INDUSTRY
Nadine Thomas Industry Insights and Engagement Manager, REA
What are a licensee’s obligations when it comes to building reports? At the Real Estate Authority (REA), we often get calls from licensees wanting to better understand their obligations around property inspection reports (commonly known as building reports). From disclosure obligations to recommending an inspector, here are the answers to your most frequently asked questions.
Vendors can commission a property inspection report and supply this to prospective buyers. If there’s an issue with the information in the vendor’s report and a buyer has relied on this information, the buyer has no recourse against the property inspector because they did not commission the report themselves. This is why you should still advise buyers to seek expert advice and obtain their own property inspection report. It’s a good idea to follow up in writing to summarise any conversations you have about this with prospective buyers.
Do I need to disclose a previous property inspection report? Yes, you must advise prospective buyers if a previous property inspection report has highlighted problems with a property, even if the problem has been resolved, or if a later report states there are no longer any issues with the property. Rule 6.4 of the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012 (Code of Conduct) outlines the need for you to share information with buyers: • A licensee must not mislead a customer or client, nor provide false information, nor withhold information that should by law or in fairness be provided to a customer or client.
60
|
The Real Estate Institute of New Zealand
You must discuss disclosing the existence of any previous reports with your vendor before making any disclosure statements to prospective buyers. If there was an issue that has been remedied, talk to your vendor about what information they can share with potential buyers to show it has been remedied.
Can I provide copies of previous property inspection reports? You shouldn’t provide copies of any previous property inspection reports to prospective buyers without getting the consent of the person who paid for it (for example, the vendor or another prospective buyer). However, this doesn’t stop you from disclosing that an issue was identified in a previous property inspection. If a subsequent report states that there are no issues with the property, you should let prospective buyers know that there have been contradictory reports, and recommend they commission their own property inspection report.
What if the vendors don’t want to disclose information about their property? If you believe an issue identified in a property inspection report needs to be disclosed, explain to the vendor why it should be
