Vendor in trouble over false advertising

Recently, a Wellington property investment company and one of its directors was warned by the Commerce Commission for making a misleading representation about a property they were selling.

Commission investigations found that Eva Properties Partnership Limited and one of its directors, Jitesh Mistry, told the real estate agent marketing a Wellington inner city property on their behalf that they had resource consent to build four apartments and ground floor commercial space. The advertisements for the property also included the information.

At the time of advertising, although resource consent had been applied for, the Wellington City Council had not granted consent for the property to be developed.

“When making a decision to buy a property, whether it is commercial or residential, a potential buyer is entitled to be provided with the correct information relating to the property,” Adrian Sparrow, the Commerce Commission’s director of Fair Trading said.

This case highlights how agents often rely on the vendor to provide them with accurate information. Previously the Commerce Commission has intervened when real estate agents have mislead buyers, but vendors also have the same responsibilities to disclose accurate information, or risk breaching the Fair Trading Act.

“Real estate agents should also be reminded that publishing misleading representations on behalf of their clients may also lead to the agent being liable under the Fair Trading Act,” said Sparrow.

When advised of the breach, Eva Properties Partnership pulled the advertisements and no further action was taken by the Commission.