NO SUCH THING AS “FREELANCE REAL ESTATE AGENT!”

THERE ARE ONLY EITHER LEGALLY ACCREDITED REAL ESTATE AGENTS OR ILLEGAL REAL ESTATE AGENTS!

WHAT IS A REAL ESTATE AGENT?

Real Estate Agents Law

                Imagine you’re admitted in a hospital due to a certain illness. You were expecting that your medical insurance would cover the medical bills but you later found out that the Insurance Agent sold you a Memorial plan instead of a Medical Insurance plan! Or worse, what if you found out that you have dealt with a bogus Insurance Agent and ran away with your money?! After seeing the medical bills, you might as well need a memorial plan because of a heart attack.

Imagine if a certain Medical Sales Agent sold a doctor the wrong medicines that were administered to you? That would be unthinkable! What if your Stock Sales Agent bought the wrong shares of stock for you? You could lose big time! What would you do if you mortgate your house to get some money to apply for abroad only to find out that you dealt with an illegal recruitment agent? In the same thought, imagine what could possibly go wrong if you dealt with a “fly-by-night” real estate agent?

Brokerage agency is a very essential profession in many industries, including Real Estate Service. An incompetent or illegal agency practice could lead to horrible or even fatal results! These are the reasons why Medical Sales Agents, Insurance Sales Agents, Recruitment Agents and Stock Brokerage Agents require extensive training and licensure. This applies true with Real Estate Sales Agents also. But unfortunately, many Real Estate Sales agents in our city are practicing without proper competence or legal requirements.

Sadly, unlicensed practice of the Real Estate profession is still happening simply because culprits can always get away with it. Thus, any Juan, Pedro, Maria or anybody who could compute 5% commission, would find properties to sell, advertise them on the internet or classified ads, and pose as real estate agents without legal qualifications! Due to these reasons, the government acknowledged the need to regulate and professionalize the Real Estate Service Industry by making the Real Estate Services Act (R.A. 9646) into a law.

R.A. 9646 is intended to set standards of professionalism and ethics in the Real Estate Service Industry. Hopefully because of this law, the industry would earn the respect and recognition it deserved. Thus all who practice the Real Estate Service are required to abide by this act.

WHAT IS A REAL ESTATE AGENT ACCORDING TO R.A. 9646?

•       REAL ESTATE SALESPERSON – Real estate salesperson a duly accredited natural person that performs service for and in behalf of a real estate broker who is registered and licensed by the Professional Regulatory Board of Real Estate Service for or in expectation of a share in the commission, professional fee, compensation or other valueble consideration. –”Section 3 paragraph g-5”

As an emphasis, a Real Estate Sales Agent, a Real Estate Salesman and a Real Estate Salesperson is one and the same. This is a duly accredited natural person who works in behalf of a duly licensed Real Estate Broker who has direct supervision over him/her.

WHAT ARE THE Rights and Limitations of a Salesperson?

•       Can perform Real Estate Services for and in behalf, and under direct Supervision of a licensed Real Estate broker.‘’ RESA Sec.31 Paragraph 1 Sentence 4’’

•       Has the privilege to the share of the commission, professional fee, or valueble consideration for deals closed. –”Section 3 paragraph g-5”

•       As such they cannot by themselves be assignatory to a written agreement involving a real estate transaction unless the real estate broker who has direct supervision and accountability over them is also a signatory thereto. – ‘’RESA Sec.31 Paragraph 1 Sentence 5’’

•       No real estate salesperson, either directly or indirectly negotiate or transact any real estate transaction for and in behalf of a real estate broker without first securing an authorized accreditation as real estate salesperson for the real estate broker, as prescribed by the Board. – ‘’RESA Sec.31 Paragraph 1 Sentence 6’’

Republic Act 9646 tells us that no salesperson shall be assignatory to any real estate transaction document or should not directly or indirectly transact any real estate transaction without securing authorization from their broker. Hence, real estate documents such as Authority To Sell, Memorandum of Agreement and/or Receipt of Payment, etc. must not be in the name of the salesperson as the principal assignatory. The Real Estate broker must be the principal assignatory to these documents and the salesperson can sign as witness in the same documents.

