The Vendor Says Keep the Leaky Home Claim Quiet
Tom lists a 1970s three-bedroom home with monolithic cladding. Before signing, the vendor shows Tom a builder's report recording moisture readings above 20% in two walls and a pending Weathertight Homes claim lodged with the Ministry of Business, Innovation and Employment. No repairs have been signed off by council. The vendor says: 'That's private. Don't put it in the listing and don't tell buyers - it's being dealt with.' Tom prepares advertising that describes the home as 'solid and well-maintained'. At the first open home, a buyer asks Tom directly: 'Has this place had any leaks or weathertight problems?' The vendor is standing nearby and mouths 'no'. Tom knows the buyer has a young family and is pre-approved. The vendor later instructs Tom to remove a clause in the agency agreement that requires disclosure of known defects.
1. How should Tom answer the buyer's direct question about leaks and weathertight problems?
Read the worked answer
Tom must not answer 'no'. The Code of Conduct and Client Care Rules 2012 require a licensee not to mislead a buyer and not to withhold information that should fairly be disclosed. A pending Weathertight Homes claim and a builder's report with elevated moisture readings are material facts that a reasonable buyer would want to know, particularly where no council sign-off has been obtained.
The vendor's confidentiality instruction does not authorise a false answer. Tom should tell the buyer that there is a pending weathertight claim and that a builder's report exists, and he should recommend that the buyer obtain independent advice and their own report. If the vendor has authorised release of the report, he can provide it. If the vendor refuses, Tom must not continue to market the property as though the issue does not exist. He should excuse himself, advise the vendor that he cannot lie, and if the vendor maintains the instruction, terminate the agency agreement and report the position to his branch manager.
2. What should Tom do about the vendor's instruction and the proposed removal of the disclosure clause?
Read the worked answer
Tom should explain to the vendor, in plain terms, that the instruction cannot be followed. The disclosure clause reflects the licensee's professional obligation; it is not a term the vendor can simply delete to make a known defect disappear. Removing it would not change Tom's duties under the Code and would create a misleading record.
He should advise the vendor to disclose the claim and the report in the listing and to obtain proper advice about the property's condition. If the vendor refuses, Tom should decline to act further. He should document the advice given, the vendor's instructions, and his decision to terminate if that becomes necessary. He should also correct the existing advertising immediately, because 'solid and well-maintained' is misleading while the moisture and claim issues remain unresolved.
3. What are the risks if Tom follows the vendor's instruction instead?
Read the worked answer
If Tom follows the instruction, he risks a disciplinary complaint and action by the Complaints Assessment Committee or the Disciplinary Tribunal. Penalties can include censure, fines, conditions on his licence, suspension or cancellation. The agency also faces reputational and licence risk.
The buyer may suffer financial loss and could bring a civil claim against Tom and the agency for misleading conduct. The vendor is exposed too, but that does not protect Tom: he has an independent professional duty. The fact that the vendor instructed him to stay quiet is not a defence. The safer and lawful course is to insist on accurate disclosure, correct the marketing, and walk away if the vendor will not allow it.