REA Warns Undertaking Real Estate Agency Work Without A Licence From REA Is An Offence

The Real Estate Authority (REA), the independent conduct regulator of the real estate industry, warns that undertaking real estate agency work in trade on behalf of another person without a licence from the REA, is an offence under the Real Estate Agents Act (‘the REA Act’) and may result in prosecution [1].

REA Chief Executive Belinda Moffat says the REA Act protects the interests of consumers and promotes confidence in real estate agency work by requiring that individuals and companies may only undertake real estate agency work if they have a licence issued by REA. To obtain a real estate licence people must meet a range of criteria including education and age requirements and must be fit and proper. Once licensed they are subject to the professional Code of Conduct overseen by REA, and REA’s complaints and discipline processes.

“Anyone undertaking real estate agency work is acting on behalf of another on what will usually be a significant transaction for that person. This is a close relationship with clients, requiring a considerable degree of trust and confidence, especially with regard to handling confidential information and significant amounts of client funds. Unlicensed trading is a serious concern because it means consumers of those services do not have the protections provided by the real estate regulatory regime such as professional conduct standards, and recourse to a formal complaints and disciplinary process overseen by REA.”

Ms Moffat says instances of unlicensed persons overtly claiming to be real estate agents are rare, but REA is concerned about unlicensed trading issues arising in a dynamic and evolving property sector.

“We are concerned about reports we receive of businesses and individuals who do not hold a real estate licence from REA providing services that could meet the definition of real estate agency work. If the service offered has the purpose of bringing about a real estate transaction, then our focus will be on whether the person providing that service ought to have a real estate licence. As the industry regulator, REA aims to take an engage and educate approach, unless it is clear that the unlicensed activity is serious and/or intentional and requires a stronger response.

Licensed real estate professionals work hard to uphold the integrity and standards expected by the regulatory regime. Trading by those without a licence undermines this, and puts consumers at risk of harm,” Ms Moffat says. Areas of unlicensed trading focus for REA include:

• Companies which own and/or develop property using contractors to act as sales agents. Companies that sell property owned by the company directly to consumers are not required to

1Section 4 of the Real Estate Agents Act 2008 (the Act) describes real estate agency work primarily as “any work done or services provided, in trade, on behalf of another person for the purpose of bringing about a transaction”. This section also describes activities related to property transactions which are not considered real estate agency work, such as mortgage lending.

hold a real estate licence issued by REA. However, a company that engages a contractor or sales agent who does not hold an active real estate licence to act as their representative on property sales may be engaged in unlicensed trading.

• Website/advertising providers offering additional real estate agency services. While the simple act of publishing real estate advertising is excluded from the definition of real estate agency work under the Act, providing services such as writing advertisements, taking marketing photography or managing open homes on behalf of someone else, could be considered unlicensed real estate agency work.

• Formerly licensed real estate agents undertaking real estate agency work without a current salesperson, branch manager or agent’s licence.

• Online property businesses that offer services to enable the buying or selling of real estate and which bring about a real estate transaction. REA encourages operators to take legal advice on whether the REA Act applies to the services being offered, and to engage directly with REA for guidance on the regulatory regime.

There are over 15,000 licensed real estate professionals currently operating in New Zealand. REA advises consumers to check whether anyone working in a professional capacity in a real estate transaction holds an active real estate licence by looking them up on REA’s public register. If they are not licensed, then they are not subject to the Code of Conduct we oversee, and we cannot deal with a complaint if problems in the transaction arise.

Ms Moffat says that where evidence of unlicensed trading is found REA will act.

“We are signalling our intention at this time so that those operating in or around the areas of interest are aware of our focus and, if necessary, take legal advice on compliance.”

“It is important they and the public understand that REA will hold to account those who seek to undertake real estate agency work without a licence and outside of the law.” Ms Moffat says.

[1] Section 4 of the Real Estate Agents Act 2008 (the Act) describes real estate agency work primarily as “any work done or services provided, in trade, on behalf of another person for the purpose of bringing about a transaction”. This section also describes activities related to property transactions which are not considered real estate agency work, such as mortgage lending.

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