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In The Know

2 February 2018

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Today we are launching a new weekly Property Management section within this newsletter, so you can stay in the know, with what is happening in all aspects of Property Management particularly as the Residential Tenancies Act is being reviewed in Parliament over the coming months.

2018 Verifiable Education

Good news, all 2018 Verifiable Training Seminars are now available to book online

Your deadline to book for the North Shore Verifiable Training Seminar on 20 - 21 February is fast approaching; book now and don't miss out! 

The Christchurch Verifiable Training Seminar is scheduled for 7 - 8 March and spaces are limited.

Check out our Education page for all our nationwide sessions happening this year.

Please note: numbers are limited in some locations, so please make sure you secure your spot.

Region Dates Location  
North Shore Auckland 20 - 21 Netball North Harbour Book Now
Christchurch 7 - 8 The Atrium Book Now
Queenstown 21 - 22 Mercure Queenstown Book Now
Dunedin 11 - 12 The Dunedin Centre Book Now
Gisborne 11 - 12 Emerald Hotel Book Now
Thames 2 - 3 War Memorial Civic Centre Book Now
Whangarei 9 - 10 Toll Stadium Book Now
New Plymouth 16 - 17 Novotel Book Now
Hamilton 23 - 24 Hamilton Working Mans Club Book Now
Invercargill 23 - 24 Ascot Park Hotel Book Now

Tickets for 2018 REINZ 15th Annual Fishing Tournament are now on sale!

Friday 2 March 2018, weigh-in from 3pm - 4pm at Auckland Sailing Club.

This is gearing up to be a great day with amazing spot prizes and $2,250 worth of cash prizes up for grabs - check out the poster.

If you want to join in on the fun, but don't have a boat, get in quick and secure your spot on on the Property Press charter boat - available now!

Get your tickets here!

Welcome to the new REINZ Residential Property Management Newsletter. Each week we will publish case studies, advocacy updates, links to news items and other useful information for our residential property management members.

REINZ Meets with Housing Minister Phil Twyford to Discuss the RTA

On 26 January, REINZ met with Housing Minister, Phil Twyford. A key agenda item was the regulation of property managers and the amendments to the Residential Tenancies Act. Minister Twyford confirmed that the Residential Tenancies Act is undergoing a very extensive ‘first principles’ review. It remains to be seen which, if any, of the amendments proposed by the Residential Tenancies Act Amendment Bill released last year will carry through to the current review. REINZ will be participating closely in this review, to ensure the voice of our property management members is heard, particularly around the proposal to abolish letting fees.

Minister Twyford is also very interested in REINZs proposals regarding the regulation of property managers and we will be meeting with him again on this critical issue in the coming months. REINZ has produced a consultation paper which includes clauses that can be included in the Real Estate Agents Act to capture property managers.

Further information on the Residential Tenancies Act review and proposals to regulate property managers will be published in this newsletter.

Property Management in the News

Bindi Norwell: Healthy hones yes – but who pays?

How Phil Twyford plans to address the renting crisis

Unregulated property managers hold keys to tenants' fortunes

Case Updates

New High Court ruling Linklater discusses Holler v Osaki

Facts: The Landlord rented the property to several young students (“the Tenants”). The tenancy was terminated early after the Tenants damaged the property. The Landlord tried unsuccessfully in the Tenancy Tribunal and the District Court to claim for the insurance excess she paid, and the replacement costs for two damaged carpets. She did not make an insurance claim for those two carpets because the excess was probably higher than the replacement costs.

The Landlord appealed to the High Court and argued that Holler v Osaki (which confirmed that landlords cannot hold their tenants liable for careless damage, if the property is insured) shouldn’t be applied when the damage was caused by a tenant’s recklessness in breaching their Tenancy Agreement, and where the damage was caused not by a single event (as in Holler v Osaki) but on unspecified dates over an extended period.

Discussion: The Landlord lost in the High Court. The Court upheld the reasoning in Holler v Osaki and considered that provided the damage was caused by carelessness and the property is insured, then the Landlord is barred from claiming against the tenants. The Court said there is no requirement that “carelessness” in this context must be less than “recklessness”, or that the careless damage must have been caused by a single event.

This case is a reminder for landlords to ensure they have adequate insurance cover for their rental property, because the relevant provisions in the Property Law Act would apply so long as the property is insured (regardless of the excess amount and whether the landlord chose to make an insurance claim).

The position remains that a landlord can hold a tenant liable if they can prove the damage was caused intentionally. However, as the Linklater case suggests, the threshold for “intentional” damage is high, and likely excludes damage caused by recklessness.

Click here for the decision

Landlord’s Termination Notice declared Retaliatory and Set Aside

Facts: The tenancy began in mid-2017. Amongst other matters, the Tenant complained that his view has been obscured from the start of the tenancy due to overgrown trees and shrubs and that despite at least 8 visits from either the property owner or the landlord and two trees being removed, the view remained blocked. In November, the Tenant issued a 14-day notice requiring the landlord to remedy the state of the garden. A few hours later, the Landlord issued a 90-day notice to end the tenancy.

