24Real estate agency work and the regulatory framework

Which statement about continuing professional development (CPD) for licensees is correct?

  1. CPD is required only for branch managers, not salespersons
  2. Licensees must complete the CPD required by the Authority to maintain their licence Correct answer.
  3. CPD can be replaced by years of experience
  4. CPD is optional and only relevant to new licensees

Explanation

The Authority sets mandatory CPD requirements that licensees must meet to keep their licence. The obligation applies across licence classes, including salespersons, and cannot be substituted by experience. CPD is ongoing, not a one-off requirement for new entrants.

Question 25Real estate agency work and the regulatory framework

A licensee is unsure whether a proposed marketing claim about a property is misleading. What is the most appropriate course of action?

  1. Verify the claim with evidence before publishing and remove it if it cannot be substantiated Correct answer.
  2. Publish it and rely on the seller to defend it later
  3. Publish it with a small disclaimer in the footer
  4. Publish it only in online listings, where the rules are looser

Explanation

Licensees must be able to substantiate claims before publishing them; if a claim cannot be supported, it should not be used. Relying on the seller, adding a footer disclaimer, or assuming online listings are exempt does not remove the obligation. The duty of honesty applies across all advertising channels.

Question 26Real estate agency work and the regulatory framework

Under the Real Estate Agents Act 2008, which body hears disciplinary charges of misconduct brought against a licensee?

  1. The Real Estate Authority's licensing team
  2. The Real Estate Agents Disciplinary Tribunal Correct answer.
  3. The District Court
  4. The Complaints Assessment Committee

Explanation

The Act establishes a two-tier disciplinary system: the Complaints Assessment Committee screens complaints and may make findings of unsatisfactory conduct, while the Real Estate Agents Disciplinary Tribunal hears charges of misconduct and can impose penalties such as suspension or cancellation. The Authority administers licensing and education but does not adjudicate misconduct.

Question 27Real estate agency work and the regulatory framework

A licensee is issued with a licence and begins work at a new agency. Which obligation applies to the licensee's written agency agreement with a seller?

  1. It must be in writing and signed by both the seller and the agent before the agency can be enforced Correct answer.
  2. It only needs to be in writing where the property is sold by auction
  3. It can be signed by the agent alone and sent to the seller afterwards
  4. It may be verbal provided commission is agreed before the listing goes live

Explanation

The Act requires agency agreements to be in writing and signed by the parties, and a licensee cannot claim commission unless a valid written agreement is in place. Verbal arrangements do not satisfy this requirement regardless of the method of sale.

Question 28Real estate agency work and the regulatory framework

Which statement best describes the role of the Real Estate Authority (REA) in relation to the industry?

  1. It is an independent Crown entity that regulates licensees and promotes public confidence in the sector Correct answer.
  2. It is a division of the Ministry of Business, Innovation and Employment that sets commission rates
  3. It is a voluntary accreditation body that agencies may join to gain marketing benefits
  4. It is a trade association funded by member agencies to promote their commercial interests

Explanation

The Authority is an independent Crown entity established under the Real Estate Agents Act 2008. It administers licensing, provides consumer information, and supports the disciplinary framework rather than acting as an industry lobby group.

Question 29Real estate agency work and the regulatory framework

A salesperson holds a current licence but moves to a different agency. What must happen for the salesperson to continue working lawfully?

  1. The salesperson must sit the licensing examination again before starting at the new agency
  2. The salesperson must notify the Authority of the change and work under the supervision of the new branch manager Correct answer.
  3. The salesperson may keep working immediately because the licence attaches to the individual, not the agency
  4. The salesperson must wait until the licence renewal date to record the new agency

Explanation

A salesperson's licence must be linked to a licensed agent who supervises the salesperson's work, so a change of agency must be notified to the Authority. Until the new arrangement is recorded, the salesperson is not properly supervised.

Question 30Real estate agency work and the regulatory framework

A licensee is preparing a written appraisal for a seller. Which practice best reflects the Act's expectations for appraisals?

  1. The appraisal may present the highest recent sale in the suburb as the expected price without qualification
  2. The appraisal should be delivered verbally so the seller cannot later rely on it
  3. The appraisal should state a single figure with no supporting evidence to avoid confusing the seller
  4. The appraisal should be supported by evidence of comparable sales and clearly distinguish the estimated value from a registered valuation Correct answer.

Explanation

An appraisal is an estimate of likely selling price and should be backed by evidence such as comparable sales. It is not a registered valuation, and the licensee should make that distinction clear so the seller understands the limits of the opinion.

