Misleading and Deceptive Conduct in Advertising Campaigns
Real estate agents will inevitably make representations to attract potential clients, buyers and/or tenants. These representations may be in writing, and can include pictures, photographs, plans and drawings, a verbal statement or even conduct (gestures and demeanor). It should also be remembered that silence may constitute a representation. Therefore, extreme care must be taken by agents to ensure that all representations are accurate and will not fall foul of the consumer protection legislation.
Section 212 of the Property Occupations Act 2014 (Qld) (PO Act) relates to false representations about property. Section 212(1) of the PO Act states that a licensee or real estate salesperson must not represent to someone else anything that is false and misleading relating to the letting, exchange or sale of real property. The maximum penalty for breaching this provision is currently $72,063 (540 penalty units).
Section 212(3) of the PO Act provides that a representation is taken, for the subsection, to be false or misleading if it would reasonably tend to lead to a belief in the existence of a state of affairs that does not in fact exist, whether or not the representation indicates that the state of affairs does exist.
If a person makes a representation relating to a matter and he or she does not have reasonable grounds for making the representation, the representation is taken to be misleading (section 212(4) of the PO Act). The onus of establishing whether the person had reasonable grounds is on the person making the representation (section 212(5) of the PO Act).
Further, section 18 of the Australian Consumer Law (ACL) prohibits conduct, in trade or commerce, which is misleading or deceptive, or is likely to mislead or deceive. Misleading and deceptive conduct is a broad concept which includes words, actions and pictures. It is irrelevant whether there is an intention to mislead; what is relevant is the overall impression created by the conduct and its actual or likely effect on the target audience.
As agents will appreciate, with the restrictions introduced during the COVID-19 pandemic, the marketing of a property for sale or rent has, at times, included a reduction in physical inspections of a property and an increase in absentee buyers or tenants who are interested in purchasing or renting a property without physically inspecting it.
We now look at some specific risks which agents need to be conscious of when marketing a property for sale or rent.
Photographs used when marketing a property for sale or rent may be false or misleading if they lead a prospective buyer or tenant to believe in the existence of a state of affairs that does not in fact exist. Photographs may be considered misleading if they are digitally altered or enhanced, and the alterations or enhancements materially change the photograph, or the perception provided by the photograph.
Digitally altering or enhancing the photographs of a property to change the colour of the paint on the walls may be considered misleading. However, cleaning a property and including additional lighting before photographing the property is not misleading.
It may also be considered misleading to digitally alter a photograph to remove images from the background that may be considered undesirable, such as electricity towers, items that obscure views, or objects in neighbouring properties.
In this regard, agents will recall in February 2016, a NSW real estate agency advertised a three bedroom home for sale in Sydney’s Penshurst. The photographs of the property placed on the internet did not show a large water tower immediately behind the property, which dwarfed the house when viewing it from the street. At the time, the NSW Fair Trading issued a statement saying that the digital enhancement of advertising material may constitute an offence where the enhancements are not disclosed or create a deception for buyers. If a photograph is altered, agents should be mindful of whether their conduct may be misleading or deceptive or likely to mislead and as a result, be in breach of the ACL.
Aside from editing photographs, other conduct that can result in claims against agents may include not using up-to-date photographs of a property in its advertisements. Where absentee buyers or tenants are interested purchasing or renting a property without physically inspecting it, they will rely upon the information they are able to gather about the property from the photographs used in the advertising campaign.
Agents should therefore be mindful to always ensure that any photographs of a property reflect the property in its current condition. Out-of-date photographs should not be used to save time and money.
Words and descriptions
Agents need to ensure the accuracy of all descriptions and words used to promote a property in their advertising campaigns.
Representations about the potential or permitted use of land or buildings must acknowledge any legal restrictions affecting the property. These include planning requirements, restrictive covenants and easements. Representations about the characteristics of land include for example:
- the suitability for residential developments;
- the ability to be subdivided;
- the drainage, water supply and topographical features; and
- the dimensions of the land or buildings.
Any representations about the development potential of properties should include words to the effect of ‘Subject to Planning Consent’ and all interested parties should be encouraged to undertake their own independent enquiries and seek professional advice if appropriate.
Agents must also be careful when describing the location of a property. They must ensure that they correctly describe the suburb, as well as the local amenities and school catchment areas.
Agents must be vigilant in ensuring that they comply with their legislative obligations when marketing properties for sale or rent. As well as being careful to ensure that all written and oral representations and statements made in relation to properties are completely accurate, agents should ensure that they actively encourage all prospective buyers and tenants to undertake their own enquiries and investigations to satisfy themselves that the property meets their requirements and that they obtain their own expert advice. Agents should also ensure that all of their marketing material contains an appropriately worded disclaimer.