Misrepresentation by a Real Estate Agent

 

When purchasing a property there are so many things we must take into consideration.

Often, purchasers rely on their agents to supply them with information regarding all aspects of the property. And agents are often given information in good faith by the owner.

Even, when an agent makes a statement about the property which has simply been passed on to the agent by the owner, the agent may be liable when that statement turns out to be incorrect.

While agent and owner are both liable for damages it is usually the agent who has to pay because the owner has limited money and may have disappeared.

However a recent trend has seen the courts put more of an onus on buyers to make their own inquiries rather than simply accept everything an agent tells them.

Hyder v McGrath Sales Pty Ltd [2018] NSWCA 223 is one such case.

McGrath was retained to sell a property in Bellevue Hill, Sydney. The purchaser bought the property for $9.4 million. The purchaser’s husband who was an experienced property developer undertook the pre-contractual investigations and negotiations with the vendor.

The property was a battle-axe block with a shared driveway. The shared driveway was wide enough for two cars. Prior to the sale, the vendor had used part of the driveway as a private parking area. Indeed, this part of the driveway had a sign that read “Private Parking” with the property's street number under it. There was enough room for four cars to park tandem style on the driveway without creating an obstruction.

McGrath advertised the property as having “private off-street and driveway parking” and the purchaser consequently believed that she had the exclusive right to park on the driveway. The property also came with a two car garage, although there was very limited street parking.

However, there were easements over the driveway in favour of the other properties that shared the driveway. Shortly after moving into the property, the purchaser became aware that she did not have the exclusive right to park on the driveway.

The court held that;

  1. the buyer would have realised that the agent was simply passing on information.
  2. the buyer would have still purchased the property anyway
  3. the buyer should have checked out the terms of the easement.
The case is a reminder for agents to either check what they are saying is correct or make sure the buyer knows it is coming from the seller. For buyers it is a reminder that if something is important to them they must conduct their own enquiries or at least get legal advice on the issue.