Question 31Real estate agency work and the regulatory framework

A licensee acts for a vendor under a sole agency agreement. A prospective buyer approaches the licensee directly. What is the licensee's obligation regarding the buyer?

  1. Treat the buyer as a client and negotiate on the buyer's behalf without a separate agreement
  2. Withhold information about the property to protect the vendor's negotiating position
  3. Advise the buyer to obtain independent advice only after an offer is accepted
  4. Treat the buyer as a customer, deal fairly and provide accurate information about the property Correct answer.

Explanation

A person who is not a party to an agency agreement is a customer, not a client. The licensee must deal with customers fairly and honestly and must not mislead them, while the fiduciary duty of loyalty runs to the vendor.

Question 32Real estate agency work and the regulatory framework

A licensee is drafting an advertisement for a property with a leaky bathroom that the vendor has disclosed. Which approach is consistent with the Act?

  1. Include the defect only if a buyer specifically asks about weathertightness
  2. Describe the property as 'in pristine condition' because the rest of the house is sound
  3. Describe the property accurately and include the known defect so buyers are not misled Correct answer.
  4. Omit the defect because the vendor will disclose it during due diligence

Explanation

Advertisements must not be misleading, and a known material defect should be disclosed rather than concealed. Relying on due diligence to correct a false impression created by the advertisement does not cure the misleading conduct.

Question 33Real estate agency work and the regulatory framework

A licensee receives an offer from a buyer on a property listed with another agency. The listing agent is unavailable. What should the licensee do with the written offer?

  1. Tell the buyer the offer is unlikely to succeed and discourage them from submitting it
  2. Present the offer to the vendor only after obtaining the buyer's permission to share their finances
  3. Present it promptly to the vendor through the listing agent or as the agency's procedures require Correct answer.
  4. Hold the offer until the listing agent returns so the vendor is not disturbed

Explanation

Offers must be presented to the vendor promptly; delaying or suppressing an offer breaches the licensee's duty to act in the vendor's best interests and to deal fairly with the buyer. The agency's internal procedures govern how the offer reaches the vendor.

Question 34Real estate agency work and the regulatory framework

Before a buyer signs a sale and purchase agreement, the licensee should ensure the buyer understands which point about the agreement?

  1. That the agreement is legally binding once signed and conditions should be met within the stated timeframes Correct answer.
  2. That the deposit is refundable if the buyer changes their mind
  3. That the licensee has checked the title and guarantees the property is free of defects
  4. That the buyer may cancel at any time before settlement without consequence

Explanation

A sale and purchase agreement becomes binding when signed, and conditions such as finance or LIM must be satisfied within the stated periods. The licensee should encourage the buyer to seek legal advice rather than give legal advice personally.

Question 35Real estate agency work and the regulatory framework

A licensee is asked to release funds from the agency's trust account to pay a deposit to the vendor before the sale becomes unconditional. What is the correct approach?

  1. Release the funds immediately because the vendor has requested early payment
  2. Pay the funds from the agency's general operating account instead
  3. Hold the funds indefinitely without telling either party
  4. Follow the trust account rules and only release funds when authorised under the agreement and agency procedures Correct answer.

Explanation

Client money must be held in trust and released only as authorised by the agreement and the trust account regulations, with proper records kept. Early release without authority exposes the agency and licensee to disciplinary and audit consequences.

Question 36Real estate agency work and the regulatory framework

A licensee wants to recommend a particular conveyancer to every buyer they work with. Which consideration is most relevant under the Act?

  1. No disclosure is needed because conveyancing referrals are outside the Act
  2. The licensee may recommend only a conveyancer employed by the agency
  3. The licensee must disclose any benefit received for the referral and ensure the recommendation is not misleading Correct answer.
  4. The licensee must recommend the cheapest conveyancer available

Explanation

Where a licensee stands to gain from a referral, that benefit must be disclosed so the client can judge the recommendation. Recommendations must also be honest and not misleading, and clients remain free to choose their own adviser.

Question 37Real estate agency work and the regulatory framework

A licensee discovers after settlement that a buyer relied on an inaccurate statement the licensee made about the property's floor area. Which principle is most relevant to the licensee's position?

  1. The licensee is protected because settlement has already occurred
  2. The licensee bears no responsibility because the buyer should have measured the property
  3. The licensee is liable only if the buyer can prove deliberate deception
  4. The licensee may be accountable for misleading conduct even where the error was unintentional Correct answer.

