Misleading Advertising

Real Estate Agents often wonder why they are sued and not the seller of a property when a representation about the property turns out to be false. In nearly every case the agent is simply passing on what the seller told them. Why is the seller not held to account for their misinformation?

The following reasons are why it is always best to sue the agent not the seller;

  1. The seller often doesn’t have much money;

  2. The seller unlike the agent doesn’t have insurance to cover this situation; and

  3. The legislation makes it easier to recover the money from the agent than the seller.

The following is an illustration of why that is the case.

In QLD and NSW if you want to sue the seller you can’t simply prove they told lies. The case of Williams v Pisano [2015] NSWCA 117 is a good illustration of this point.

The house was converted from a small 3 bedroom house to a large 5 bedroom house with views of Sydney Harbour. The online advertisement contained statements about the quality and standard of the renovations carried out on the property.

After settlement the buyer found out that the work had been carried out defectively and over a million dollars in repair was required.

Even though the seller conceded that they had made misrepresentations the court held the seller didn’t owe a duty of care to the buyer. They also found that the Australian Consumer Law did not apply to the seller as they were not conducting a business of selling houses. The seller was not held to be responsible for the repairs.

In QLD if you can prove the agent made the representations and was not simply passing on information then the agent is liable. Both the Australian Consumer Law and the Property Occupations Act make the agent liable for misleading and deceptive conduct.

We therefore once again stress the need to make sure any advertisement about the property, states that the information comes from the seller and buyer should make their own inquires.

For further information please contact Roland Taylor on 0417 605 185 or rtaylor@swc.net.au.

For AgentsFiona Hollingworth