Real estate agents or brokers are one of the most important stakeholders of the real estate sector. They act as a bridge between the seller/developers and buyers and make the home buying and selling process very convenient. With a strong knowledge of the real estate laws and professional skills, any individual is sure to thrive as a real estate broker.
However, with the enactment of the Real Estate (Regulation and Development) Act in 2016, the process for registering as a broker has changed. Not only does the act necessitates the registration of brokers, but one also has to adhere to a set of rules after getting certified.
So if you are planning to kickstart your career as a real estate broker but are not sure how to go about it, then you have come to the right place. In this blog, we will shed light on the provisions related to broker registration and penalties enshrined in the RERA act.
The economy’s growth and subsequent opening of new jobs make this appear as an insignificant cost towards ensuring your superior career progression. The government’s impetus, aimed at bolstering urban development and infrastructure – endeavors that include the ambitious target of adding 25 million homes, 40 million dwelling units.
Who is a Real Estate Broker?
A real estate broker is an individual who represents a client for the purpose of transfer of a property. The person is responsible for sale/purchase to or from another person and receives a remuneration or fees for their services. The fee is taken in the form of a commission that amounts to a certain percentage of the deal. A real estate broker is also someone who introduces prospective buyers and sellers to each other, through various mediums, for the purpose of selling or purchasing a property.
How to Register as a Real Estate Broker Under RERA Act?
The RERA Act was established to regulate the Indian real estate sector. It aims to standardize the industry, promote transparency, and protect the interest of buyers and sellers in the market. As per the Section 9(1) of the act, to become a real estate broker, you have to get yourself registered with the Real Estate Regulatory Authority (RERA) of the concerned state.
Documents Required
As a real estate broker, you are required to make an application in writing to RERA under Form G. The application will have to be accompanied by the following documents:
- An authenticated copy of your PAN card.
- Details of the partnership, proprietorship, company, etc.
- In case a real estate agency or brokerage firm is applying for registration, the details of incorporation along with certain documents like MoA, AoA, etc. are to be submitted.
- Name, contact details, address, and photographs of the real estate broker, partners, or director.
- An authenticated copy of address proof of the real estate broker/firm’s place of business.
- Details of any civil or criminal cases that are pending against the broker or his/her firm.
- IT returns for 3 financial years preceding the application
- For those exempted from filing returns, a declaration has to be submitted.
Application Fees
The application has to be submitted along with the fee that is prescribed. The amount can be submitted through a demand draft, online payment, or a cheque drawn on any bank that is scheduled under the concerned state’s RERA. It is to be noted that the documents required and the registration fee varies from one state to another.
Once the authority has scrutinized the application, it will register the real estate broker and grant a license to work in that particular state or union territory. The authority can also choose to reject an application based on reasons that will be provided to the applicant in writing.
What is Deemed Registration?
In case an application is made to RERA and the authority does not grant the registration certificate or reject the application within a period of 30 days, the individual will be deemed to have received the certificate of registration. This will only happen if the applicant has not received any communication by the authority regarding the status of his application about the deficiencies therein or its rejection.
For How Long is the Registration Valid?
Once the real estate broker is registered with RERA, his/her registration certificate will stay valid for 5 years from the date of receipt. The registration can be revoked before the date of expiry in case the broker breaches any rules or regulations under the RERA act. The registration can be renewed by submitting the necessary fee at least 60 days prior to the expiry date.
What are the Rules to be Followed by a Real Estate Broker?
Once an individual is recognized as a real estate broker, they have to adhere to the rules and regulations as mentioned in the RERA act in order to keep the certification intact. Some major rules that must be followed are mentioned below:
- A real estate broker must not facilitate the sale of an unregistered property.
- The broker must duly maintain the books of accounts, records, and documents (mentioned under rule 14 in the RERA Act).
- The broker must quote his/her registration number in every sale that he/she facilitates.
- Brokers must not partake in any unethical practice. This may include making false statements about the details of any project, giving misleading information, etc.
- In order to enhance transparency and ease of access to information for consumers, Maharashtra’s RERA made it mandatory for real estate advertisements and promotional materials – offline as well as online – to include QR codes. The absence of the QR code scanner from the promotional materials can lead to a penalty of up to Rs 50,000 under Section 65.
Penalties for Non-compliance
A real estate broker is required to obtain a registration certificate from the concerned state’s authority. If any provision of the act is violated, then the broker is liable to pay Rs. 10,000 per day (till the period of violation. This may even cumulatively extend up to 5% of the total estimated cost of the plots or buildings sold.
Additionally, if the agent does not comply with the verdict of the tribunal, then the agent may be imprisoned for up to 1 year/fined every day till the default continues. This may further extend up to 10% of the transaction cost.
BONUS SECTION: Real Estate Broker vs Real Estate Agent
The terms “real estate broker” and “real estate agent” are often used interchangeably, but they refer to different roles. Their roles have been summarized below –
Real Estate Broker
- Real estate brokers usually undergo extensive education and training compared to agents, which includes knowledge about real estate law, contracts, and ethics.
- Brokers can work independently or start their own brokerage firm. They have the authority to hire real estate agents to work under them. In addition to buying, selling, and leasing properties, brokers are also adept at managing the business operations.
- Ideally, brokers are expected to have a deeper understanding of real estate laws, procedures, and documentation. Considering they are tasked at handling more complex transactions than agents.
Real Estate Agent
- Real estate agents are required to become a licensed real estate agent, as mandated under the Real Estate (Regulation and Development Act), 2016 (RERA).
- The educational requirements are less rigorous than those for real estate brokers.
- Agents work under a licensed broker and aid clients in buying, selling, negotiating contracts, and renting properties.
- Agents are expected to be well-versed in the practical aspects of real estate transactions, market analysis, and client service. They are typically the primary point of contact for clients looking to buy, sell, or lease properties.
Hence, to work as a real estate broker, you have to register yourself with RERA and comply with the provisions mandated by the RERA act. Although the registration process remains almost similar across India, the documents and fees vary from one state to another. Registration is a legal requirement; however, to flourish as a broker, you must have excellent negotiation skills so that you can bring the best offers to the table!