Explanation

Misleading conduct does not require intent; a licensee can be held accountable for an inaccurate representation that a buyer reasonably relied on. Settlement does not extinguish that accountability, and the licensee should take care to verify figures before publishing them.

Question 38Real estate agency work and the regulatory framework

An agency principal is reviewing supervision arrangements. Which arrangement best meets the Act's expectation for supervising salespersons?

  1. Salespersons are left to manage transactions independently because they hold individual licences
  2. Supervision is documented once at induction and not revisited
  3. A licensed agent actively oversees salespersons, reviews their work and is available for guidance on transactions Correct answer.
  4. Supervision is delegated to the agency's receptionist to manage diaries

Explanation

A salesperson must work under the supervision of a licensed agent, and that supervision must be active rather than nominal. The agent is expected to oversee transactions, provide guidance and ensure compliance with the Act and the code of conduct.

Question 39Real estate agency work and the regulatory framework

A licensee is considering buying a property that their own agency has listed. Which course of action best manages the conflict under the Act?

  1. Wait until the listing expires and then approach the vendor directly
  2. Proceed with the purchase quietly because licensees are entitled to buy property like anyone else
  3. Have a colleague sign the agreement on the vendor's behalf without telling the vendor
  4. Disclose the interest in writing to the vendor and take steps to ensure the vendor is independently advised and not disadvantaged Correct answer.

Explanation

A licensee who wishes to buy a property listed by their agency has a conflict between personal interest and duty to the vendor. The conflict must be disclosed in writing and managed so the vendor receives independent advice and a fair process, in line with the fiduciary duty owed to the client.

Question 40Real estate agency work and the regulatory framework

A licensee is concerned that a client's instructions would require them to act in a way that conflicts with the code of conduct. What is the most appropriate response?

  1. Decline to follow the instruction, explain the obligation to the client and seek guidance from the agency or the Authority Correct answer.
  2. Resign from the agency without informing the client or the Authority
  3. Follow the client's instruction because the client is the principal and the licensee acts as their agent
  4. Follow the instruction but record the client's direction in the file as a defence

Explanation

A licensee's obligations under the Act and code of conduct are not overridden by a client's instructions. The licensee should decline the improper instruction, explain why, and escalate internally or to the Authority where uncertain, rather than comply and rely on a file note.

Question 41Professional conduct, ethics and the Code of Conduct

Under the Real Estate Agents Act 2008, which body hears complaints about a licensee's alleged breach of the Code of Conduct in the first instance?

  1. The Real Estate Agents Disciplinary Tribunal
  2. The Ombudsman
  3. The High Court of New Zealand
  4. The Real Estate Authority (formerly the Real Estate Agents Authority) Correct answer.

Explanation

The Real Estate Authority receives and assesses complaints and can refer serious matters to the Disciplinary Tribunal. The Tribunal hears the charges that the Authority lays; it does not receive complaints directly from the public. The High Court and Ombudsman have no first-instance role in licensee discipline.

Question 42Professional conduct, ethics and the Code of Conduct

A licensee is acting for a vendor and also introduces a buyer who wants the licensee to represent them in the same purchase. What does the Code of Conduct require?

  1. The licensee may act for both parties only if no commission conflict arises
  2. The licensee may act for both parties if the vendor agrees, because the vendor is the principal client
  3. The licensee must not act for both parties in the same transaction under any circumstances
  4. The licensee may act for both parties provided both give written consent after full disclosure Correct answer.

Explanation

The Code permits dual agency only where there is informed consent in writing from both parties after full disclosure of the risks and the licensee's position. Without that written informed consent the licensee cannot act for both sides. Consent from one party alone is insufficient.

Question 43Professional conduct, ethics and the Code of Conduct

A licensee receives a confidential written offer from a buyer and, without authority, tells another prospective buyer the amount. Which obligation has the licensee most directly breached?

  1. The obligation to act in the client's best interests only
  2. The obligation to disclose in writing all known defects
  3. The obligation to account for money held in trust
  4. The obligation to protect the confidentiality of information obtained in the course of agency work Correct answer.

Explanation

Confidential information gained through the agency relationship must not be disclosed without the client's authority. Revealing an offer's amount to a competing buyer breaches that confidentiality duty and can also harm the vendor's bargaining position. Trust accounting and defect disclosure are separate obligations.

Question 44Professional conduct, ethics and the Code of Conduct

A licensee markets a property as having a 'self-contained granny flat' when the flat has no separate kitchen and is not lawfully able to be rented separately. What is the licensee's position under the Code?

