How The New Real Estate Law Will Benefit Agents
When the government recently notified 69 of the 92 Sections of the new real estate legislation, the process to institutionalise the law began. The legislation, which covers all stakeholders, including real estate advisors, is expected to go a long way in reforming the property market. For the first time, the law will also enable real estate advisors, the key agents in the sector, to work in an organised manner and push an image revamp.
Who is a real estate agent?
Chapter 1 in Section 2 of the Real Estate (Regulation and Development) Bill, 2016, defines the various real estate terms, including real estate agents.
According to the Bill, a real estate agent is a person “who negotiates or acts on behalf of one person in a transaction with another person” and “receives a remuneration for his services”. A real estate agent, says the law, “introduces prospective buyers and sellers for negotiations for sale or purchase of real estate”. The law covers property dealers, brokers and middlemen under the same category.
What does the law have for agents?
While the market of real estate advisory services is certainly huge — from narrow lanes in small towns to swanky offices in metros, real estate advisors are found everywhere — there is no data available on the size of this service market, as it has remained unorganised. This is also responsible for the many misconceptions attached to the advisory profession. Now, the law will help authorities maintain a book on transactions taking place in the advisory services segment. The funds thus collected will also go a long way in redeeming liquidity in the crunch-hit sector.
Stamp of authenticity
While we can't really do without their services, people are sometimes, unfortunately, quite sceptical about brokers and their role in property transactions. The new law is giving these major stakeholders a chance to redeem their image. Section 9 of the law makes it mandatory for real estate advisors to register themselves with the real estate regulatory authority. This will on the one hand help them gain home buyers' confidence, and on the other also bring in more and more competition in this service segment by weeding out any wrongdoers. Further, there is a great variance on advisory changes so far. After things go online, a streamlining of charges would be in the offing. All this, in the long run, will provide real estate advisors an opportunity to create their place in the sector.
Strict provisions for accountability
With the opportunity also comes responsibility. Various Sections of the law, under Chapter 8, lay down the penalties applicable on sector stakeholders in case of any default.
- According to Section 62, if a real estate advisor fails to comply with the provisions of Section 9 and 10 (these sections talk about the mandatory registration of real estate advisors, and lays down the dos and don'ts), he will be subject to a penalty of Rs 10,000 a day till the time the default continues. This could go up to five per cent of the total project cost for which the transaction was facilitated.
- Similarly, under Section 65, a broker will have to face a penalty for each day in case he fails to comply with or contravenes the orders of the Real Estate Regulatory Authority (RERA). This, too, could go up to five per cent of the total project cost for which the transaction was facilitated.
- According to Section 66, a broker could face a jail term of up to a year or a penalty that could go up to 10 per cent of the total project cost, or both, if he fails to comply with or contravenes the orders of the Appellate Tribunal.
The law, by putting in place these penalties, among others, aims to weed out any wrongdoing by any stakeholder in the sector.