Act XXXII of 2020 makes licensing a requirement for all Estate Agents, Property Brokers and Branch Managers
News    ·   11-08-2020
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AUTHOR: Marisa Vella; Stefania de Gabriele

Introduction

The 3rd of July 2020 marked Parliament’s ratification of Act No. XXXII of 2020, referred to as, Real Estate Agents, Property Brokers and Property Consultants Act, 2020, which Act provides for the licensing of the branch manager, real estate agent, property consultant and property brokerage professions.

The overarching intention of the new law is to place a licensing requirement on all persons who choose to exercise the activity of a “property broker”, a “property consultant”, a “real estate agent” or a “branch manager”, in an attempt to create more transparency in the industry. All persons applying for a  licence must satisfy a number of criteria before a Licensing Board which is established under this Act. The applicable cut-off date i.e the date within which all persons seeking to carry out the above activities must have obtained a registered licence, is the 31st December 2021.

Persons requiring a Licence under the Act

The law defines those persons  requiring a licence as follows:

 “property broker” means any natural person who has a licence to act as an intermediary in the process of negotiating and arranging transactions involving the acquiring or disposing or leasing of land in terms of this Act and does not employ and, or engages any branch managers and, or any property consultants;

 “real estate agent” means any natural person who has a licence to act as an intermediary in the process of negotiating and arranging transactions involving the acquiring or disposing or leasing of land and employs and, or one or more branch managers and, or one or more property consultants;

Therefore, property brokers and real estate agents need to be licensed if they act as an intermediary in the process of negotiating and arranging transactions involving the acquiring or disposing or leasing of land, including when the said activity is carried out through the engagement or the employment of a branch manager or a property consultant or both.

“property consultant” means any natural person who has a licence to act as an intermediary in the process of negotiating and arranging transactions involving the acquiring or disposing or leasing of land in terms of this Act and is employed or engages by an estate agent and who acts under the directions of the same or those of a branch manager.

“branch manager” means any natural person who is a holder of a licence and is employed or engaged to supervise any property consultant.

Notwithstanding the distinction between these different roles, the new law creates one set of criteria to determine whether any individual may begin or continue to exercise these different activities mentioned above.

The law further distinguishes between those who perform the regulated activities on an every day basis and those who perform them occasionally. The law stipulates that a licence shall not be required where a person carries any of the above regulated acitivities on an occasional basis and in addition does not advertise his services nor employ or engage anyone to assist him in the carrying out of the said occasional acitivity. The law defines occasional activity as “acting as an intermediary in the process of negotiating and arranging not more than 2 transactions per annum involving and acquiring or disposing or leasing of land.” A notification to the Board in cases where an individual wishes to carry out any of the regulated activities on an occasional basis, is still required. 

Eligibility Criteria

In accordance with Article 4 (1) and (2) of the new law, any person is eligible to obtain a licence to act as a property broker or real estate agent or a branch manager, provided he:

(a)    Has attained the are of eighteen (18) years or has been emancipated to trade;

(b)    Holds a certificate in real estate having as its subject matter the legal, financial, technical and communication issues related to real estate, its marketing and sale, at a minimum of 12 (ECTS) at level four (4) in the case of a real estate agent and a minimum of 8 (ECTS) at level fourt (4) in the case of property consultants, of the Malta Qualifications Framework attained from a fully licensed training institution with a regular licence by the National Commission for Further and Higher Education; and

(c)     Any other qualification which the Malta Qualifications Recognition Information Centre recognises as being equivalent.

In addition to the eligibility criteria, any persons wishing to obtain a licence under the Act must submit an application in the prescribed form. Most importantly, the applicant must indicate in his application, the place or places of activity and where he intends to carry out the activity including what he believes to be his principal place of activity.

The law provides opportunity for those individuals who wish to form a partnership in Article 3(5). In this case, an application for partnership must include, inter alia, the principal place of activity, along with the details of all beneficial owners within that partnership.

In general, applications are considered by the Licensing Board and authorised after all the necessary requirements are fulfilled. Other factors, such as the beneficial owners’ conduct and repute, their financial position and the interests of the public are also a necessary consideration members of the Licensing Board must make, before determining a person’s eligibility. Once an individual is approved and granted a licecse, the law does not allow for a change in the beneficial owner, unless prior approval has been granted by the Licensing Board.

The law allows licensee’s to exercise the activity of a broker or of a real estate agent under a particular name, other than his own. Whatever the chosen name, it must first be approved by the Licensing Board. The Board will not approve of the name however if it feels that it resembles the name of any other person, firm or Company exercising the same type of activity.

In any case, the Board shall set up in accordance with the Act, a Register of Licensees which  it shall ensure is available to the public and updated regularly with new or suspended licesnses and other necessary information.

The Effects of a Licence

Once a licence has been granted, the licensee is provided with an Identity document which shall contain, amongst other things, a photograph of the licensee, his name, the licence type, registration number and term of validity. The validity of a licence under the Act remains until the expiration of five years. After five years, the licence will be renewed unless there are reasons not to renew the licence under any of the grounds provided for in the Act.

Alternatively, a licensee may at any time surrender his licence, but notifying the Board in writing. However, surrendering a licence does not free the licensee from obligations he would have had, had he not surrendered his licence, such as, the obligation to pay fees on or before the date on the licence would, but for its surrender expire.

The Act also allows for the Licensing Board to cancel or suspend a licence which it has granted. The Act lists a number of scenarios within which this can occur, such as, where the Board determined that the licensee no longer fulfils or meets the requirements, or has contravened any of the provisions of the Act.

In the event that any applicant for a licence under this law feels aggrieved by the decision taken by the Board, then there is the possibility of appealing that decision to the Administrative Review Tribunal. An appeal must take place within 20 days from the receipt of the Board’s decision- whether that be a decision to suspend a licence or a decision not to grant one in the first place.

Novel features of the Law

A feature of significant importance in the new law is the obligation imposed on Licensees to make known to the parties, in advance, the fees to be charged for their services. The law moreover provides that a fair compensation would still be due in the event that the licensee was active during the negotiations between the parties, but the transaction is never finalised. Such compensation would, in any case, be determined by a court.

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