Phantom foreign farm sales highlight due diligence hole

Real estate agents not establishing the credibility of purchasers is a major hole being highlighted by Federated Farmers. This follows reports a $150 million ‘deal’ for 28 Southland farms has collapsed.

“When a simple Google search revealed a convicted Australian criminal was associated with the people fronting this deal, you can see why Federated Farmers was more than sceptical,” says David Rose, Federated Farmers rural security spokesperson.

“There were a number of red flags associated with the supposed purchaser too. It included reported claims from late last year that the Northland hapu involved had genealogical connections to its Arab partner ‘that went back to biblical times’.

“While Federated Farmers backs moves to bring professional standards of conduct to the real estate industry, a failure to do some cursory checks is of concern.

“Given the deals involved very large sums of money, it seems very odd that little was done to verify if the purchaser had the financial means to legally complete. If someone walked through my door saying they had upwards of $150 million to buy a number of farms, I’d check to see if they were on the level.

“These days, real estate agents are required to act in good faith and deal fairly with all parties engaged in a transaction. In addition, real estate agents must not mislead, provide false information or withhold information from the parties involved.

“That indicates to me a professional obligation to ascertain the veracity of a purchaser, so operating on hope doesn’t cut the mustard.

“Real estate agents must do more groundwork in future otherwise they risk failing another professional standard, that of bringing the real estate industry into disrepute,” Mr Rose concluded.