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Monday, October 29, 2007

Recovery of Real Estate Agency Fees In Malaysian Courts

Do you know that under Malaysian estate agency law, anyone seeking to enforce a contract to recover in any court any fees, charges or remuneration for any...services rendered as an estate agent would have to meet 2 requirements respectively stipulated in Sec 22C(1)(d) and Sec 23(1) of the Valuers, Appraisers & Estate Agents Act 1981 ("VAEA Act 1981"):

Firstly, Sec 22C(1)(d) requires him to show that "he is a registered estate agent and has been issued with an authority to practise under section 16"

Sec 22C(1)(d) reads :
"No person shall unless he is a registered estate agent and has been issued with an authority to practise under section 16 - be entitled to recover in any court any fees, charges or remuneration for any professional advice or services rendered as an estate agent." and

Secondly, he must also show that "he practises as a sole proprietor..., a partner..., a shareholder or director...or as an employee of such sole proprietorship, partnership or body corporate" - that is, that he is not a freelance registered estate agent practising without a registered estate agency firm.

Sec 23(1) further reads:
"No registered...estate agent shall...have the right to recover in any court any fee, charge or remuneration for any professional advice or services rendered by him pursuant to his practice unless he practises as a sole proprietor of a sole proprietorship, a partner of a partnership, a shareholder or director of a body corporate registered with the Board, or as an employee of such sole proprietorship, partnership or body corporate"

With the enactment of the Valuers, Appraisers & Estate Agency Act 1981 and all its subsidiary rules, professional standards, Circulars of the Board of Valuers, Appraisers & Estate Agent ("BOVAEA"),etc., real estate agency in Malaysia is no longer just a business - regulated only by the normal commercial law of contract.

It is now a profession (also reiterated in Circular 11/96 of the BOVAEA) that is regulated, over and above the normal law of contract or commerce, by specific estate agency law, rules, standards, practice notes and circulars of the Parliament-empowered statutory Board known as the Board of Valuers, Appraisers & Estate Agents (Malaysia)...

Therefore, from the foregoing, it is clear that for any claim of estate agency fee, charge, etc. in any court, apart from having to prove that there was an enforceable agreement, the Claimant would also have to meet the above 2 requirements as laid down by estate agency law!

For your further information, Malaysian estate agency law, in safeguarding public interests, goes as far as to stipulate in details, among others, on:
* "Who may assist the registered estate agent in his practice?" - obviously not just any Tom, Dick and Harry can be as casually employed in a registered estate agency firm as in other non-professional firms; and
* "How should these assistants (known as the Negotiators) be employed by the registered estate agency - in terms of % commission payable, monthly salary, EPF contribution, full-time status, supervision and the likes?"
simply to ensure that the public is served by bona fide registered estate agents or their assistants who can be held accountable and not just anyone on loose attachment or on licence-leasing to a registered estate agency who obviously can easily abscond their responsibilities and, worst still, with the client's money.

Wanna know exactly how Malaysian estate agency law ensures that the public is served only by bona fide registered estate agents and/or their legally-employed assistants known as the Negotiators...and not by operatives on loose attachments or licence-leasing?

Do look out for my next blog post!

Cheers,
Douglas GT Tan

Friday, October 26, 2007

A Registered Estate Agent Shall Not Freelance - Practising Without A Registered Firm Not Allowed!

Dear Readers,

Are you aware that: A person’s legal right to practise estate agency and to recover fees in court(s) (say, under S22(C)(d) of the VAEA Act 1981) is subjected to 2 levels of requirements/registrations:

* Firstly, under S22(C) of the VAEA Act 1981, he must be qualified and is registered under his personal name as a registered real estate agent - with a personal E No. - and issued with an authority to practise real estate agency under Sec 16; and,

* Secondly, under Section 23(1) of the VAE Act 1981 and that of Std 2.2.5 of MEAS 1999, he can only practise estate agency as the sole-proprietor of a sole-proprietorship, partner of a partnership, director of an incorporated real estate agency company; or, as an employee thereof. In other words, freelancing is not allowed - meaning: a registered estate agent is forbidden to practise estate agency without a registered estate agency firm.

More details in the next post...stay connected to this blog always.

Cheers,
Douglas GT Tan

Tuesday, October 23, 2007

Owners of Real Estate, Licensed Auctioneers & Power of Attorney Holders Acting Gratuitously May Market Properties in Malaysia

In my earlier post, I touched on Sec 22C(1) relating to the question of "who may legally "offer for sale or invite offers to purchase" properties in Malaysia?"

Now, you ought also to know that the ensuing Section 22C(2) provides exceptions to this restriction to three(3) categories of people.

Section 22C(2) reads:
"Notwithstanding subsection (1) -
(a) an owner of any land, building and any interest therein may sell or rent, or offer to sell or rent, such land, building and interest;
(b) a licensed auctioneer may sell or offer to sell any land, building...by public auction; and
(c) a holder of a power of attorney in respect of any land, building...acting gratuitously and for no commission, fee, reward or other consideration, may sell, purchase or rent, or offer to sell, purchase or rent, such land, building and interest."


Moot Point: What about an owner of foreign land, building and any interest therein? Is this category also covered or excepted? If so, it means that owners of foreign properties may market them in Malaysia without having to do so through a resident Malaysian registered estate agent.

In my next post, I will blog on the two types of registration involved before a registered estate agent may legally practise real estate agency in Malaysia. I will also show you that a registration under personal name alone does not entitle that registered person to legally practise real estate agency in Malaysia - In other words, freelancing by a registered person without a registered real estate agency firm is not allowed in Malaysia! What does this mean???

