In this article, Rishabh Saxena of NUALS discusses registration process for property brokers in India.

Introduction

India is a developing country with augmenting growth rate around 7.5% P/A. As the growth rate increases, it generates jobs which eventually make public affluent which is a good sign for the future of the nation. India is so huge and is further expanding in terms of human population that basic life necessities like food, job and house is on accelerated mode. The housing among these things is one of the major requirement as the people are growing rich. Initially, house seeking people approach a broker or agent who acts as an interface between buyer and seller and attempt to match up sellers who wish to sell and buyers who wish to buy.

Who is a broker/Agent?

In simple language, a broker is the person buys and sells goods and assets for others or can say act intermediate between two parties who are willing to exchange their assets.

Real Estate (Regulation and Development) Act, 2016 clearly states the definition of a broker in Section 2 Clause (zm) as:  “real estate agent” means any person, who negotiates or acts on behalf of one person in a transaction or 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 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.

Broker needs to be registered first

Real Estate business is one of the largest revenue generators in India, but it never had any regulating body to make regulation and policies about it. Due to this failure, people fall in trap of developer’s and broker’s unethical ways of pursuance, they become victims of fake schemes of real estate business. Till now what happened brokers had a free play on the Indian residential real estate market where they prosper on misinforming and with flawed reasoning to their customers, so they went unchecked as there was no authority to curb them. Buyers come from the lower middle class or middle class background are primarily targeted by these brokers.

In March 2016, government passed a law  “Real Estate (Regulation and Development) Act, 2016 (RERA)” to regulate real estate market and make strict policies that have to be fulfilled by the developers and brokers while selling their property. Under RERA, brokers or agents will have to ensure they are duly registered with the regulator. After registering themselves broker becomes more accountable to home buyers and completely responsible for their business activities and practices.

Registration of brokers is also helpful to them as the real estate bill requires the developers to file the information with the regulatory authority about current status of the building projects, status of the land where housing units are developing, any delays in the completion layout plans etc. Broker also need to know all this because being an intermediate he deserves to know all this which protects him from unwittingly making false claims to a home buyer.

If any broker doesn’t register himself then he will be penalized as per the provision of the act.

How can a broker get registration

Registration of Real Estate Agents:  Section 9 of Real Estate (Regulation and Development) Act, 2016 provided that how a broker can a registration

• Section 9 (1): No real estate agent shall facilitate the sale or purchase of or act on behalf of any person to facilitate the sale or purchase of any plot, apartment or building, as the case may be, in a real estate project or part of it, being the part of the real estate project registered under section 3, being sold by the promoter in any planning area, without obtaining registration under this section.
• (2) Every real estate agent shall make an application to the Authority for registration in such form, manner, within such time and accompanied by such fee and documents as may be prescribed.
• (3) The Authority shall, within such period, in such manner and upon satisfying itself of the fulfillment of such conditions, as may be prescribed—
  • (a) grant a single registration to the real estate agent for the entire State of Union territory, as the case may be;
  • (b) reject the application for reasons to be recorded in writing, if such application does not conform to the provisions of the Act or the rules or regulations made thereunder: Provided no application shall be rejected unless the applicant has been given an opportunity of being heard in the matter.
• (4) Whereon the completion of the period specified under sub-section (3), if the applicant does not receive any communication about the deficiencies in his application or the rejection of his application, he shall be deemed to have been registered.
• (5) Every real estate agent who is registered as per the provisions of this Act or the rules and regulations made thereunder 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.
• (6) 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.
• (7) Where any real estate agent who has been granted registration under this Act commits breach of any of the conditions thereof or any other terms and conditions specified under this Act or any rules or regulations made thereunder, or where the Authority is satisfied such registration has been secured by the real estate agent through misrepresentation or fraud, the Authority may, without prejudice to any other provisions of this Act, revoke the registration or suspend the same for such period as it thinks fit:
• Provided that no such revocation or suspension shall be made by the Authority unless an opportunity of being heard has been given to the real estate agent.

Punishment for not complying with the registration provision

Section 62 of RERA provides punishment for non registration and contravention which states: “If any real estate agent fails to comply with or contravenes the provisions of section 9 or section 10, he shall be liable to a penalty of ten thousand rupees for every day during which such default continues, which may cumulatively extend up to five percent. Of the cost of plot, apartment or buildings, as the case may be, of the real estate project, for which the sale or purchase has been facilitated as determined by the Authority.”