Real estate agent fined over sale of house with sewerage issues (Ray White, Jones & Associates)

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Property industryConsumer

Consumer Protection is reminding real estate agents about their responsibility to tell prospective buyers certain information about homes offered for sale.

It comes after a State Administrative Tribunal mediation resulted in a reprimand, $1,000 fine and order for $500 costs, for a real estate agency that failed to tell a house-buyer about known sewerage issues.

John L Realty Pty Ltd, formerly trading as Ray White Kwinana and now trading as Ray White (Jones & Associates), managed a Medina rental property for its owners from July 2009 to May 2014. After the tenants reported pipework problems in July/August 2013, a plumbing contractor attended on two occasions to clear blockages between the property and its septic system.

The property manager/real estate agency was advised via the plumbing contractor’s invoice that there was a broken section of damaged pipework between the septic tank and property which would cause problems in the near future. There was also a standard recommendation from the plumber for the owner to connect the property to the now available deep sewer service.

By November 2013 the owners had decided to sell and entered into a selling agency agreement with Ray White Kwinana. In February 2014 an offer was accepted and settlement was in May 2014.

Three days after settlement the tenants reported a toilet blockage and the plumbing contractor, who had attended previously, came back and cleared the blockage, noting on the invoice that rags had to be removed on that occasion. This was when the new owner found out about the pre-existing issues as well as the real estate agency/property manager’s inadvertent nondisclosure of its prior knowledge.

Acting Commissioner for Consumer Protection David Hillyard says not communicating this information to the buyer, even though it was an unintentional oversight, is a breach of the Real Estate and Business Agents Act in contravention of the Code of Conduct for Agents and Sales Representatives 2011.

“Before or after receiving the buyer’s offer, the real estate agent should have disclosed the plumbing contractor’s invoices from July and August of 2013 stating that the property’s pipework to the septic tank was damaged and that further problems would occur if it was not repaired,” Mr Hillyard said.

“It was not otherwise likely the buyers themselves would ascertain these facts because the condition of the septic system was only detectable by a special inspection of the tank and pipes, rather than by routine inspections ordinarily carried out by home-buyers.

“If the potential buyers had known about the issue they could have considered and explored the cost of the recommended option to connect to the deep sewer, which was available. They may then have altered the amount they were offering for the property on that basis.

“We hope this case serves as a reminder to real estate agents in WA that they must disclose things like this to potential purchasers.”

Information about the obligations of those working in WA’s property industry can be found on the Consumer Protection website:

Media contact (Consumer Protection)

Consumer Protection
Media release
02 Aug 2016

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