UY! LISTING KO YAN!!! (Hey! That’s my listing!)

•       WHAT IS A REAL ESTATE LISTING? – IT IS AN AUTHORITY GIVEN BY THE OWNER or THE TRUSTEE of the OWNER by virtue of SPECIAL POWER OF ATTORNEY TO THE BROKER TO OFFER TO SELL, LEASE, MORTGAGE, EXCHANGE OR JOINT VENTURE,  A CERTAIN PROPERTY OR PROPERTIES, FOR A COMMISSION, FEE, AND/OR VALUEBLE CONSIDERATION.

Many so-called “freelance” real estate sales agents have the notion that when they pointed out a certain property for sale or lease or joint-venture or exchange, they actually believe that the property is already their “listing”. Ofcourse if we now know that a listing must be accompanied by an authorization given by the seller to the broker to offer the said property to prospects. A mere “pointing out” of a certain property does not turn that particular piece of real estate a “listing”.

CAN A SALESPERSON GET LISTINGS FOR HIS/HER OWN SELF?

As discussed earlier in this article (RESA Sec.31 Paragraph 1 Sentence 5) no salesperson shall be assignatory to any real estate transaction document including authority to sell and memorandum of agreement. Only licensed real estate broker can be a principal assignatory to these kinds of documents and the salesperson can sign as a witness.

•       Therefore, what an accredited salesperson can do is ENDORSE THE OWNER/SELLER/LESSOR OF THE PROPERTY TO GIVE THE LISTING TO THE LICENSED BROKER WHO IS SUPERVISING THE ACCREDITED SALESPERSON.

 No salesperson shall be entitled to receive or demand a fee, commission or compensation of any kind from any person, other than the duly licensed real estate broker who has direct control and supervision over him, for any service rendered or work done by such salesperson in any real estate transaction. ‘’RESA Sec.31 Paragraph 2’’

In this paragraph, it is clear that no salesperson shall demand or collect any fee from clients. Only the brokers have legal rights to collect professional fees. Then again, it is the brokers’ obligation to compensate their salespersons for the service they have rendered by giving a share of the professional fee or salary or any valueble consideration they have agreed upon.

·         No violation of this provision shall be a cause for revocation or suspension of the certificate of registration of the real estate broker unless there was actual knowledge of such violation or the broker retains the benefits, profits or proceeds of a transaction wrongfully negotiated by the sales person. ‘’RESA Sec.31 Paragraph 3’’

In this part of the law, it is also clear that the accrediting broker shall not have his/her license revoked as long as the broker has no knowledge of the salespersons’ illegal or unethical activities. Should the broker found out that a certain salesperson committed an illegal or unethical transaction, the broker has the right to withheld the proceeds of the said transaction and report the incident to the proper authorities.

We often hear these phrases “Minsan lang ako nag-ahente eh! Kailangan ko pa ba ng license non?!”

(“Do I still need a license even if I only posed as freelance real estate agent at one time?”)

Let’s look at what the law tells us:

“R.A. 9646 Section 27:

Acts Constituting the Practice of Real Estate Service- Any single act or transaction embraced within the provisions of Section 3(g). Rule II hereof, as performed by real estate service practitioners, shall constitute an act of engaging in the practice of real estate service.”

The law clearly states that ANY SINGLE ACT is already a practice in Real Estate Service, hence would require proper licensure and accreditation to do so. Therefore…

“Prohibition Against the Unauthorized Practice of Real Estate Service- No person shall practice or offer to practice real estate service in the Philippines or offer himself/herself as real estate service practitioner, or use the title, word, letter, figure or any sign tending to convey the impression that one is a real estate service practitioner, or advertise or indicate in any manner whatsoever that one is qualified to practice the profession, or be appointed as real estate service practitioner in any private, national government entity or local government unit, unless he/she has satisfactorily passed the licensure examination given by the Board. xxxxxxxxx” RESA Section 29

Section 29 of RESA tells us that even a mere “sign tending to convey the impression that one is a real estate service practitioner” must have be duly licensed or accredited by the Profesional Regulations Commission, or else would be in violation of the law.

