Legislative control keeps profession’s house in order

Press, 15 August 1984, Page 30

Legislative control keeps profession’s house in order

New Zealand’s real estate profession is the envy of the world in terms of legislative control, despite being the smallest numerically of the 37 member countries of the Paris-based International Real Estate Federation.

Apart from the socialist and communist nations, where real estate is almost solely the property of the state, and where there is no

free enterprise in property transactions, New Zealand alone has an Act of Parliament solely for its real estate profession.

This unique legislation was largely the work of the profession itself which, since the first Land Agents’ Act in 1912, has strived to keep its house in order and under the strictest control.

The first attempts at control occured at a meeting of agents in Wellington on July 22, 1915, which formed the Dominion Estate Agents and Land Auctioneers Association of New Zealand.

Although real estate agents at the time paid licensing fees to the Government, there was no protection under the act against unlicensed operators. The newly-formed association wasted no time in its efforts to close this gap, but despite favourable promises from Prime Minister Massey, years elapsed before any changes were made. Under the new 1922 Act almost anyone with 10 eunds for a licence, and o pounds ten shillings as a bond, could obtain a real estate agent’s licence. No experience or qualifications

were necessary, and there was absolutely no protection against misappropriation or theft by an agent. Needless to say, the real estate profession had little confidence in the 1922 Act. This lack of confidence was compounded by the failure of the new act to recognise not only the existing association, but also the Real Estate Institute, which the Government was aware was being formed to replace the association.

The institute, by 1930, was to become the sole governing body of real estate, although membership was purely voluntary. From the moment the 1922 Act had become reality, successive executive committees of the institute kept up a constant barrage of deputations to various Cabinet ministers to rectify .what was seen to be poor legislation. The institute’s legislative campaigning was curtailed during World War 11, but the moment hostilities ended it began again, with more vigour than ever before, helped by the large number of returning servicemen who entered the profession.

By 1947, the quest for a new- act had gathered enough impetus to have the Government consider a bill before the House, mainly because proposals put forward by the institute included clauses which would

help the post-war rehabilitation programme. Action was further delayed until a change of government in 1949 brought an upsurge of interest from the new Prime Minister, Peter Fraser, and an agreement from the Opposition leader, Mr S. G. Holland, that new legislation would be passed provided a clause was dropped which made it mandatory for examinations to be completed before a licence was issued.

A change in the Cabinet in 1951, however, brought the new Minister of Internal Affairs, Mr W. A. Bodkin, into the firing line from the institute, and immediate steps were taken to bring the proposed bill before the House, but again there was to be frustration, this time in the form of strong objections from the stock and station industry. By late 1952, differences between the Stock and Station Agents’ Association and the institute had been resolved, and the following year the bill passed into law. In the mid-19505, an organisation established in opKition to the Real Estate titute, the New Zealand

Licensed Land Agent’s Association, had gained strength, and there was alarm among institute members that the new body, unlike the institute, had no code of ethics, no set commission rates and no discip-

Unary rules.

Examinations were also non-existent and, compared with the institute, membership brought very few benefits.

It was clear that new legislation was needed to bring unity to the real estate profession, and this became even more apparent with the establishment of accommodation bureaux, which were seen to be taking advantage of the most :acute accommodation shortage ever experienced in :New Zealand.

Events in 1957, during instances of licensing by magistrates, brought to light a need for guidelines by which the magistrates could decide the fitness or otherwise of a person applying for a real estate agent’s licence.

The magistrates were unanimous in their thinking that such guidelines could only be set by the institute, which prompted immediate moves for additions to the 1953 Act.

Another change of government in 1957 forced the institute to curb its advocacy for changes, but several widely publicised cases of imprisonment of agents for breaches of the 1953 Act — involving losses of up to. £ 8000 — brought unexpected support from parliamentarians who had previously opposed such moves. A new parliamentary friend to the institute em-

erged in 1961. He was the Minister of Justice, Mr J. R. Hanan, who agreed with the institute’s aims to protect the public against unscrupulous agents, raise the standard of practice of the pro-, fession and provide service to the public through training, education and examination of agents. Mr Hanan believed that it was important that if any new legislation was to go through the House, there would have to be unity among all factions the real estate profession. By 1962, this had been achieved and the way was paved for the Real Estate Agents’ Act 1963.

The new act primarily protected the public against dishonest agents by compelling any person dealing in real estate to be a member of the institute and participant in the fidelity guarantee fund.

Sales people had to be certificated after establishing that there were no blots jon their characters, and licensees themselves had to pass stringent examinations set by the institute.

: Mr Hanan continued to be supportive of the ideals of the institute and in 1969, soon after his death, he was posthumously made life member in recognition of services to the profession. Over the next few years control of licensees continued to be in the hands of the institute, but from time to time chinks would appear in the armour, and on the odd occasion the less scrupulous licensees would attempt to take advantage of the loopholes. Although minor changes to the act were continually mooted, more revolutionary thinking came from the institue’s executive committee

as the profession entered the 19705. For some time it had been felt that there was lack of uniformity in thinking by magnistrates, despite guidelines which the institute felt contained no sideroads. The institute wanted the Government to establish a judicial licensing board for the profession and in 1972 legislation was drafted for its establishment.

Yet another change of government brought in Mr A. M. Finlay as Minister of Justice, who proved symEathetic towards the estabshment of a licensing board of five, comprising a lawyer as chairman, two nominees from the institute ,and two independent members, one of whom would be

a real estate licensee. A bill to formally establish the board was introduced late in 1975, together with an almost completely revised act, and this passed into law early the following year. Although the new legislation, which governs real estate today, appeared to be watertight there are still questions asked about interpretations and the institute’s national council is well aware of the need for minor amendments.

But generally, the act is working well, not only in its provisions for the good order and discipline of the real estate profession, but also for its strength in protecting the public from unscrupulous and dishonest dealing.