Estate agency fined for charging $30k on private sale

A Nelson real estate agency, which tried to charge a $30,000 selling commission on a property it was only engaged to manage, has lost its dispute with the property owner and been ordered to pay more than $6000 in fines and costs.
The Real Estate Agents Authority has ruled that Summit Real Estate "engaged in unsatisfactory conduct" under the Real Estate Agents Act when it tried to enforce part of its property management contract.

It fined the company $2200 and ordered it to pay the legal fees of $4198 to businessman David Lewis, who last year moved to Blenheim and engaged Summit to manage and lease out his property in Richmond, south of Nelson.

Mr Lewis and the tenant later agreed to a private sales-and-purchase agreement.

However, Summit said it was entitled to charge a 3 per cent commission - or $30,000 - on the sale, citing a clause in the management contract.

Mr Lewis, who argued Summit had done nothing towards the sale but still wanted a commission for it, said he did not notice the clause in the contract when he signed it.

Summit had offered to drop its commission from $30,000 to $12,000 but Mr Lewis refused.

Summit denied it was in the wrong, and if anything Mr Lewis had breached the Act by failing comply with the contract regarding terminating the management agreement and over notifying the tenant the house was going on the market

Summit director Allister Nalder told the authority Mr Lewis had the contract for a week before he signed and they offered to explain it to his wife, but she declined.

In its decision, the authority's complaints assessment committee said the clause was not "hidden in the fine print". However, it was under a section heading that would not have alerted the owner to the clause and ideally it should have been specifically brought to his attention.

It ruled a management contract did not suffice as an agency contract.

The dispute between Mr Lewis and Summit has been followed by local newspapers and also featured on the television show My House, My Castle.

Mr Nalder told the Nelson Mail it would appeal as Summit did not believe the decision complied with the Act.

- NZPA