On 04 September 2020, the Real Estate Agent Authority Act received the assent of the President of Mauritius. The Real Estate Agent Authority Act seeks to provide for the establishment of a Real Estate Agent Authority (REAA) which would assist in offering enhanced protection to parties to real estate transactions in Mauritius, and at the same time maintain the good repute of Mauritius’s real estate industry. The Real Estate Agent Authority Act 2020 will come into operation on a date to be fixed by proclamation. Real estate agents in Mauritius are advised to familiarize themselves with their new duties and responsibilities.
Compulsory registration of real estate agents
The REAA would register all real estate agents, including land promoters and property developers, and regulate their business activities, with no person permitted to act as real estate agent unless registered with the REAA. Failure to register as real estate agent if required to do so will be an offence punishable on conviction by a fine of up to MUR 100,000 and imprisonment of up to 2 years. As a transitional measure, persons already acting as real estate agents prior to the commencement of the Real Estate Agent Authority Act would have up to six months after the commencement of the Act to apply for registration.
Definition of a Real Estate Agent
A Real Estate Agent is broadly defined and would include any person who carries out a real estate transaction by:
- negotiating the sale, exchange, purchase or lease of real estate;
- taking part in the procurement of prospects, or in the negotiation or closing of transactions, which result in the sale, exchange, purchase or lease of real estate;
- procuring vendors, purchasers, lessors, lessees, landlords or tenants of real estate;
- advertising or holding oneself out as being engaged in the business of negotiating the sale, exchange, purchase or lease of real estate;
- receiving payment for a real estate transaction, either by oneself, one’s
- partner, employee or agent;
- engaging in real estate management, either as a consultant or as an agent.
The definition of a Real Estate Agent explicitly includes land promoters or property developers, and explicitly excludes the following persons:
- a person who carries out a real estate transaction where he is the owner or part-owner of the real estate;
- a person who acts for, or on behalf of, another person under a power of attorney to carry out a real estate transaction, and he does not carry out that transaction for any profit or consideration;
- an administrator, a liquidator, a receiver manager, a receiver, an auctioneer or a trustee who, in the discharge of his functions, carries out a real estate transaction.
Persons entitled to register as Real Estate Agent
A natural person who wishes to register as Real Estate Agent would need to be aged 21 or over, and either hold a diploma in real estate (or an equivalent qualification approved by the Board) or possess a minimum of 5 years’ experience in the business of real estate transactions. A company, ‘societe’ or partnership may be registered if at least one director/ member/ partner of the entity is registered as real estate agent.
A person will be barred from registering as a real estate agent if:
- he has been convicted of a financial crime
- he has been convicted within 10 years of his application of an offence involving fraud or dishonesty in any country;
- he has been disqualified or deregistered from acting as a real estate agent within 5 years of his application due to professional
- misconduct, fraud, dishonesty or breach of a code of practice in any country;
- he is declared bankrupt;
- he is the subject of extradition proceedings;
- his name appears on a United Nations Sanctions List;
- he is an employee of another estate agent.
Security to be furnished by a Real Estate Agent
As part of the process of registering as Real Estate Agent, it will be compulsory for an applicant to furnish a security that can subsequently be applied to satisfy a judgement debt in connection with the real estate business. The security may be in the form of cash deposited with the Accountant-General, a bond of a bank, an insurance policy, or a mortgage on an immovable property. The amount of the security will be prescribed.
Register of Real Estate Agents
The REAA would keep a Register of Real Estate Agents which would be available for inspection on the payment of a fee. The register would contain the name, address, and qualification of every estate agent, as well as details of estate agents who have been suspended, or deregistered, or have passed away.
Code of professional conduct
Real estate agents would be required to comply with a Code of Conduct and Practice and uphold the good repute of the business of real estate in Mauritius. The REAA would be empowered to investigate any complaint made against a real estate agent which relates to professional misconduct, and in cases of professional misconduct, take disciplinary measures. The Act provides very detailed examples of what would constitute acts of professional misconduct on the part of a real estate agent in relation to the sale, exchange, purchase or lease of a real estate:
Dishonesty and misrepresentation
- Holding himself out as a real estate agent having authority to carry out real estate transactions on behalf on an owner without the owner’s consent
- Misrepresenting to the public that he is the owner of the real estate and failing to disclose that he is a real estate agent
- Using another real estate agent’s description, photograph or other information relating to real estate to procure his services as a real estate agent
- Assigning a contract without providing full and frank disclosure to all parties involved in the transaction
Conflict of interest
- Acquiring an interest in the real estate without disclosing details of the interest to the owner of the real estate
- Inducing a party to a contract to breach the contract for the purpose of entering into a contract with another person
- Acting as a dual agent without the written consent of the parties involved in a transaction
- Accepting a commission, rebate or profit on expenditures made while acting as a real estate agent in the management of the real estate without the owner’s consent
Gross negligence or incompetence
- Demonstrating gross incompetence or gross negligence in discharging functions as a real estate agent
- Employing or using the services of a person whose application for registration as a real estate agent has been refused on grounds of character, or who is suspended as real estate agent, or whose name has been removed from the Register and has not been reinstated
It is to be noted that, in relation to a real estate agent which is a company or any similar body, any act done with the knowledge, consent or connivance of the director, manager, secretary or similar officer, would be deemed to be an act done on the part of the body corporate.
Written contract of agency
No real estate transaction can be carried out by a real estate agent unless there is a written contract between the real estate agent and the client. The contract would need to specify the real estate and the transaction to be carried out, the period of validity of the contract, and whether the real estate agent is the sole agent in respect of the subject matter of the contract. Any dispute pertaining to the performance of any contract may, if the parties agree, be referred to and settled by the REAA.
The fee chargeable by a real estate agent for carrying out a real estate transaction shall be a prescribed percentage of the value of the transaction. The real estate agent would nevertheless be entitled to charge other fees for giving advice as regards a real estate transaction or for other services.
Proper keeping of accounts
A real estate agent would be required to keep proper accounts of his receipts and expenditures showing clearly and separately amounts in connection with every separate real estate transaction. The accounts are to be maintained for a period of 7 years following the completion of the transaction. The REAA will be empowered to designate an auditor to audit the books of account of any estate agent.
The supervision of real estate agents, for the purpose of anti-money laundering and combating the financing of terrorism, will continue to be the responsibility of the Financial Intelligence Unit (FIU).
It is to be noted that a real estate agent who not only becomes aware, but ought reasonably to have become aware, of a suspicious transaction, and fails to make a report to the FIU within 5 working days after the suspicion arose, may become liable on conviction to a fine of up to MUR 1 million and to imprisonment of up to 5 years.
The laundering of illicit funds through real estate is a well-established money-laundering method throughout the world. Real estate agents are strongly advised to be conversant about the various ML/TF risks in relation to real estate transactions, safeguard themselves against possible accusation of assisting in the retention or control of the proceeds of money laundering and criminal conduct, and seek appropriate professional guidance in order to manage those risks.
Improved business climate
The real estate industry has become an important pillar of the Mauritian economy. The REAA, by professionalizing the activities of real estate agents in Mauritius, and by offering enhanced safeguards and protection to parties to real estate transactions, would create a more secure business environment conducive to the continuous development of the Mauritius real estate industry, now a main driver of economic growth.
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Fred Yeung Sik Yuen CPA FCCA CGMA MBA
Date of Publication: 23 March 2021