OFT puts real estate agents on notice
OFT has recently received a number of complaints about real estate agencies in a particular area advertising properties with incorrect or misleading information, especially regarding the suburb in which a property is located.
A number of complaints have been investigated and agents put on notice about the consequences of breaching legislation that outlaws misrepresentation in advertising. Agents may see it as relatively harmless to advertise a property as being in a neighbouring suburb which is perceived to be more prestigious than its actual location. In reality however, this is a clear example of misrepresentation.
Any advertising which contains incorrect information, whether intentionally or otherwise, would constitute a breach of OFT legislation. Penalties up to $1 100 000 currently exist for corporations and $220 000 for individuals who present any false or misleading information.
In a real estate setting there are several factors agents should keep in mind when advertising:
An agent must take reasonable steps to find out or verify the facts material to the lease or sale to avoid error, omission, exaggeration or misrepresentation.
An agent must encourage their client (the seller) to disclose all relevant facts about the property.
If an agent has information about detrimental features of the property they are engaged to sell, the agent is required to disclose this information to prospective buyers.
An agent is guilty of misrepresentation if they wilfully conceal a material fact about a property, such as a previous flooding.
An agent must not make misleading statements about the layout of a property.
An agent must not give the impression to buyers that a property in located in one suburb when clearly it is not.
OFT has written to over 70 agents in the area in question alerting them to this final point and the potential consequences of being found to have breached the legislation.
OFT will continue to monitor this issue and not hesitate to investigate likely cases of misrepresentation where they become apparent.
For further information on misrepresentation of information, visit the OFT website.