Another decision by the Real Estate Agents Disciplinary Tribunal has placed even more emphasis on agents to not only search the title to a property but to also have an understanding of the implications of any covenants.

The facts of the case before the Tribunal:

• A couple with a young child purchased a property in a retirement village-like complex without knowing that the title was subject to a covenant restricting ownership to people aged over 55 years.  Shortly after settlement the purchasers discovered what the covenant meant.
• The agents were aware of the covenant, but not of its details, and told each proposed purchaser of the existence of the covenant and advised the purchasers to take their own legal advice.
• The Tribunal said, “…the licensee ought to have searched the content of the Transfer shown as containing a restrictive covenant”, and that, “A licensee should be familiar with, and able to explain clearly and simply, the effect of any covenants or restrictions that might affect a purchaser’s rights”.
• The Tribunal found the agents guilty of engaging in unsatisfactory conduct.  This resulted in a fine and an order reprimanding the agents, as the Tribunal said, “Licensees are obliged to do more than just warn prospective purchasers that covenants exist: and on that basis, the Committee was bound to find the licensees guilty of unsatisfactory conduct, because they were unaware of the terms of the covenant”.

Therefore it is important that as an agent you obtain a copy of the title search and understand what is contained in any easements and covenants registered against the title.

If you feel that you do not understand the implications or meaning of encumbrances, caveats, covenants or other restrictions on the title we would suggest that you seek your own legal advice to clarify these matters.  If we can be of any assistance to you please don’t hesitate to contact us on 0800 89 68 50