STAY CONNECTED for more on real estate agency issues...

Cheers,
Douglas GT Tan

P/s: If you have an opinion, please feel free to share - drinks on me when we meet...;-)

Saturday, October 20, 2007

Who May Legally "Market" Properties As Agent in Malaysia? Who may act as sale agent in Malaysia

Dear Readers,

In this maiden post, let me blog on the issue relating to these questions: Who may legally market properties as an agent in Malaysia? Or, simply, who may act as a real estate sale agent in Malaysia? Can anyone including a foreigner sell real estate in Malaysia? Who can sell foreign properties in Malaysia? Is there absolute freedom for anyone to sell any real estate in Malaysia? Do you need to be a registered estate agent to market or sell properties in Malaysia?...

Now, Sec 22C(1)(ba) of the Valuers, Appraisers & Estate Agents Act 1981 ("VAEA Act 1981") reads:
No person shall unless he is a registered estate agent and has been issued with an authority to practice under section 16…offer for sale or invite offers to purchase any land, building…irrespective of whether such land, building and interest is located within Malaysia or outside Malaysia: Provided that where foreign properties are to be marketed in Malaysia, such offer or invitation shall be made by or through an estate agent practising and residing in Malaysia…”

Now, if the word "market" includes the meaning "offer for sale or invite offers to purchase", then I think Section 22C(1)(ba) of the "VAEA Act 1981" (Act 242) provides a ready answer to the above questions: Who may legally market properties as an agent in Malaysia? Or, simply, who may act as a real estate sale agent in Malaysia?

Section 22C(1)(ba) of the "VAEA Act 1981" stipulates quite clearly that the person - whether local or foreign - who may market properties - again, whether local or foreign - as a sale agent in Malaysia must be "...a registered estate agent...(who)...has been issued with an authority to practice under section 16..." 

Now, you may ask: What if it is a one-off "offer for sale or invite offers to purchase" any land, building...by someone - whether local or foreign - who is not a Malaysian real estate agent? Does that go against the Section and make it an offence under Sec 30(i) of the "VAEA Act 1981"?

If you read Section 22C(1)(ba) again, you will agree that it does not contain the words "habitually", "repeatedly", "regularly" or "as a matter of business practice" i.e. it does not read: "No person shall unless he is a registered estate agent and has been issued with an authority to practice under section 16…"habitually", "repeatedly", "regularly" or "as a matter of business practice", offer for sale or invite offers to purchase any land, building…irrespective of whether such land, building and interest is located within Malaysia or outside Malaysia..."

So, there should be no disagreement that even a one-off "offer for sale or invite offers to purchase" by anyone who is not a registered estate agent is forbidden by Sec 22C(1)(ba) as well - unlike the ensuing subsection (c) (i.e. Sec 22C(1)(c)) where proof of "practice" of estate agency appears to be required: to establish an offence beyond reasonable doubt in a criminal case; or to nullify a contract under Sec 24 of the Contracts Act 1950 (Act 136) on balance of probabilities in any civil case.

Sec 24 of the Contracts Act states that "...Every agreement of which the object or consideration is unlawful is void." Sec 24 of the Contracts Act reads:
"The consideration or object of an agreement is lawful unless -
(a) it is forbidden by a law;
(b) it is of such nature that, if permitted, it would defeat any law;
(c) it is fraudulent;
(d) ...
(e) the court regards it as...opposed to public policy.
In each of the above cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void
."

There were at least three (3) decided court cases involving non-registered persons suing for payment upon successful introduction of buyers to the defendants: Lim Eng Heng v. Lim Sam Kew & Others [2003] MLJU 47 was decided in favour of the defendant in the High Court; in the Court of Appeal,the decision went in favour of the Plaintiff.

Whereas, Matad Sdn Bhd v. Ng Chee Keong [2005] 1AMR and Teh Eng Peng @ Teh Joo v. Teh Swee Lian [2006] 2 MLJ were both cases decided in favour of the Plaintiffs. Click the hotlink given to read details of one of the cases. As for the other two (2) cases, you can request for faxed copies from me.

In my view, strictly by the wording of the Parliamentary enactment - in Sec 22C(1)(ba) of the VAEA Act 1981- as already explained in the foregoing: If there is evidence on balance of probabilities (in civil cases) or beyond reasonable doubt (in criminal cases) that someone who is not a registered estate agent with an authority to practise (except 3 classes of people - please see my next posts) has "offer for sale or invited offers for purchase" any local or foreign properties in Malaysia, then the said Sec 22C(1)(ba) of the VAEA Act 1981 would, in my view, render even a "one off" real estate marketing sale activity an offence under Sec 30(i) of the VAEA Act 1981; and, render any agreement founded on it (including to pay fee, etc.) void under Sec 24 of the Contract Act 1950.

Any finding to the contrary must only be because Sec 22C(1)(ba) - where even a "one-off" sale activity by a non-registered person is outlawed - was not pleaded or successfully by the defendant and Sec 22C(1)(c) - which requires defendant to prove "estate agency practice on the part of the Plaintiff" was successfully pleaded by the Plaintiff. I believe the outcome of a court case depends not just on what is in the parliamentary act but also what is in the pleading. Agreed? 

Anyway, a moot point for your consideration: Is a one-off "offer for sale or invite offers to purchase" as illegal in our estate agency law as a "one-night-stand" is infidelity in marriage law?

Your views, please.

Cheers,

Douglas GT Tan
Principal/CEO
GT Realty

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