Tribunal clears realtor after buyer claimed he didn’t disclose neighbouring property’s gang connections

Did a real estate agent know gang members lived next door to the property he was selling?

That's the question a tribunal considered recently after the buyer, who bought the place sight unseen, discovered who was occupying the neighbouring Kāinga Ora property.

Later, she found out that the agent had even cancelled an open home for the property when he saw gang members congregating nearby for a tangi on the same morning he was to be showing people through.

The eventual buyer complained to the Real Estate Authority but it decided not to investigate the matter further.

The woman has since appealed that decision to the Real Estate Agents Disciplinary Tribunal, which this week published a finding that the realtor had done nothing wrong.

The key issue the tribunal considered was whether the realtor, whose name was suppressed, knew the property was inhabited by gang members as opposed to simply congregating there for a one-off tangi.

On the morning the house was to be shown in January 2022 the realtor, concerned by the number of patched gang members he saw nearby, asked the property owner if he wanted to cancel the open home.

"… I've never before heard of a gang problem around there. Just our bad luck," the vendor replied, before agreeing to cancel the viewing.

Several days later the eventual buyer, whose name was also suppressed by the tribunal, contacted the realtor and within the week made an offer without viewing the property in person.

Instead, the agent walked her through the house while on a video call and she says he deliberately did not pan the camera to show the neighbouring property.

When she took possession in March of the same year she was concerned at the state of the house next door, with piles of rubbish left outside it, before finding out some of the occupants had gang connections.

In her complaint, the woman said she had concerns for her safety and decided to renovate the house and move out.

However, when she went to sell the property in June she didn't mention the same concerns she'd had with the neighbours and wrote instead; "Happy with location, good neighbours."

Then in July she made a complaint to the agency and said she never would have purchased the house if she'd known about the gang activity in the area.

According to the purchaser, she moved into the property in March 2022 and immediately noticed broken-down vehicles, overgrowth, trolleys and rubbish outside the corner property.

She spoke to locals who frequently alluded to the gang house and she became concerned for her safety and sanity.

In her complaint, she claimed the realtor knew that gang associations would deter buyers so he made an effort to ensure they wouldn't find out.

She did not buy the house to 'flip it', as he alleged, but intended to slowly renovate it over a few years while living there.

By contrast, the agent said the vendor did not mention any issues with the neighbours and generally found the area quiet and peaceful.

Then on the day of the open home in 2022, he said he saw lots of patched gang members riding or driving through town and then arrived at the property where there were groups of people nearby.

One of them told the realtor there was a tangi happening that day. He considered it was a one-off event or a rare occurrence and didn't know the people in the neighbouring property had gang affiliations until the complaint from the purchaser was made.

When the Real Estate Authority investigated the complaint they interviewed people who lived on the street with several giving statements that they were aware that several gang members lived in the house and in the area.

However, they said their presence was not especially overt nor were they disruptive.

Another realtor who acted for the woman who purchased the property advised her that she would have to disclose the gang's presence to any prospective buyer.

She told the authority that at the open homes, it was very clear that patched gang members were going in or coming out of the corner property and prospective buyers would pull up, see the state of the corner property and drive away without attending the open home.

The authority found that the link between a one-off tangi and a sustained gang presence in the area wasn't established and didn't have to be disclosed.

Its investigation concluded that beyond the tangi, which was an isolated event, it was not able to find that the realtor had any reasonable knowledge about a presence in the area.

Unhappy with the authority's decision the woman appealed it and it was bumped up to the Real Estate Agents Disciplinary Tribunal which this week also dismissed her complaint.

"Our starting point is that the corner property was not a gang pad, but a Kāinga Ora house which since about 2019 had been occupied by tenants, one or more of whom were gang members or were affiliated with a gang," its ruling reads.

"We accept the evidence as to the general eyesore state of the corner property. However, there is no presumption such properties signal a gang."

The tribunal found that a single tangi where gang members were present didn't necessarily indicate that there was an ongoing gang presence at the house.

"We accept his [the realtor's] evidence that he did not see a gang presence at any other time," its ruling reads.

"We find that given the knowledge of the licensee, he was not required to disclose to the purchaser the cancellation of the open home due to the gang tangi that day, let alone the gang connections of the corner property unknown to him.

"The corner property was not a gang pad. The tangi was a one-off event. The licensee acted competently and in good faith."

* This story originally appeared in the New Zealand Herald.