Real Estate Agent- Registration

Real Estate Agent- Registration
Real Estate (Regulation and Development) Act, 2016

SHORT SUMMARY:

In this Flash editorial, the author begins by referring the provision of the RERA, Real Estate (Regulation and Development) Act, 2016.  The provisions of RERA came into effect from 1st May, 2017. The main thrust of the article, however, is upon the “Provisions relating to Real Estate Agents, Brokers, and Dealers”. Once a regulator is in place, and agents get registered, it would become complicated for the agents to hoodwink the homebuyers.

This is article no. 2 of the series of editorials written by the author on RERA and article no. 228 of editorial written by author on corporate laws  {including Companies Act, 2013, SEBI, RBI Regulations, IBC, LLP Act, 2008 etc.}.

INTRODUCTION:
Real estate agents “hereafter referred as ‘REA’ for the purpose of this editorial” are the back bone of the real estate market. They channelize the markets in which the money is either brought by the promoters or by the buyers. Real estate agents are the catalysts through which a smooth sail of selling and purchasing can be done in the market. A promoter builds a project but he neither has the skill nor the network to sell those units and a buyer can only reach the promoter through a personal relation or through agents. If we look in the developed countries, say for example US, there, an agent is valued extremely high by the general public since they realize that the agent is the medium through which a promoter and a buyer meets.

Need of RERA in India:
In India with the passage of time, the general public is losing trust in the real estate agents. Even this thing has become so extreme that the young generation find this a work of thieves and goons. However, one should always keep in mind that not all the agents are thugs; many of them do their job very honestly.

Thus, the government had to come up with an answer for the losing faith of our real estate agents. This answer is RERA. RERA with, Central Advisory Council and Real Estate Appellate Tribunal has been formed so that people can regain trust in our nation’s real estate agents and also to strictly penalize the defaulters due to which an unbalance is created in the public.

Who is Real Estate Agent under RERA?
Section 2(zm) defines the term ‘real estate agents’, which is a very broad and inclusive definition and covers all from of agencies involved in sale and purchase of projects, registered under the Act.

2(zm) "Real Estate Agent" means any person, who negotiates or acts on behalf of one person in a transaction of transfer of his plot, apartment or building, as the case may be, in a real estate project, by way of sale, with another person or transfer of plot, apartment or building, as the case may be, of any other person to him and;

Receives remuneration or fees or any other charges for his services whether as commission or otherwise and;

Includes a person who introduces, through any medium, prospective buyers and sellers to each other for negotiation for sale or purchase of plot, apartment or building, as the case may be, and includes Property Dealers, Brokers, Middlemen by whatever name called;

After reading the above definition a question come into mind i.e.

A.     Does the term ‘real estate agents’ include web-portals engaged in selling of apartments or plots?
As definition cover all from of agencies involved in sale and purchase of projects Consequently, web-portals etc. engaged in selling plots or apartments are also covered under the Act and are required to comply with the duties and responsibilities as provided therein including under the Rules and regulations made there under.
Provisions of registration of “Real Estate Agent” stated under Section 9 of RERA, 2016.
B.      What do we understand by Real Estate Projects?
As stated in 2(zn) "Real Estate Project" means the development of a building or a building consisting of apartments, or converting an existing building or a part thereof into apartments, or the development of land into plots or apartment, as the case may be, for the purpose of selling all or some of the said apartments or plots or building, as the case may be, and includes the common areas, the development works, all improvements and structures thereon, and all easement, rights and appurtenances belonging thereto;
Registration of Real Estate Agents

In short Line ‘who intend to sell any plot, apartment or building - which is required to be registered with the Regulatory Authority’

Provisions relating to ‘registration of REA’ are stated in section 9 and functions of REA stated in section 10 of RERA.

Application for Registration: Under the Act, in order to render their services, all REA have to be registered with the authority. Every REA shall make an application to authority for registration as agent [Section 9)2)].

Registration Number: The real estate agent shall be granted a registration number by the Authority, which shall be quoted by the real estate agent in every sale facilitated by him under this Act.

Renewal of Registration: Every registration shall be valid for such period as may be prescribed, and shall be renewable for a period in such manner and on payment of such fee as may be prescribed.

Maintenance of Accounts: The agents are required to maintain books of account, records and documents related to every transaction done by them.

Information to Buyer: Agents are required to share all the information and documents about the project with the buyers, which they are entitled to at the time of booking a property.

List of Agents: The regulator will also maintain a list of the authorized agents on its website, enter the names and photographs of real estate agents who have applied and registered under this Act along with details of projects that they can deal in. Agents, who are found to be in violation of the rules, will get removed from this list.

Declaration by Promoter: The developer, while registering their projects, the developers are also liable under the Act to disclose the name and other details of the authorized agents who are allowed to deal in particular projects of the developer.

Penalties / Punishments:

C.      What is the punishment prescribed for non-registration of by a real estate agent under the Act?

As per section 62, where under the Act, it is obligatory for the real estate agent to register himself with the Authority, and the real estate agent fails to do the same, he shall be liable to a penalty upto of rupees ten thousand per day of default, which may cumulative extend upto five percent of the cost of the plot / apartment, for which the sale has been facilitated by him.

D.     What is the punishment prescribed for non-compliance of the orders of the Authority by the real estate agent?

As per section 65 if the real estate agent fails to comply with the orders of the Authority, he shall be liable to a penalty for every day of default, which may cumulative extend upto five percent of the cost of the plot / apartment, for which the sale has been facilitated by him.

E.      What is the punishment prescribed for non-compliance of the orders of the Appellate Tribunal by the real estate agent?

As per section 66 if the real estate agent fails to comply with the orders of the Appellate Tribunal, he shall be liable to a penalty for every day of default, which may cumulative extend upto ten percent of the cost of the plot / apartment, for which the sale has been facilitated by him or with imprisonment for a term which may extend upto one year or with both.

Complaint against Real Estate Agent:
Any aggrieved person may file a complaint with the Authority or the adjudicating officer for any violation or contravention of the provisions of this Act or the rules and regulations made there under against real estate agent or any promoter allottee. [Section 31)1)].

Conclusion:

It is now a compulsion for an agent to get registered with RERA. Without this registration, he will be ineligible to sell or advertise a property. Once a regulator is in place, and agents get registered, it would become difficult for the agents to mislead the homebuyers. Sometimes, in order to convince homebuyers to buy a property, agents may manipulate information. For instance, they may say that very few units of a project are left for sale, or that the developer would raise the price in a few days; to pressurize the buyer into making a decision in a hurry. Pushed into rushing, some buyers could forego basic due diligence on their part. However, once the regulator is in place, homebuyers will be able to cross-check most of this information on the regulator’s website.


Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION

 (Authors – CS Divesh Goyal, Goyal Divesh & Associates. Company Secretary from Delhi and can be reached at csdiveshgoyal@gmail.com, 8130757966/8130657778

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