Right at the end of last year, a High Court judgement was released for the first prosecution under section 141 of the Real Estate Agents Act 2008.  That is the section that prohibits a person who is not licenced under the act from carrying out real estate agency work.  The section came into force on 16 November 2009.

Action had been taken against Home Buyers Limited and its director Francisca  Forster.  Home Buyers Limited is a family business.  They trade property.  Sometimes they find a vendor, reach an agreement for access and an option to purchase and then look for a buyer.

The settlements can happen contemporaneously.  That was what was intended in this instance and documents were drafted on this basis.  In the end, however, the owners entered into an agreement direct with the final buyers and the buyers agreed to pay a fee to Home Buyers Limited.  The purchaser wanted it done this way to make sure they received warranties under the documents.

The end result of the deal was the same.  The seller sold the property, the buyers bought it and the “middleman” received a fee.

Mrs Forster was up front the whole way through the transaction.  She was clear that she was not a real estate agent but there is no doubt that she played a role in finding the buyer and negotiating a sale, albeit that the sale was intended to be from Home Buyers Limited as the vendor.

The court determined that there had been a breach of section 141.  Home Buyers Limited had provided work or services to another party in order to bring about a sale.  The offence had been committed.

The company was fined but the court took into account a range of circumstances in deciding Mrs Forster’s fate.

• it was the first prosecution under section 141 of the Real Estate Agents Act.
• as shareholder and director she would bear the impact of the conviction of Home Buyers Limited.
• the consequences of the conviction would outweigh the gravity of the offending.

Mrs Forster was discharged without conviction.

What are especially interesting, and perhaps a bit scary, are comments made by the judge about property trading.

The judge made a point of saying Home Buyers Limited should not assume that the property trading transaction they had envisaged would not fall foul of the act (i.e. the sale by the owner to Home Buyers Limited and then the on-sale to a third party).  Judge Mallon made a point of recording that the Real Estate Agent’s Authority considered there would have been a breach of the section any way; as the deal had been originally proposed.

By Debra Dorrington