LIMITATIONS OF REAL ESTATE BROKERS ACCORDING TO R.A. 9646 Sec. 31 paragraph 4

BROKERS CANNOT….

·         Deny just compensation for the services rendered by their duly accredited salespersons.

•       Hire unathorized real estate practitioners.

•       Agree to share commissions with unlicensed real estate practitioners.

•       Use the sales persons of other brokers if there are no consent from the accrediting broker.

•       Fail to report any violation/s of R.A. 9646 OR ELSE THE BROKER SHALL BE IN VIOLATION OF THE BOARD CODE OF ETHICS HIM/HERSELF. “Section 35, RESA”

Therefore, a real estate salesperson, in order to pursue his/her livelihood must duly accredit themselves under a licensed broker. Should the unaccredited salespersons render services and/or agree to share commissions with a broker, that would cause the broker to violate Section 31 of R.A. 9646.

Another common phrase we hear in the industry is this:  “May Special Power of Attorney ako kaya dapat kalahati ng Commission sa akin!” (I have the Special Power of Attorney, so I must have half of the commission!)

Who are excempted to practice Real Estate Service without license? (RESA Sec. 28)

•       Owners selling their own properties with certain limitations provided by law.

•        Persons appointed by court to perform real estate service, for example : bankrupcy insolvency proceedings.

•        Public Government Officers performing their functions except assessors and appraisers.

•        Trustee granted a Special Power of Attorney WHO DO NOT REQUIRE PAYMENT, COMMISSION, RENUMERATION OR CONSIDERATION.

We often hear many so-called real estate sales agents pose as “Trustee” to a certain client. But in legality, a Trustee or a representative is one who is granted a Special Power of Attorney WHO DO NOT REQUIRE PAYMENT, COMMISSION, RENUMERATION OR CONSIDERATION.   Therefore, if one does not hold a Special Power of Attorney or he/she demands compensation for the sale of a certain property, that person is required a license or accreditation by the PRC.

WHAT ARE THE QUALIFICATIONS TO BE A REAL ESTATE SALES PERSON? RESA Sec.31 paragraph 1.

·         MUST BE FILIPINO CITIZEN

  • WITH GOOD MORAL CHARACTER, HONESTY AND INTEGRITY

·         NO AGE LIMIT

·         2 YEARS OF COLLEGE; or 3year experience as a DTI REAL ESTATE SALESMAN; or Certified 3yrs Salesman experience by a licensed Real Estate Broker

·         NO CRIMINAL CONVICTION

·         Appropriate number of Credit Units of PRC Accredited Real Estate Training:

o   For salespersons with 2years of college – 12 units and 60 hours of On-the-Job Training certified by the accrediting Real Estate Broker.

o   For sales person without 2years of college – 60 units of PRC Accredited Training and 60 hours On-the-Job training certified by the accrediting Real Estate Broker.

WHAT ARE THE REQUIREMENTS TO BE ACCREDITED AS A REAL ESTATE SALESPERSON?

·         BIRTHCERTIFICATE

·         TRANSCRIPT OF RECORDS

·         NBI CLEARANCE

·         CEDULA

·         NOTARIZED CERTIFICATE OF PRC ACCREDITED TRAININGS WITH CORRESPONDING REQUIRED CREDIT UNITS

·         NOTARIZED CERTIFICATE OF ON-THE-JOB TRAINING FROM THE ACCREDITING BROKER

·         DULY ACCOMPLISHED ACCREDITATION FORM

·         ID PICTURES

·         P5,000 WORTH OF SURETY BOND – (different insurance companies charge different premiums for surety bonds)

These requirements shall be submitted by the accrediting Broker to PRC for registration on or before December 2011.

