Principles of Property Disclosure

Denese Konowe

Kia ora, everyone, and welcome back to Kiwi Real Estate, Inside Out. I'm Denese Konowe, and as always, I'm joined by my partner in both life and podcasting, Dr Lee Konowe. Today, we're digging into a topic that, honestly, comes up in almost every transaction—property disclosure. Lee, you ready to get into the nitty gritty?

Dr Lee Konowe

Absolutely, Denese. And, you know, this is one of those things that sounds simple on paper—just tell the truth, right? But in practice, especially under the REA Code of Conduct, there are layers. So, for anyone new to the game, property disclosure in New Zealand isn't just a suggestion. It's a legal and ethical obligation for both sellers and agents. We're talking about transparency, accuracy, and, if you get it wrong, some pretty serious consequences.

Denese Konowe

Exactly. And the Code of Conduct is very clear: you have to disclose any information that could affect a buyer's decision. That means known defects, past issues, even things like leaky homes—which, if you've worked in Wellington, you know that's a big one. I mean, the leaky home crisis changed the way we all approach pre-sale disclosures. You can't just hope the buyer doesn't ask; you have to be upfront, or you risk not just your reputation, but your license.

Dr Lee Konowe

Yeah, and it's not just about ticking boxes. The REA expects agents to be proactive. If you know—or even suspect—something's wrong, you can't just look the other way. And, Denese, remember that Wellington case where the seller tried to gloss over some water damage? That ended up in a formal complaint, and the agent was held responsible for not pushing harder on disclosure. So, it's not just the seller on the hook.

Denese Konowe

Right, and that's why, as we talked about in our episode on property inspections, documentation and transparency are everything. If you don't disclose, or you fudge the details, the consequences can be severe—fines, disciplinary action, even losing your ability to practice. So, honesty isn't just the best policy; it's the only policy if you want to stay in this business.

Dr Lee Konowe

But, Denese, let's be real—practicing full disclosure isn't always straightforward. Sometimes, the seller genuinely doesn't know about a defect, or maybe they think it's not a big deal. And for agents, there's that tricky balance between respecting client confidentiality and meeting your duty to disclose under the Code. It's not always black and white.

Denese Konowe

Oh, absolutely. And sometimes, you uncover things mid-transaction that nobody expected. I had a situation a few years back—I'll never forget it—where a boundary issue almost derailed the whole deal. The seller had no idea the fence was actually a meter over the legal boundary. We only found out because the buyer's lawyer did a title search. Suddenly, everyone's scrambling, and I'm stuck in the middle trying to keep both sides calm while making sure we disclose everything properly. It was a mess, but it taught me the importance of double-checking even the things you think are obvious.

Dr Lee Konowe

And that's the thing—sometimes, as agents, we have to be detectives. You can't just take the seller's word for it. But then, you also have to be careful not to breach confidentiality. If a client tells you something in confidence, but it's material to the sale, you have to disclose it. The Code is clear on that, but it can feel like walking a tightrope, especially if the client pushes back.

Denese Konowe

Yeah, and I think that's where experience comes in. You learn how to have those tough conversations with clients—explaining that disclosure protects everyone, including them. It's not about throwing anyone under the bus; it's about making sure the deal doesn't fall apart later, or worse, end up in court. And, as we've said before, open communication is key. If you set expectations early, it's a lot easier to manage these challenges when they pop up.

Dr Lee Konowe

So, let's talk about what actually works. There was that case in Christchurch—remember, Denese?—where a property had undisclosed meth contamination. The agent found out just before settlement. Instead of trying to sweep it under the rug, they documented everything, notified all parties, and worked with the REA's recommended process. It was stressful, but because they handled it by the book, the sale eventually went through, and everyone was protected.

Denese Konowe

That was a textbook example of how to do it right. The agent used the REA's disclosure forms, kept a paper trail, and made sure both the buyer and seller were fully informed. And, you know, that's what the REA recommends—document, document, document. If it's not in writing, it didn't happen. And don't just rely on memory or verbal agreements. Use checklists, get signatures, and keep copies of everything. It sounds tedious, but it saves you so much grief down the line.

Dr Lee Konowe

And there are tools out there to help. The REA has checklists, templates, and even online resources to guide agents through the disclosure process. I mean, it's not foolproof—mistakes can still happen—but if you use these tools, you're much less likely to miss something important. And, as we discussed in our episode on complaint management, if a dispute does arise, having thorough documentation can turn a potential disaster into a manageable situation.

Denese Konowe

Exactly. At the end of the day, best practice is about being proactive, honest, and thorough. If you approach every transaction with those principles, you're not just protecting yourself—you're building trust with your clients and strengthening the whole industry. And that's what we're all about here at Kiwi Real Estate, Inside Out.

Dr Lee Konowe

Couldn't have said it better myself, Denese. So, that's a wrap for today. If you found this helpful, or if you've got your own disclosure war stories, we'd love to hear from you. We'll be back soon with more real-world insights and, probably, a few more tales from the trenches.

Denese Konowe

Thanks for tuning in, everyone. Lee, always a pleasure. Catch you next time on Kiwi Real Estate, Inside Out. Ka kite!

Dr Lee Konowe

Ka kite, Denese. Take care, everyone.