New legislation for estate agents

news: New legislation for estate agents

A new law regulating the activity of estate agents is about to come into force. The Decree Law 211/2004, of August 20, will come into force on September 20 and replaces the former regulations related to this activity, namely Decree-Law 77/99, of March 16.

The main points of this new Decree Law are as follows:

The activity of estate agents is that by which a company undertakes, by way of a contract, to find a party interested in the set up or acquisition, transfer, exchange or lease of a property.In this respect, estate agents may:

• Search for and obtain information towards finding a property as requested by

a client

• Carry out actions for the advertisement of properties

• Request documents and information required for the transaction

It should be noted that the estate agents may not perform or execute acts that are exclusive to other activities, mainly acts which can only be executed or performed by lawyers or legal executives.In fact, according to Law 49/2004, of August 24, acts such as drafting contracts or any preparatory actions towards the completion, change or termination of a legal agreement are exclusive to lawyers or legal executives and, therefore, may not be carried out by estate agents.

The activity of estate agents requires a licence granted by IMOPPI, which is granted for periods of three years. In order to obtain such a licence, the interested party must:

• Be a company

• Have as its object the activity of estate agent

• Have all tax and social security obligations up to date

• Have professional capacity

• Be properly insured

• Have positive share capital

• Have professional good standing

The name of the company, as well as all contracts, stationery and advertisementS must contain the expression Mediação Imobiliária and the licence number. Furthermore, employees must be identified with cards containing their name, picture and company details. Estate agents may receive clients only in independent facilities. The opening, change or close down of the facilities must be previously communicated to IMOPPI.

The estate agents’ contracts must be in writing and must contain:

• Identification of the property’s characteristics, as well as all charges or

encumbrances on it

• Identification of the type of transaction

• Payment terms, mainly the amount or percentage of the agents’ commission

and applicable VAT

• Identification of the details of the insurance policy

Another obligation of estate agents to IMOPPI is that they must have an updated archive of all contracts for a period of five years.In their relations with clients, estate agents must, among others:

• Certify that the clients are duly authorized to enter into the contract

• Obtain and provide all information related to the transaction, mainly

characteristics, type, price and payment terms

• Certify compliance between the information contained in the estate agents’

contract and that provided by the party

In general, the estate agents’ commission is only due upon completion of the transaction and estate agents are prohibited from receiving commission from both parties. All amounts received by the agents must be held by the agents until completion of the transaction. The agents are prohibited from using these monies for their own benefit. Furthermore, all monies received by the agents must be returned to the party before entering into a promissory contract or before completion. After this, all monies received by an agent on account of the consideration must be immediately transferred to the other party.

The IMOPPI is the regulatory body for this activity. In this respect, it is entitled to confirm compliance of the estate agent with these regulations.The agents that do not comply with these regulations may be subject to civil and penal responsibility. Furthermore, if a client is not satisfied with the agents’ conduct or believes the agent is in breach of the above regulations, he should file a complaint with IMOPPI. As mentioned above, estate agents must be properly insured. The insurance policy is requested to insure all patrimonial damages to third parties that arise from the agents’ activity. No agent may begin to operate without proving to IMOPPI that this insurance policy has been subscribed.

Estate agents’ licences may be suspended or cancelled by IMOPPI in the event of non-compliance with any of the above regulations. All agents whose licences have been suspended or cancelled must stop their activity immediately and all contracts are considered to be terminated.