In many countries which have matured real estate market, there are at least three (3) mechanisms in overseeing the transactions of real estate.
- Ownership of land and interest therein.
- Developing mechanisms – the developers.
- Market intermediaries and conveyancing professionals.
Land ownership/tenancy/dealings
This part is much in the hand of the politicians and the law makers of the country – the jurisdiction of the land laws. In Malaysia, the main land legislation is National Land Code in West Malaysia, Sarawak Land Code (Chapter 81) in Sarawak and Sabah Land Ordinance in Sabah. The respective land offices are the administrative power of land matters, with the top executive power in the State Authority.
Developing mechanism of developers and builders
The law currently governing this part is for residential purpose – Housing Development (Control & Licencing) Act, and the Parliament is soon to debate on the new Bill called “Real Property Development Bill” to cover those non-residential real estates. Builders and developers are the producers of the real estate, and there are laws which safeguard the buyers (residential) and soon to include commercial, industrial and other real estate types.
In addition, recently there is a new law – Residential Tenancy Bill to be re-tabled in the Parliament for matters relating to residential rental. The laws are changing and public need to be aware of your rights under the law to protect yourselves. There are many con-artists out there, especially with the more high-tech ways of scams, including the fintech, proptech applications – lelong and investor clubs. People could get scammed away huge sum of hard-earned saving just over a wrong decision. Therefore, it is of paramount importance to regulate the intermediaries who carry out the role as agents.
Intermediary in transactions
The transactions (“dealings”) are carried out between parties who own or engage in tenancy of the real estate. In many instances, the owners are not personally handling the transaction matters. This is commonly seen in conveyancing. Lawyers are the professionals handling this process of dealings, and they ensure the eventual ownership transfer and exchange of money or benefits in this transactions.
Of course, in the case of kampung and villages where there could be no lawyer (registered legal practice), the kampung Penghulu, or village headman would become the intermediary. In this matter, the district office or if there is land office, the land administrator also become the officers in this transaction.
Another type of intermediaries are the brokers and agents, valuers and property managers as well. They are intermediaries who facilitate the transaction dealings – be it ownership transfer – buy and sell, or leasing, letting or renting.
In Malaysia, this area of law which regulates the intermediaries to ensure buyers and tenants are protected is Valuers, Appraisers, Estate Agents and Property Managers Act, 1981. The main reason is because in the past, a lot of people were being scammed to buy or rent properties. Many have lost thousand and ten of thousand of money to these illegal con-artists.
Under this law, an intermediary for real estate transactions, being any of the 5 activities below are within the definition of “Estate Agency Practice” S.22B(1A) :-
An intermediary who engage in the below activity(ies) for a fee, commission, reward or other consideration-
- Selling a property
- Sourcing to buy or to rent a property
- Leasing or letting or renting a property
- Making known or promote or advertise a property for the above purpose(s)
- Tenancy administration
is regulated under this law.
This person who qualifies to carry out the above “estate agency practice” is in law called a “Registered Estate Agent” – REA. Hence, unless a person is legally qualified as Registered Estate Agent (REA), it is criminal act to engage in the above dealings – selling, sourcing, renting, making known and tenancy admin of any property.
Who then is Real Estate Negotiator (REN)?
The law allows this person – REA, to recruit his or her team of salespersons – Real Estate Negotiators. Every REA who hold the authority to practice is allowed to recruit a maximum of fifty (50) persons of RENs. These RENs work under the supervision of this REA as if the work is carried out by the REA himself/herself.
The REN joins the firm which is set up by the REA to carry out the service of Estate Agency Practice. The law also specifies that the profession of estate agency practice is only to be carried out under a FIRM (S.23 Practice by Firms). Hence, a REN can only join a Registered Real Estate Agency Firm, and not just ANY FIRM!
Therefore, do NOT just follow any person who claims to be legitimate recruiting you until and unless you could see the office of Registered Real Estate Agency Practice (a firm) complying to the law. Because you could be scammed!
How then do I know I am joining the correct FIRM?
The registration of an estate agency firm comes with a Number. Below are the three types of firms:-
- E(1) XXXX – A Sendirian Berhad Real Estate Agency Firm.
- E(2) XXXX – A partnership Real Estate Agency Firm.
- E(3) XXXX – A soleproprietorship Real Estate Agency Firm.
There are regulations and Standards to follow when operating a Registered Real Estate Agency Firm. Particularly, the registration number and board crest have to be clearly exhibited in the signboard hanging outside the office. Moreover, the certificates of incorporation (certificate of registration for enterprise) and annual certificate of practice (authority to practice as a firm) have to be displayed in a conspicuous place within the office (Rule 25G Authority to Practice).
Therefore, for you who want to join a legitimate registered real estate agency firm, you must ensure you are able to see these certificates and registration requirements being publicly exhibited in the office. If NOT, you might be JOINING AN ILLEGAL BOGUS FIRM! YOU MIGHT BE MANIPULATED TO JOIN A SCAM!
Understand WHO and WHAT to look for when you select to join an estate agency practice. DO NOT be scammed!