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A couple had to sell their house after they discovered the four-bedroom house they'd just purchased only had consent for two of those rooms.
The two former Barfoot and Thompson realtors who sold the property have each been fined $1000 by the Real Estate Authority after being found guilty of unsatisfactory conduct this year.
"House + house + land" and "earn a little extra income" was some of the marketing material used to sell the property in Swanson, West Auckland in 2018.
The couple who purchased the place were under the impression the property included three bedrooms and a fourth one in a cottage they could rent out.
The money they were lent to buy the property from the bank was conditional on them renting out the cottage. But, it was only after they'd signed the papers and approached a property manager to rent it that they found out it wasn't consented.
In a recently released decision the Real Estate Authority found that advertising for the cottage was misleading. It ruled Lisa Edwards and Andy Lawrence did not take adequate steps to clarify that it could not be separately rented.
It also found that the realtors should have verified that a third bedroom in the main dwelling that was originally intended to be a garage was not consented.
The couple wanted $80,000 in compensation and argued that they overpaid for the property as a two-bedroom house with a garage is worth significantly less than a three-bedroom with a cottage.
Lisa Edwards and Andy Lawrence were each fined $1000 by the Real Estate Authority. Photo / Barfoot and Thompson
They said that Edwards and Lawrence's conduct had played a massive part in their lives over the past three years and had affected their mental health. If the property had been accurately advertised it would have been worth significantly less than the price that they paid for it, the complainants argued.
They thought the purchase of the property was a sound financial decision but because they could not legally rent the cottage they had to sell it.
When they sold the property the unconsented works was clearly disclosed and the couple said this disadvantaged them in the market as potential purchasers were put off.
They said they would never have purchased the property if they'd had the full picture as they would not have been able to obtain finance and "the whole situation would have been avoided".
Lawrence and Edwards declined to comment for this article but told the REA in submissions that they would never intentionally mislead anyone and denied that the marketing for the property was misleading.
They were not made aware that the main bedroom in the main house had previously been two bedrooms and that the third bedroom had been converted from a garage.
They, along with the vendors, did not know that the property had been altered.
The cottage was noted in the marketing as not having building consent, however, it did have a safe and sanitary report.
"The marketing did not state that the cottage could be separately rented. It was made clear that the cottage could only be used by extended family, for personal use or, for friends or visitors for short stays," they said in submissions.
The vendors of the property had obtained a LIM report and the realtors went through it in detail before listing. They also discussed the obligation to disclose any defects or unconsented works.
The couple were advised to check with the council as to the status of the third bedroom in the main house.
The vendors did not consider that they needed to put anything in the Agreement for Sale and Purchase (ASP) as they were advised that it had been consented and the council information seemed consistent with this advice.
After the ASP became unconditional the couple requested a separate rental appraisal of the cottage from their bank and were told this wasn't possible because it could not legally be rented.
Ultimately the REA found that the unsatisfactory conduct was at the lower end of offending and fined Lawrence and Edwards $1000 each.
It said that it took into account that the pair didn't intentionally mislead the complainants and that changes would be made to their practice as a result of the findings made against them.
