What duty of care does a real estate agent have to a seller in NZ?

What Is an Agent’s Duty of Care to Sellers in NZ?
When you appoint a real estate agent, you take on a principal and the agent becomes your agent. This relationship creates specific legal duties. Here is what they are.

The fiduciary nature of the agency relationship
When you appoint a real estate agent to sell your property, the agent acts as your agent in a legal sense, they are authorised to act on your behalf in the sale transaction.
This creates a fiduciary relationship: the agent owes you duties of loyalty, honesty, and good faith. These are not just professional standards, they are legally enforceable duties.

The duty to act in the vendor’s best interest
The agent’s primary duty is to act in the vendor’s best interest in the sale.
This means: seeking the best reasonably achievable price in the current market, disclosing any information that would affect your decision-making (including information that may reduce the offered price), not withholding offers from vendors, and not prioritising the agent’s commission interest over the vendor’s sale outcome.

The duty to disclose relevant information
The Real Estate Agents Act and the code of conduct impose specific disclosure obligations. The agent must disclose: any conflict of interest (for example, if the prospective buyer is a relative or business associate of the agent), any fact that would be likely to influence a vendor’s decision about the sale (including negative feedback from multiple buyers about the price), and any material change in market conditions that affects the campaign strategy.

The duty of honest communication
Agents must not mislead vendors about the state of the market, the likely sale price, or the level of buyer interest. Inflating buyer interest to prevent vendors from adjusting strategy, or overstating comparable sales to justify a higher asking price, are both breaches of the duty of honest communication. The code of conduct specifically prohibits misleading or deceptive conduct.

Remedies for breach
If an agent has breached their duty to you as vendor, through dishonesty, concealing offers, acting in conflict of interest, or other misconduct, you have several potential remedies: a formal REA complaint (see Post 476), a civil claim through the courts for damages arising from the breach, or a Disputes Tribunal claim for smaller amounts. Document your concerns and seek legal advice on the most appropriate remedy for your specific situation.

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Paul Sumich is a Whangarei-based real estate professional with local Northland expertise. Find more at paulsumich.co.nz/blog