RES420 - Fundamentals of Real Estate - Waterford Real Estate Ltd Case Study - First Home Buyers - Law Assessment Answer

Assessment Task:

RES420 - Fundamentals of Real Estate Law Assessment Answer

This assignment focuses on the learning you have done in Module 3. The assignment consists of three tasks:
Task 1: First home buyers.
Task 2: Helping new immigrants into the housing market.
Task 3: Forms of co-ownership.

Learning Outcomes

You will be assessed on the following learning outcomes:

• Explain land ownership titles and key property law definitions as they apply to real estate practice.
• Discuss key points of the law relating to ownership (including co-ownership) and transfer of land in New Zealand.

Assignment Scenario

For the purposes of this assignment, you have recently joined the team as the newest salesperson at Waterford Real Estate Ltd, working at the Waterford East branch under the leadership of John Canon. 

Task 1: First home buyers

You are working with customers, Tom and Lucy Bradshaw, who are keen to purchase their first home. Over a period of about 3 weeks, you have shown them several properties, and they’ve shown considerable interest in five of them. You have given them a copy of the certificate of title for each of these properties.

(a) Tom and Lucy mention that they are rather confused by the titles of the five properties. They ask you to

(i) identify the current owner/s of each home, and

(ii) explain each property in terms of tenure. In your explanation, describe how the tenure affects the rights and obligations of the owners.

(b) Lucy says, ‘I have an idea of what a mortgage is, but can you please explain this and the other interests on these titles? Some of these things sound as if they might impact on what we can or can’t do if we bought one of these properties. We really don’t want to make a mistake!’ Identify and explain the interests registered on each certificate of the title listed in (a) above.

(c) Tom says, ‘I’ve been talking to our lawyer, and she says there’s also something called limited as to parcels. She doesn’t think we need to worry about that. Can you please give us a brief explanation?’

Explain this term and describe to Tom and Lucy how such a limitation, if present on a title, would affect them as potential buyers.

Task 2: Helping new immigrants into the housing market

You have been asked by the Waterford Community Centre to talk to a group of new immigrants about property ownership in New Zealand. Most have low levels of English.

(a) You decide to support your speech with a handout because you may have future customers in the audience. Here are the key points you need to include in the handout:

(i) A brief overview of the Torrens land transfer system used in New Zealand.

(ii) Explain what the customer, client, customer’s solicitor and client’s solicitor do, starting with the sale and purchase agreement, and ending with the completed sale.

(iii) Complete this handout by explaining the process of registering the new owner’s details on the certificate of title at LINZ.

(b) You also plan to explain to your audience that people buying and selling real estate may come across the following terms in relation to the land transfer system. Write notes on the terms to add to your handout.

(i) Real property.
(ii) Personal property (three types).
(iii) Ownership.
(iv) Possession (real and personal property).
(v) Lease.
(vi) Licence (inland, as distinguished from a real estate licence).
(vii) Equitable interests and legal interests.
(viii) Indefeasibility.
(ix) Exceptions to indefeasibility.
(x) Registered security.

Task 3: Forms of co-ownership

(a) Jason and Crystal Flood are a young couple preparing to buy their first home. After asking about how they want to structure the ownership, you realise they don’t know about the different forms of co-ownership. Explain the following terms and the effect they have on homeownership:

(i) Joint tenancy.
(ii) Tenancy in common.
(iii) Civil unions.
(iv) Trusts.

(b) Dave Anaru asks to you appraise a small farm. Because you are aware of areas of M?ori land in the region, you order a historic title search, which shows that this may be M?ori land.

(i) What information on the certificate of the title might suggest this? (List three items.)

(ii) What legislation applies to the possible sale of this land? 

(iii) Who could advise you or your client about this?

Assignment 3

Task 1: Annoyed customers and clients.

Learning Outcome

You will be assessed on the following learning outcome:
• Identify relevant points of consumer protection law applicable to real estate practice.

Assignment Scenario

For the purposes of this assignment, you have recently joined the team as the newest salesperson at Waterford Real Estate Ltd, working under the leadership of John Canon. John runs regular training sessions for the sales team and asks for your assistance in preparing some case study material. He’s written a series of scenarios, taken from real-life situations, and asks you to prepare an answer sheet to be handed out at the end of the training.

For each scenario, John asks you to answer each of the following questions:
a) What, if anything, has been done wrong by the salesperson?
b) What legislation (if any) has been breached? (Identify the section and subsection as required). Note, more than one Act may apply in some situations.
c) Has the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012 (the Code) been breached? If so, state the rule(s) that apply.
d) What organisation(s) would deal with such an issue, and why

Task 1: Annoyed customers and clients

1. Barbara Bullock phones the office and says, ‘We drove from the other side of town to see the property at 17 Sentinel Drive because it was advertised as five double bedrooms, and we’ve got a large family. But when we got there, it was more like three double bedrooms, one single bedroom, and another room that I could only describe as a small study. We are very disappointed and annoyed that we wasted our time.’

2. Steve Smith comes to the office and complains, ‘When we listed our home we gave the salesperson a copy of the registered valuation we’d had done about a year ago. He said that because we had that, he didn’t need to do an appraisal. That seemed strange – is it acceptable?’

3. When preparing an offer for Mr and Mrs Kongoola, recent immigrants with limited English skills who are purchasing their first New Zealand business, the salesperson failed to explain the meanings of ‘plus GST’, or ‘unconditional’. The offer was accepted by the client, and the customers will now have to pay $112,500 more than they had expected to pay.

4. Bevan Hall phones and says, ‘Our neighbour, John, has recently put his lifestyle block on the market. It’s a good property, but there’s a massive power pylon in the front paddock. Imagine our surprise when we saw the first ad in the newspaper. It showed the house and paddock, but there was no sign of the pylon. Can a salesperson really delete something like that from a photo?’

5. A salesperson is listing the home of the Harkness family, which is held in trust. The signatories are Mr and Mrs Harkness and their solicitor, Jack Dawson. Mrs Harkness asks whether she and her husband can sign the agency agreement, rather than bothering the solicitor, ‘because he’s very expensive’. The salesperson agrees that there’s no need to involve the solicitor until there are a sale and purchase agreement to be signed. He also fails to give them the New Zealand Residential Property Agency Agreement Approved Guide or advise them to seek legal advice before signing the agency agreement.

6. Maria Tang calls and says, ‘When we bought our first investment property 3 weeks ago, the salesperson assured us that it would rent for at least $480 per week, and that we’d probably get $520 without any difficulty. We relied on that information when working out our budget. But we’ve since found out that this isn’t a popular area for rentals, and our property manager is struggling to find us a tenant who’ll pay more than $440 per week.’

7. A salesperson is showing a 5-hectare lifestyle property to James. When pointing out the boundaries, the salesperson refers to a large, flat paddock on the eastern side as being included in the property. James comments that that paddock is exactly what he wants to develop an equestrian facility, including a dressage arena. In fact, that paddock belongs to the next-door neighbour. The size of the paddock is approximately half a hectare.

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