The Tenant sought compensation for the garden work and other breaches he alleged the Landlord had committed, and also sought to set aside the Landlord’s termination notice by claiming it is retaliatory.

Discussion: The Tribunal was satisfied that the Landlord took too long to cut back the overgrown trees and shrubs. The Tenant had a reasonable expectation that the work would be completed in a reasonable timeframe. Compensation of $560 was awarded for the inconvenience caused by the overgrown garden and lack of view.

The Tribunal also declared the Landlord’s notice was retaliatory under section 54(1) of the Residential Tenancies Act (“the RTA”) and therefore was of no effect.

It said where there is such a short time between the Tenant issuing a 14-day notice complaining of outstanding maintenance issues, and the Landlord’s termination notice being issued, there is an inference that the Landlord has at least been partly motivated by the Tenant’s actions. This puts an evidential onus on the Landlord to prove, on balance, that the Tenant’s complaint was not the reason for the termination notice.

Property Managers serving termination notices need to be aware of section 54 of the RTA and take note that the Tribunal may consider the timing of the notice to assess whether it is retaliatory.

Click here for the decision

Disclaimer: The information in these case summaries is for general informational purposes only and may only discuss some, not all, aspects of a case. It does not constitute legal or other professional advice and does not replace your company’s internal policies and guidelines. Always check your company’s guidelines, policies and information first and seek legal advice if you have any queries.

"Dear Advisory..."

What qualifies as a "de facto partner" for the purposes of section 134 of the Real Estate Agents Act?

Section 134 of the Real Estate Agents Act requires licensees to make disclosure in the prescribed form, and provide a registered valuation, if they or a “related person” wishes to purchase their client’s property.

Section 137 of the Act describes what a “related person” is. Related persons include a licensee’s spouse, civil union partner, or de facto partner. Relatives and children of these persons may also be captured under section 137. We have been asked whether a “de facto partner” in this context means the person must have been with the licensee for a minimum timeframe, e.g. at least 3 years.

We look to the Interpretation Act for some guidance on this question. Section 29A of the Interpretation Act states that in an enactment, a “de facto relationship” means a relationship between 2 people, aged 16 or older, who are not married or in a civil union, and who are living together as a couple in a relationship in the nature of marriage or civil union. In determining whether 2 people are in a de facto relationship as defined above, a court must consider all the circumstances of the relationship. This means a relationship shorter than 3 years can be considered a “de facto relationship”, so long as the persons involved have been “living together as a couple”.

Therefore, in assessing whether your partner is a “de facto partner” captured by section 134, the question to ask is not only how long you have been together for, but whether you are “living together as a couple in a relationship in the nature of marriage or civil union”. Each relationship must be assessed on its own particular circumstances.

Failure to Complete GST Particulars a breach of Rule 9.9

Facts: This is a CAC decision on the appropriate penalty for a Licensee who failed to indicate, as required on the sale and purchase agreement, whether the the vendor was registered for GST, and to complete the GST schedule if the vendor was so registered.

The Complainants alleged the Licensee misled or failed to advise them properly in relation to GST, causing them a loss of over $70,000. The CAC dismissed this aspect of their complaint and found the Licensee guilty of unsatisfactory conduct solely because he failed to complete the GST particulars on the sale and purchase agreement.

Decision: The CAC imposed a fine of $750 although the Complainants asserted the Licensee should pay them the nominal GST amount. The Committee was unable to conclude whether the incomplete agreement contributed to the Complainant’s problems concerning GST, but considered it was important that the GST particulars had been supplied to their solicitors before settlement. Hence, this was a situation where there was a delay in the Complainants receiving the relevant GST information, rather than a situation where they did not receive the information at all.

This decision is a reminder for all licensees to ensure all material particulars (including the “yes/no” acknowledgement about whether the vendor is registered for GST) is completed on a sale and purchase agreement. Failure to do so is a breach of Rule 9.9 of the Client Care Rules, and can also result in much more serious consequences, such as financial loss for the vendor and purchaser.

REINZ Advisory Service published an Information Sheet on GST and Compulsory Zero-Rating last year with leading accounting firm PwC.

Click here for the decision

Please email any advisory or compliance questions to Sonia Ng, Lawyer, REINZ Advisory Services, and we may feature your question and our response here. This column is intended for general information only and does not constitute legal advice and does not replace your agency’s internal policies and guidelines. Always check your agency’s guidelines, policies and information first and seek legal advice if you have any queries.

REINZ Series of Real Estate Tech Trends and Innovations Part 1

This week, REINZ released Part 1 of a series of Real Estate Tech Trends and Innovations white papers. The first paper covers off Data Driven Opportunity.
Click to read now.