WHAT IF A CERTAIN PERSON WHO IS NOT A LICENSED BROKER OR AN ACCREDITED SALESPERSON HELPED IN CLOSING A DEAL, IS IT ILLEGAL TO GIVE THAT PERSON SOME MONEY OR GIFT AS TOKEN OF APPRECIATION?

REFERRAL FEE vs COMMISSION

•     It is legal and ethical to give gifts or referral fees to people who helped in closing the deal.

•     It is illegal and unethical to agree to split commission, percentage or rebate to any unauthorized person.

•     Referral fee  to be legal must be freely given by the Broker to the referror whatever the amount or value may be.

•     Demanding for an amount or percentage as “referral fee” is not a referral fee but a commission or rebate, thus it would be illegal for unlicensed practitioners.

So for unaccredited/unlicensed persons who helped in closing a deal DO NOT HAVE legal rights to demand or collect commissions, rebates or compensation for the services they rendered, but they may be (and it should be emphasize “may be” and not “must be”) given gifts, token of appreciation, or referral fees which value or amount is in the discretion of the servicing Real Estate Broker.

For a salesperson to demand and collect, commission, salary, or valueble consideration from the broker, he/she must be duly accredited with the licensed broker.

AS EMPHASIS: Commissions are for Professionals Only! Referral fee is ANY AMOUNT freely given by the broker to the referror.

WHAT DOES THE LAW TELLS US ABOUT THE PUNISHMENT OF VIOLATING RESA? (R.A. 9646 Sec. 39)

resa punishment•       FOR LICENSED PRACTITIONERS THE PUNISHMENT WOULD BE NOT LESS THAN P100,000.00 FINE or  Imprisonment for not less than 2 years OR BOTH!

•       FOR UNLICENSED PRACTITIONERS THE PUNISHMENT WOULD BE NOT LESS THAN P200,000.00 FINE or  Imprisonment for not less than 4 years OR BOTH!

We don’t want that do we? Back in the day, DTI Memorandum Order No. 39 Series of 1985, doesn’t seem to have the teeth to implement its’ police power. But nowadays, according to R.A.9646 Sec.35, PRC shall appoint special prosecution team to enforce this law.

This law was enacted not to scare away people from practicing real estate service. R.A.9646 intends to provide high morals and professional standards to all real estate practitioners. And most importantly, RESA aims to protect the clients, brokers, and real estate salespersons from unethical and unlawful real estate practices.

RESA is indeed a breath of fresh air to the industry of Real Estate Service. Many are optimistic that this move by our legislators will bring about positive developments in the industry. Unlike the “Anti-Littering Law” or the “Anti-Piracy Law” that many people do not respect, we just hope that this law would be respected by all to be beneficial to our country in general. We often hear these phrases “The Philippines have many very good laws, the problem is Filipinos just don’t follow them”.

Now the next questions are “How will the RESA be enforced? What steps should the government and the industry take to make sure that this law must be followed?”
DO NOT BE AN ACCOMPLICE IN VIOLATING THE LAW!!! Obey the law! Avoid getting arrested!

DO NOT BE AN ACCOMPLICE IN VIOLATING THE LAW!!! Obey the law! Avoid getting arrested!

Unlicensed Real Estate Agent caught by police

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REMINDER!!!

ALWAYS TRANSACT BUSINESS WITH LICENSED REAL ESTATE SERVICE PROVIDERS!!!

DEALINGS BY UNLICENSED REAL ESTATE AGENTS ARE PUNISHABLE BY LAW. Republic Act 9646

CHECK IF YOU'RE DEALING WITH LICENSED REAL ESTATE BROKERS HERE

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Cheers,

Gary Louis David

Real Estate Broker License No. 0003469

VP for Marketing KingDavid Realty Co.


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