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False advertising

Discussion in 'Legal Issues' started by cherubym, 24th Jan, 2016.

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  1. cherubym

    cherubym Well-Known Member

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    Hi,
    I'm wondering if an agent lists a property claiming 3 Bed, 2 bath, where 1 bath is not approved by council. Is it legal? Can we notify REIV or equivalent in other state to take an action against that agent? Or can the new owner sue the agent for misleading advertisement?

    Thanks!
     
  2. thatbum

    thatbum Well-Known Member

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    Probably.

    Notify yes. Take action - probably not.

    Almost certainly not. Have you suffered any loss?
     
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  3. Scott No Mates

    Scott No Mates Well-Known Member

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    REIV is an agents' body - it don't do nuthin' (unless it hurts their reputation).

    Agent relies on what the vendor tells them, and listed at the bottom of their advert as disclosure.
     
  4. cherubym

    cherubym Well-Known Member

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    Thanks!

    Who looks after the legality part of the adverts? There must be some organizations that can crack down these kinds of misleading deeds?

    So it means that it's vendor's responsibility, if it is illegally listed.
     
  5. Xenia

    Xenia Adelaide Property Manager Business Member

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    Just tell the agent to correct their ad.
    What is all this suing stuff?
     
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  6. cherubym

    cherubym Well-Known Member

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    But most of the agents know well that if a highset is not legal height, but has 3 bedrooms upstairs and 2 rooms downstairs, it is not legal to advertise as 5 bedrooms. But are you saying bathroom is a different story?
     
  7. RPI

    RPI Property Lawyer, Town Planner Business Member

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    If they settled and suffered a loss, and the loss was significant enough to warrant the cost of litigation. There are actions available under Competition and Consumer Act as well as at common law.But not cheap. Although the insurer will sometimes cough up early on and then the quantum of loss does not need be so big.

    After multiple years of fighting with BCC over the use of granny flats being rented separately we finally have a resolution. We are now preparing the case against the agents, the builder, the land owner, the certifier and the marketing companies that sold off these houses as "dual income".
     
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  8. Cactus

    Cactus Well-Known Member

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    Check your contract of sale. I may have done a Reno in the past without permit that may have required one. When I sold my contract may have clearly stated that I may have done these things and that I did not warrant any of them and that the purchaser make all enquirers and take all risk on the this. I may have sold to a woodduck that may not have even read his contract.

    It may be possible to remove all may's from the text when reading.
     
  9. cherubym

    cherubym Well-Known Member

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    I just feel it is not right to mislead buyers.
     
  10. Xenia

    Xenia Adelaide Property Manager Business Member

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    me too - I agree totally
    work on having them correct it. They may not even be aware of it.
    A win win solution is always the best approach.
     
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  11. Cactus

    Cactus Well-Known Member

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    I would guess that 90% of 15 year old established housing has had some illegal work done like opening a living up to dining with hanging beam and no permit.

    This is why DD is important.

    I would not, not buy a place for this reason but If I knew would use the info to negotiate.

    I wonder how many SS/PC members have done a Reno that required a permit either wittingly or not and sold without advising agent and purchasers. I would say bucketloads.
     
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  12. cherubym

    cherubym Well-Known Member

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    Thanks everyone for the replies. Does anyone know if it is easy enough to get a bathroom approved? I understand that could be different with one council to another. Is there typically a cost involved in getting it council-approved?
     
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  13. Cactus

    Cactus Well-Known Member

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    I suspect it Depends on how the bath was created. Was it retrofitted to an existing room or was a new room created. A building inspector should be able to help.
     
  14. Scott No Mates

    Scott No Mates Well-Known Member

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    Only habitable rooms require 2.4m ceilings -bathrooms, laundries, halways, kitchens etc are not habitable rooms and can be of a lower height.
     
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  15. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Agents are not fans of clients with illegal works as the buyer has a right to know this and will always use it to negotiate a price down and it makes a sale that much harder. If the agent is aware they must disclose it if asked. However the buyer must still perform due diligence and not solely rely on the agent disclosure...The agent may not know about the broken roof timbers etc or even know that some of the works are unapproved. Unapproved works aren't always badly done.

    Retrospective approval is VERY difficult to obtain and if plumbing, a slab, foundations etc are involved it likely wont happen. Councils do have a unapproved works process BUT it can result in a demo order especially if unlicensed works are evident. (ie plumbing, electrical, structural, etc).

    A local certifier is a safer initial source of guidance rather than council. They will know what the council attitude is like.
     
  16. JDM

    JDM Well-Known Member

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    I take a slightly different approach to some others in this thread.

    Is it legal? No - In my view it is a breach section 18 of the Australian Consumer Law by the agent and likely a breach of the agent's code of conduct. There would likely be a common law claim also.

    Can we notify REIV or equivalent in other state to take an action against that agent? As has been mentioned, the REIV is a body that acts in the interest of the agents usually, however this would not hurt. Notifying Fair Trading or the ACCC are probably the more appropriate avenues.

    Or can the new owner sue the agent for misleading advertisement? Yes, definitely possible. An agent putting a disclaimer in their ad or using details provided by an owner is NOT a defence.
     
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  17. Jennifer Duke

    Jennifer Duke Well-Known Member

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    Agreed with JDM. As per NSW Fair Trading:

    Intention to mislead not relevant
    The intention of an agent or certificate holder in relation to misrepresentation is not relevant under the Property, Stock and Business Agents Act 2002. What is relevant is the impression a client or customer might gain and whether this would be likely to mislead them.

    Section 52 (1) of the Act states that it is an offence against the Act if in the course of performing functions as a licensee or registered person, another person is induced to enter into any contract or arrangement through:
    • a statement, representation or promise which is false, misleading or deceptive (whether to the knowledge of the person or not) or by
    • concealing a material fact (whether intended or not).
    A defence exists, however, when the agent / certificate holder ‘…did not know, and had no reasonable cause to suspect’, [that his/her] statement, representation, or promise was false, misleading or deceptive [section 52(3)].