Introduction
When you are planning to buy any real estate property, you have to generally look out for an agent. While looking for an agent the foremost apprehension striking your consciousness would be whether the agent is trustworthy or if he dupes you what remedies will you have?
When a real estate agent or broker acts in an agency capacity for a buyer or seller client in a transaction, the agent or broker functions under certain legally mandated duties called fiduciary duties, acting in the best interests of the client. Such duties are regulated in some cases and sometimes not.
A fiduciary is generally a person you trust. A fiduciary relationship is formed between two parties who trust each other. The trust typically has to do with assets, money or property.
In real estate, fiduciary relationship is created when the buyer pays the seller the consideration in lieu of the real estate and thus, they are mutually bound to take care of each other’s interests. Neither of the parties is supposed to breach these responsibilities or they may be held accountable for the losses which either of them may incur. Even in those conditions, wherein no real loss in caused, the other can be held liable if they have been deliberately neglecting their duties. These duties are in place so as to ensure that the law can protect the interests of the parties and they can feel secure in venturing out to form relationships without any worry since the protection of their interests is all but ensured.
Duties of Agents
The duties which agent, buyer and seller owe to each other can be summed up as followings:
- Obedience- This requires that the parties are obedient to each other in respect to the terms and conditions as have been laid down in the terms and conditions of the agreement and should do their best to fulfil their obligations to each other. However, it does not entail doing anything unlawful by one on behest of another.
- Loyalty: Both of them should be loyal to each other i.e. neither of them must enter into the agreement with any overt or mala fide intent to deceive or to cause any wrongful loss or wrongful gain. Doing any such act which would be tantamount to breach of loyalty is breach of this sacrosanct duty which the party have to each other.
- Disclosure: If there is any pertinent information which may cause any of the parties to change their stance or may be affecting their interests, irrespective of whether for better or worse, should be disclosed to them and any failure to do so would be considered breach of this duty.
- Confidential: This involves that any confidential information conveyed by either of them to each other must be kept that- confidential. The parties are under obligation towards each other to keep their confidences so that no loss can be caused due to such potential leakage.
- Performance: This involves performing their respective roles under the agreement which for the seller may vary from getting registration deed prepared, completing other formalities on his end and for the buyer they majorly limit to payment of the earnest money as per the agreed schedule.
- Reasonable Care: This duty is one to which special care should always be paid. The words “reasonable care” are only finally fully defined in many cases when it’s too late to change your actions, but amount essentially to the duty owed.
What are forms of Client Representation under RERA?
The Real Estate (Regulation and Development ) Act 2016 requires a form of disclosure to the client or prospective client as to how an agent intend to represent his client in a real estate transaction. Clarity of understanding of RERA Act and Rules and the various ways in which agent can be client’s/buyers representative are central aspects to such a disclosure. As per RERA (Real Estate Regulation and Development Act, 2016), only registered real estate agents can facilitate the sale/purchase of properties in a real estate projects. No real estate agent can facilitate the sale/purchase of properties in a real estate projects registered RERA without obtaining registration with the state Real Estate Regulatory Authority.
As per RERA Act an agent is a person who negotiates or acts on behalf of one person in a transaction of transfer of his plot, apartment or building, in a real estate project, by way of sale, with another person of any other person to him; and receives remuneration or fees or any other charges for his services whether as commission or otherwise. It includes a person who introduces, through any medium, prospective buyers and sellers to each other for negotiation for sale or purchase of plot, apartment or building and includes property dealers, brokers, middlemen by whatever name called.
What are duties and functions of Agents under RERA ?
DUTIES AND FUNCTIONS OF AGENT/ HIS FIDUCIARY DUTY
A real estate agent should:
- Not facilitate the sale or purchase of any plot, apartment or building, in a real estate project or part of it, being sold by the promoter in any planning area, which is not registered with the RERA Authority,
- maintain and preserve such books of account, records and documents as may prescribed by Authority,
- not involve himself in any unfair trade practices,
- facilitate the possession of all the information and documents, as the allottee, is entitled to, at the time of booking of any plot, apartment or building,
- Discharge such other functions as may be prescribed.
What is unfair trade practice under RERA?
“Unfair trade Practice” means a practice of:
- Making any written or visible or oral statement which:
- Falsely represents that services are of particular standard or grade;
- Represents that promoter has approval or affiliation which he does not have;
- Makes false or misleading representation concerning services.
- Allowing publication of any advertisement or prospectus in newspaper or otherwise of services that are not intended to be offered.
Resale Properties and RERA?
From above provision of RERA, we notice that while the projects which are registered under the RERA are regulated and even the agents dealing in same are regulated. However, agents are not regulated by the RERA Authority when it comes to dealing with or selling of second hand resale properties. Had the legislation under RERA made to regulate agents dealing with second hand real estate properties, it would have been a complete code in itself and it would have been easy to fix liabilities upon them. However, it is not so that a person is remediless if in case there is some kind of foul play by the agent. The civil courts and Indian Penal Code is there to take care of the foul plays committed by agents by abusing the fiduciary relationship with the buyer.