On the 16th of March 2020, the Parliamentary Secretary for Lands and Construction announced that a bill, proposed to be named the “Real Estate Agents, Property Brokers and Property Consultants Act” (the “Bill”) shall be subject to a public consultation. The salient features of the proposed bill may be found below:
The purpose of the Bill, as quoted from the Bill’s text is to “streamline persons acting as intermediaries in the process of negotiating and arranging transactions involving the acquiring or disposing or leasing of land…”.
Primarily, the Bill defines the business of a ‘property broker’ or ‘real estate agent’ as a business which involves any of the latter couplet acting as an “intermediary in the process of negotiating and arranging transactions involving the acquiring or disposing or leasing of land, including when the said activity is carried out through the engagement or the employment of a branch manager or a property consultant or both.
It is to be noted that the term “land” is defined as being inclusive of all immovable property as denoted in the Civil Code (Chapter 16 of the Laws of Malta) which is not extra commercium i.e. which may be subject to private ownership. The provision of legal advice in relation to any transaction as denoted above as well as the drafting and/or publication of any contractual agreement relative to such transaction fall outside the scope of what is considered to be the business of a property broker or real estate agent.
The Bill proposes that after the 6th of June 2021, all persons carrying out the activity as denoted above shall be prohibited form carrying out such activity unless they are in possession of a licenced issued in terms of the said proposed Act. An exemption from licensing exists for persons who carry out such an activity on an occasional basis, provided that such persons do not advertise their services and do not employ or engage anyone to assist them with the provision of such a service.
The term “occasional basis” shall be construed, in accordance with the Bill, as “acting as an intermediary in the process of negotiating and arranging not more than four (4) transactions per annum involving the acquiring or disposing or leasing of land.” Should any doubt arise as to whether an activity is carried out on an “occasional basis” or otherwise, the Licensing Board as proposed to be construed in the Bill shall have the discretion to deem what constitutes occasional activity.
The Bill proposes that where two or more property brokers or real estate agents intend to carry out their business jointly, they shall be bound to form and register a commercial partnership or body corporate in accordance with applicable law. This partnership shall be duly authorised by the Licensing Board. In these instances, no person shall be the director or a company or partner of a partnership unless they are in possession of a licence by the Licensing Board which allows them to carry out the business of a property broker or real estate agent.
The Bill proposes that any person who has attained the age of eighteen (18) years of age and who has attended a training course approved by the Licensing Board may act as a property broker or real estate agent. Similar requirements apply for persons wanting to carry out the function of a property consultant, the latter of which is defined by the Bill as “any natural person who is employed or engaged (whether under a contract of service or a contract for services) by any licensed person to carry out the business of property broker or real estate agent, other than a branch manager, and who acts under the directions of the same or those of a branch manager”. In turn, a “branch manager” is defined as “any natural person who is a holder of a licence and is employed or engaged to supervise any property consultant”.
Therefore, it is evident that the proposed Bill seeks to set a ‘standard’ level of qualification which any property broker, consultant, real estate agent or branch manager should have in order to b able to provide associated services regulated by the proposed Act.
It is being proposed that licences shall be valid for a period of five (5) years. Such licences may be renewed, provided that the prescribed form is duly submitted to the Licensing Board at least three (3) months prior to the licence expiring.
The Licensing Board shall have the power to grant, refuse renewal of, suspend and cancel licences on the basis of the conditions as noted in the proposed Act. In summary, these conditions mainly revolve around breach of law and lack of fitness and properness of the licence holder.
The Bill denotes that in the absence of an agreement, the following brokerage fees may be charged:
The Bill also denotes that the full fee shall only be due if the licence holder assisted the parties to the transaction in question at all stages of negotiations until the transaction in completed. The Bill goes on to denote that in the event of a transaction which is not compensated, a licence holder shall still have a right to “fair compensation”, the latter of which shall be determined by a court of law.
The proposed bill is up for public consultation and is henceforth still subject to change. Any requirements as proposed in the Bill shall only be applicable as law if they are taken up and adopted in the final Act.
The full version of the Bill may be found by accessing the following link: https://meae.gov.mt/en/Public_Consultations/MTI/Documents/Real%20Estate%20Agents,%20Property%20Brokers%20and%20Property%20Consultants%20Act,%202019%20-%20BILL.pdf.
For more information, please do not hesitate to contact us on [email protected].
© novolegal 2023. Website Design and Web Development in Malta