  1. The licensee has breached the duty to be honest and must not mislead, even where the vendor supplied the claim Correct answer.
  2. No issue, because the vendor supplied the description and the licensee merely repeated it
  3. No issue, because buyers are expected to make their own enquiries about the property
  4. The licensee is protected because the advertisement carried a disclaimer

Explanation

A licensee must not mislead or conceal material facts and cannot hide behind vendor-supplied information; the licensee must verify or qualify claims made in marketing. A disclaimer does not cure a misleading statement about a material feature. Buyers' own enquiries do not relieve the licensee of the honesty duty.

Question 45Professional conduct, ethics and the Code of Conduct

Which statement best describes the standard of care a licensee owes a client under the Code of Conduct?

  1. The licensee need only avoid fraud or dishonesty
  2. The licensee must guarantee a successful outcome for the client
  3. The licensee must exercise the care, skill, and diligence that a reasonable licensee would exercise in the same circumstances Correct answer.
  4. The licensee must follow the client's instructions in every respect, even if unlawful

Explanation

The Code requires licensees to act with reasonable care, competence, and diligence, judged against what a competent licensee would do. It is not a guarantee of results and is more demanding than merely avoiding dishonesty. A licensee must not follow unlawful instructions.

Question 46Professional conduct, ethics and the Code of Conduct

A licensee is asked by a vendor to withhold from buyers the fact that the property has been subject to repeated flooding. How should the licensee respond?

  1. Decline and explain that concealing a material fact known to the licensee would breach the Code Correct answer.
  2. Withhold the information but mention it verbally only if a buyer specifically asks
  3. Comply, because the vendor is the client and the licensee must follow instructions
  4. Comply, because flood history is not a legal disclosure requirement

Explanation

A licensee must not conceal a material fact and must disclose known defects that could affect a buyer's decision. Following a client's instruction to conceal such information would itself breach the Code. Selective verbal disclosure only on request still amounts to concealment.

Question 47Professional conduct, ethics and the Code of Conduct

When must a licensee provide a written disclosure of any potential conflict of interest to a client?

  1. Only when the conflict actually causes a loss
  2. At settlement, once the transaction is complete
  3. Only if the client asks about it
  4. Before the client enters into an agency agreement or otherwise commits to the relationship Correct answer.

Explanation

Conflicts of interest must be disclosed in writing before the client commits to the agency relationship, so the client can make an informed decision. Delayed disclosure defeats the purpose of informed consent. Disclosure is not conditional on a request or on loss occurring.

Question 48Professional conduct, ethics and the Code of Conduct

A licensee holds a buyer's deposit in the agency's trust account. Which statement reflects the Code's requirement about money held for others?

  1. The licensee may hold the deposit in the agency's general business account
  2. The licensee must hold and account for the money properly and must not apply it to the licensee's own use Correct answer.
  3. The licensee may pay the deposit to the vendor before the agreement becomes unconditional
  4. The licensee may use the deposit to cover the agency's operating costs until settlement

Explanation

Money held on behalf of others must be accounted for properly and kept separate from the licensee's own funds. Using client money for the agency's costs or mixing it with general business funds breaches that duty. Payment to the vendor before entitlement is also improper.

Question 49Professional conduct, ethics and the Code of Conduct

A licensee acting for a buyer learns that the vendor is under significant financial pressure and is likely to accept well below the asking price. What does the Code require of the licensee?

  1. Keep the information confidential and not use it to the client's advantage Correct answer.
  2. Tell the buyer client the vendor's circumstances so the buyer can bid low
  3. Tell the vendor that the buyer knows the vendor is under pressure
  4. Disclose the information to both parties and withdraw from the transaction

Explanation

Information obtained about the other party through the agency relationship is confidential and must not be used to gain an unfair advantage. The licensee must not exploit the vendor's position even for the buyer client. Disclosing it to the vendor or to both parties is not the required response.

Question 50Professional conduct, ethics and the Code of Conduct

Which of the following best describes the Code of Conduct's expectation about advertising a property?

  1. Advertisements may use exaggerated claims provided they are obviously marketing puffery
  2. Advertisements must be accurate and must not mislead or create a false impression Correct answer.
  3. Advertisements must be approved by the Real Estate Authority before publication
  4. Advertisements need only be accurate about the price and land area

Explanation

Advertising must be truthful and must not mislead, whether by statement, omission, or overall impression. The Authority does not pre-approve advertisements. Puffery that creates a false impression of a material feature is not permitted, and accuracy is not limited to price and area.