The Real Estate Authority last week released a new disclosure guideline for the real estate industry following the release of the Government’s Gluckman report. This disclosure guideline in my opinion does not make the disclosure issue crystal clear and there is too much ‘grey’.
Example 1: ‘An agent does not have to disclose test results on a property which are below 15 micrograms per 100cm2 (considered the safe level) unless specifically asked by a prospective buyer, or where a prospective buyer has clearly shown an interest in meth contamination’. Disclosure is not required if the property has been successfully remediated back to below 15 micrograms per 100cm2 in a property where meth has only been used, or to below 1.5 micrograms per 100cm2 where meth production using highly toxic chemicals was identified’. Comment: One of the first questions the majority of buyers ask when viewing a property for the first time are (a) are there any disclosures for this property we should be aware of and (b) has the property been drug tested. So why would we as agents want to ‘not disclose’ what we and the owner already know about a property’s drug history. This disclosure requirement does not make commonsense. As agents we are here to protect our Vendor’s and ourselves while at the same time being fair to buyers. By not disclosing what is already known about a property is surely misleading which contravenes the Real Estate Act, hence the uncertainty. If you were a buyer who asked an agent if there are any disclosures that apply to a property and were told ‘no there are none’ and after purchasing it you find out from neighbours it did have meth contamination and was decontaminated would you not think you were misled? Every buyer will have their own view on what level of contamination they are prepared to accept before making a decision to purchase. It is not up to an agent or the REA to make this decision.
Example 2: The Gluckman report states and the REA have adopted this. ‘There is little need to test for meth contamination unless there is strong suspicion or information from police or forensic experts that a property has been the site of production or heavy use of meth’. Comment: How is anyone to know this information unless the property is tested? The Police are unlikely to know as they mostly only find out a property has been used for consuming or manufacturing meth after the property is vacated and inspected or there is an explosion and fire, or they carry out a raid. Are they under the Privacy Act even allowed to divulge this information to the public if they have such information? How is an agent supposed to know or obtain this information before listing and marketing a property? There are too many if’s and but’s and not enough clarity.
In view of this new disclosure guideline and the lack of direction to us as an industry I am sceptical of the advice given and will continue to recommend to all buyers that they obtain a drug test be it a privately owned and occupied property or tenanted. It also needs to be clarified that the Drug Testing industry are not currently required to be licensed practitioners or regulated by any governing body. Surely this needs to be addressed urgently by the Ministers for Health and Housing to protect and reassure all parties to property transactions.
The Gluckman report is very informative and also dismisses many myths about methamphetamine in New Zealand. Please take time to read it. Right click on the link below to open the report.
Methamphetamine-contamination-in-residential-properties