Law and Order, or Realtors’ fraud disclosure

Ukrainian realtors today can be compared with enchantresses. Everyone knows that they exist, looking for their contacts. Although, from an official point of view, they do not exist as nothing specific is said about them in our laws. "Today, anyone can say that he is a realtor. However, concluding a deal, he will not account for anything afterwards," lawyer Valery Dubovik says.

Recently, the Administration of the President of Ukraine has finally instructed the government to provide the regulation of real estate activities and legalize this market of services. August 8, the Economic Development and Trade Ministry of Ukraine submitted for public consideration the draft law "On Real Estate Activities". Among the main objectives of the document is training of mediators in the sale or lease of real estate, the creation of the State Register of Realtors, as well as the legal definition of the relationship between brokers and people using their services.

By passing this document, the Administration hopes to increase the level of protection of the rights of Ukrainians, who often become victims of "black" realtors, and, consequently, to reduce the number of violations in this area.

Meanwhile, we hear more often of realtors’ frauds. Moreover, the bubble schemes amaze by their variety and fraudsters easily escape responsibility.

Kharkiv citizen Natalia told ForUm how half a year ago she nearly became a victim of the "black" realtors. "When I moved to a new city, I had to urgently find an apartment. I found a suitable option on a website: the city center, good repairs, judging by the photos, affordable price. At the meeting, the realtor showed me different photos, although, the address was the same as that in the ad," Natalia says to ForUm.

Misunderstanding with photos, according to the girl, made her grow suspicious, but she decided to listen to the conditions, offered by the realtor. "He told me that I have to pay 1.500 UAH, to sign a contract with him, the clauses of which, incidentally, were piecemeal and sometimes not appropriate to the nature of our deal. After, he promised to hand over the keys to the apartment, where I was to meet him and get to know fellow homeowners. Such an incomprehensible scheme made me even more suspicious.

In addition, the flow of the questions I asked the broker, knocked him off balance and he became visibly nervous. Of course, I refused his services. But it is possible that someone else still had to pay for being too trusting," says Natalya. 

Similar stories have crammed dozens of branches on the discussion forums. The lawyers themselves also do not deny the existence of the problem.

"Cases happen when realtors are taking money for the search for housing, and then refuse to do it," Valery Dubovik says. At the same time, according to the lawyer, when dissatisfied customers re-read the contract carefully, it turns out that it is really stated that a realtor shall provide only informational and advisory services. As a result, he declares that he fulfilled his task, providing general information about flats. Although it is possible that prior to signing the contract, he promised to do everything as quickly as possible to find you a suitable accommodation. And in fact, even the provision of information may be outdated, and the apartment has long been sold or leased.

Of course, all realtors should not be accused of dishonorable conduct and frauds. Lawyer Andriy Kotyagin believes that increasing competition in the battle for customers and a sharp drop in demand for real estate has still somewhat improved the market, so realtors are beginning to appreciate its reputation and fight for the client.

However, the restrained ambition is not enough to regulate the activities of realtors. "There must be some kind of disciplinary authority, which in the case of improper performance of duties would impose penalties on a realtor. Up to the deprivation of the license or certificate. Then they will at least be afraid of engaging in outright fraud," Dubovik says.

Legalization of the real estate services market in Ukraine has been decided to start first with the improvement of the legislative framework. When a document developed by the Economy Ministry is passed, the realtors will have to prove their professionalism not by mouth, but by deed.

If now their employers have no requirements regarding education, the situation may change in the near future. The bill requires professional training of realtors, passing qualification examination and issuance of the relevant certificate. In addition, they will be obliged, at least once every three years to improve their professional skills through training program to obtain the certificate. 

Lawyers have already evaluated this provision. In particular, Valery Dubovik says realtor should not be just a man in the street, who goes to work wherever is taken, but a qualified person. After all, quality of his work depends directly on that.

"Today, it often happens that ordinary people suffer as a result of the incompetence of realtors. For example, apartments are bought via some strange power of attorney. Contracts are declared invalid at the judicial level. Sometimes realtors do not have any education related to this field of activity, and do not know basic things. For example, what documents are needed to really confirm proprietary rights, how to determine that they are not expired, and so on. And the case refers to large sums of money, which people invest in real estate. Therefore, realtors have to be qualified," the lawyer said.

Another important innovation, provided for in the bill, is the creation of the State Registry of Realtors and the subjects of real estate activities. It will contain information concerning the state registration of their activity, location of the organization, and data supporting the existence of qualifications of specialists in this market.

There is also a proposal for limiting the maximum size of payment for real estate services with three percent of the value of real property specified in the transaction. However, this clause has drawn criticism of some lawyers. "This will lead to further outflows of these services in the shadow," says lawyer Andriy Kotyagin. However, the document has not been adopted yet and is now in the public debate, so any edits are possible. 

It should also be noted that in addition to the duties and rights of realtors, the document will provide for such norms in relation to the consumers of their services. In particular, the important thing is that you shall have the right to demand cancellation of the contract for the provision of real estate services, if another party fails to comply with its terms. And after that, you can claim damages and compensation for moral damages. It is noteworthy to say that the typical form of such a contract will be approved by the Cabinet of Ministers of Ukraine.

The draft law also provides for liability for non-compliance with legislation in this area. For example, the subjects of real estate activities may incur civil, administrative or criminal penalties for failure to comply with the clauses of the contract. In addition, pursuant to the provisions of the bill, realtor shall not be a person, who has not expired record of a crime against property or crimes in the sphere of economic activity.

As you can see, the preconditions for improving the situation in the market of real estate services have appeared. The mechanism is set to launch and now all that is left to do is to follow the development of further events.