Real estate exemption - good news for forest owners
Andrew McEwen, New Zealand Tree Grower February 2018.
Since November 2017 current and prospective forest owners have once again been able to use forestry professionals to help with the purchase or sale of forest land, forests, forestry rights and other interests in land. This was stopped in late 2009 by provisions in the Real Estate Agents Act 2008.
This Act restricted real estate work to licensed real estate agents and those exempt under the Act. Until now, the only exemptions were for lawyers, conveyancers and licensed auctioneers. However, the Real Estate Agents (Exemptions) Regulations 2017 made it legal for registered members of the New Zealand Institute of Forestry (NZIF) to help their clients in real estate negotiations. This is the first exemption made.
The Act defined real estate work as undertaking work or providing services on behalf of another person for the purpose of bringing about a transaction. A transaction includes the sale or purchase of land or an interest in land, including leases and licences, forestry rights and easements. General assistance was allowed, but problems came when a person helping a buyer or a seller was asked by the client to be part of the negotiations with the other party.
This might happen, for example, when a forest valuer is asked to sort out differences between their value and the value determined by the other party’s valuer, or when there are differences between financial aspects of the transaction, or when conditions for access arrangements or forestry rights have to be negotiated. As a result, the Act meant that a land owner could not ask a forestry professional, or any other professional apart from a licensed real estate agent or solicitor, to help them with negotiations associated with real estate transactions.
The NZIF felt it was unfair for land owners with an interest in forests to be stopped from using forestry professionals to help with such transactions. Equally, the NZIF felt it was unfair for forestry professionals to be stopped from offering services they had traditionally provided to their clients. As a result, the NZIF applied for an exemption, but only for those members who were registered. Registered members are allowed to call themselves ‘registered forestry consultants’ or ‘registered foresters’.
The focus of Ministry of Justice officials during negotiations on the exemption was to make sure there were sufficient processes in place to ensure competent and ethical conduct on the part of those who would be exempted. Property owners considering transactions, will be pleased to know that, after some changes were made, the NZIF registration scheme was found satisfactory in this respect. The exemption was granted and published as the Real Estate Agents (Exemptions) Regulations 2017 and came into force on 1 November.
What does a registered member of the NZIF offer to a land or tree owner? What safeguards are there for the client?
To start with, becoming registered requires qualifications and experience in forestry which have been recognised by the registration board. There is a peer review process that allows others to object to the registration. The board conducts regular reviews of registered members and there are continuing professional development requirements which have to be met.
Members must meet the requirements of the NZIF Code of Ethics, one of which is that they cannot undertake work which is outside their area of competence. If there are complaints that a member has breached the code or other requirements, and the complaint is upheld, one of the penalties that can be imposed is loss of registration.
When it comes to helping a client with a real estate transaction, there are other restrictions designed to protect the client. The transaction has to be connected to forestry − for example, the registered person cannot help you sell houses in town. There must be full disclosure of conflicts of interest, the registered member cannot handle funds connected with the transaction and so on.
So next time you have a property transaction in mind which involves or potentially could involve forests, why not engage a registered member of the NZIF? You can find a list of registered members at www.nzif.org.nz. Just make sure the one you engage can produce a current certificate of registration, issued by the NZIF Registration Board.
Andrew McEwen is a Registered Forester, a former NZIF President and a current member of the NZIF Registration Board. He is not looking for clients who want assistance with real estate transactions.