Bill on realtors' monopoly: Without realtor it would be impossible to take a step?

Author : Iryna Shostak

Source : 112 Ukraine

On June 9, 32 parliamentarians registered a draft law "On Realtor Activities in Ukraine", which in several weeks of its existence managed to become one of the top topics for discussion.
21:27, 8 July 2020

In early summer, a bill on real estate activities in Ukraine was registered in the Verkhovna Rada. The explanatory note to it speaks of protecting the rights and interests of specialists, subjects and consumers of real estate activities, as well as detailing the sphere, which should increase revenues to the State budget. Experts say that the document actually deprives Ukrainians of the right to dispose of their property without intermediaries.

On June 9, 32 parliamentarians registered a draft law "On Realtor Activities in Ukraine" (hereinafter - the bill), which in several weeks of its existence managed to become one of the top topics for discussion.

The fact is that some experts believe that the purpose of the document on paper:

  • to introduce a unified state policy in the field of regulation of real estate activities in Ukraine;
  • to establish the procedure for the provision of real estate services;
  • to determine liability for violations in the field of real estate activities;
  • to create a unified information database on real estate and operations with it as a system containing databases, information resources and services for real estate activities

slightly different from what should be expected in practice. In particular, we are talking about changing the rules for the sale or rental of housing - the participation of a realtor in this process will become mandatory. Or not?

According to one of the initiators of the bill, the head of the committee on economic development, MP Dmytro Nataluha, the answer is no: "The participation of a realtor in the conclusion of a transaction with real estate object is not mandatory. The same applies to filling out the information passport of the real estate property - it can be filled out not only by a realtor, but also by the owner directly.” After a wave of indignation from citizens, the MP announced this on Facebook, noting that he plans to include the provisions on the voluntary involvement of a realtor by the property owner to stop speculation on this topic.

It is interesting that after analyzing the bill, the Main Scientific and Expert Directorate came to the opposite conclusion - the realtor must be present, because the procedure for transferring rental property is subject to entering information about the real estate object and registering its information passport into the Unified Information Database (personal data identifying the owner of the property, which according to the law "On the protection of personal data" is provided only in case of concluding an agreement with a realtor).

"Therefore, from the content of these provisions it follows the need to conclude a real estate contract for real estate transactions, which, if adopted, may limit the rights of property owners to independently dispose of their real estate (sell, buy, rent and lease, etc.) without intermediary. In this regard, we believe that these provisions of the project require improvement in order to eliminate possible negative consequences," said in a conclusion of the Main Scientific and Expert Directorate of 06/26/2020.

Also, the State National Economic University pointed out a number of significant comments and contradictions. For example, the bill is about ensuring a unified state policy in the field of real estate activities, but at the same time this issue is practically not regulated in the text of the document (state bodies that regulate it and their powers are not defined).

It is also proposed by law to define "accredited professional training institutions" for realtors, but how to do this is unknown (there is no procedure for determining).

Many experts are concerned about the minimum requirements for granting the status of a realtor: the status of an agent and broker can be obtained by a person with a full secondary education. But is this really enough to consider a person qualified?

The relevant associations have already opposed the bill, which believe that the document contains significant risks for the real estate services market, and some of them are convinced that the document contains corruption risks.

Whether it is true or not, we will find out very soon, because the National Agency for the Prevention of Corruption (NAPC) announced its intention to conduct an anti-corruption examination of the bill.

"The conclusion of the examination of the law with the recommendations of the NAPC on eliminating corruption risks from its provisions will be sent to the Verkhovna Rada Committee on Economic Development for consideration when finalizing the bill," the report says.

However, doubts arise about the independence of the examination, because so many MPs acted as patrons of this legislative act. It is difficult to expect individual thoughts or instructions that could provoke a conflict of interest.

What do the experts say?

“I believe that it is necessary to adopt a law on the sale of air and make me the chief. I will tell people that we have air,” says lawyer Rostislav Kravets.

According to the expert, the said bill also "sells air" to the citizens of Ukraine: "The next institute of self-government (realtors, brokers, agents) is being formed, which will improve qualifications, pass exams, receive certificates, licenses, which is not free. Almost everything which was bad in all other self-regulatory institutions is duplicated: licenses, permits. I’m more than sure that they will install monthly, daily, or annual fees, maybe a percentage of the sale for the maintenance of these ministries."

Related: Ukrainian Parliament supports draft law on destruction of corruption schemes during evaluation of real estate prices

According to Rostislav, this institution in no way affects the guarantees and rights of citizens who have acquired or are trying to lease real estate, in no way protects them.

Moreover, if we talk about the Unified Information Database, it should be noted that the objects will receive the appropriate individual code / number, without which it will not be possible to conclude a sales contract or a lease.

In addition, as noted by the lawyer, in all manipulations relating to real estate, nevertheless, mandatory participation of realtors will be required, who, of course, will not do it for free.

"As a result, you already handed over the apartment, paid taxes from it, and now you need to look for an intermediary. The intermediary will have to pay for his certificates, his advanced training, thus, the cost of real estate transactions (rent, purchase agreement, sales and, I suspect that they will also bring the gift article here) should only happen with the payment of some taxes, commissions to these offices or realtors," says Rostislav Kravets.

Therefore, instead of guarantees or additional benefits for citizens of Ukraine, another ministry will be created with its own requisitions. Moreover, it is not difficult to guess that most of these funds will not go to the state budget, but to the pockets of the heads of these self-governing organizations of realtors and withdrawn abroad.

In his opinion, this state of affairs is an analogue of the tender mafia, when money was paid for any government procurement to a certain structure, for the issuance of any certificates, etc.

Attorney Yuri Belous has a completely different opinion: "I believe that such an initiative is already good, because there have already been such initiatives, but it did not reach the adoption of the law, so the work of realtors and the real estate market for many years remained virtually unregulated."

According to Yuri, such shifts can be qualified as positive. A separate section of the bill refers to attestation and certification in the field of real estate activities. Also, realtors did not comply with the requirements of tax legislation: when a lease was concluded through them, they did not inform the Tax Service about the conclusion of the contract, respectively, and the landlord's obligation to pay taxes.

As a good shift, the lawyer also notes the introduction of professional secrets.

"This bill is aimed at ensuring that realtors bear responsibility in case of violations (in case of realtor violations, you can stop the certificate from being revoked for up to two years or suspend the certificate for one to six months), clearly defines the rights and obligations of specialists in the field of real estate services,” adds Yuri.

Individuals and legal entities bear civil, administrative and criminal liability for violation of the requirements of the law on real estate activities.

The responsibility of the subject of real estate activities to the consumer of real estate services is established by a real estate contract.

Damage caused to a person as a result of illegal or negligent actions of a subject of real estate activity and / or a specialist in the field of real estate activity must be compensated.

According to it, and this is indicated in the explanatory note to the draft, the purpose of the bill is to introduce the protection of the rights and interests of specialists in the field of real estate activities, real estate agents and consumers of real estate services.

No wonder the bill is considered controversial, but one way or another, it is not known how its norms will be implemented and who will actually benefit from this. The only thing that can be noted is that such a legislative initiative was met with discontent, in particular due to the fact that today it is not relevant. After all, business needs to think about a way out of the "quarantine crisis", and not try on new possible norms and think about their profitability.

Related: Ukraine's National Bank sues for oligarch Kolomoysky’s real estate worth $4,1 million


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