Real Estate

Hard deadline for licence renewal

The Board is reminding dealers and salesmen, who practice after the March 31 expiration of their current licence, that they are in fact practicing in contravention of the law.

Some practitioners might be minded to take the entire months of April (in this case), and September as the payment period, while still practicing during those months and making payment at some point therein. Dealers and salesmen are also allowed by law to pay the annual licence fee in two instalments, with a deadline of March 31 and August 31. The April 1 instalment covers the period April 1 to August 31, with the second instalment due September 1, covering the period September 1- March 31.

The fact is the full licencing period runs for one year (365 days) and expires on March 31. As per Section 10 (1) of the Real Estate (Dealers and Developers) Act, anyone who conducts business without a valid licence does so illegally.

It is also worth noting for the protection of practitioners, that as per Section 47 of the Real Estate (Dealers and Developers) Act, anyone who engages in the practice of real estate as a dealer and salesman without being the holder of a valid licence, is not entitled to bring any suit or action for the recovery of any fees or compensation for anything done on behalf of another person.    

Recent indications coming to the Board, point to the fact that some practitioners are still not aware of the fact regarding the licensing period.  The April 1-30 window, represents the period in which practitioners may pay their renewal fee, before a 50% late-penalty fee becomes applicable.

The ability to pay via the Board’s Client Portal has made payment of the renewal fee a seamless process.  The Portal is an online payment platform that real estate dealers and salesmen can use to pay their licence or penalty fees using any (debit or credit) Visa or MasterCard.  Since the platform has built-in verification and confirmation processes, it is the payment option of choice for real estate dealers, salesmen and strata corporations.  

Payment may be made in-office using any credit or debit card, as well as the bill payment platforms available by NCB and Scotiabank.  Full details on payment options may be found here.  

History of the Real Estate Board

The Real Estate (Dealers & Developers) Act and the establishment of the Real Estate Board was ultimately the response to an untenable situation which was particularly prevalent in the sixties and seventies, and continued thereafter.

A commission chaired by Sir Herbert Duffus, commenced in 1973 to examine the real estate industry.  In his 1976 interim report, the chairman wrote that “hundreds of purchasers of land and houses in these private schemes had paid deposits with little or no prospect of obtaining land or homes or the return of their money.”  It when on to say “all are agreed that legislation for the strict control of developers is long overdue.  The evidence given at the enquiry has indicated very clearly that there ought to be laws controlling developers, as well as salesmen.”

The report pointed to the inexperience of many land developers, coupled with blatant dishonesty in some cases, leading to failed developments.

Prior to this commission, draft legislation was first prepared from as far back as 1969 and progressed to the point where a third printing of The Real Estate (Licencing of Brokers and Salesmen) Act, in 1972.

A second attempt to get legislation on the statute books was made in 1973 when a new Bill, The Real Estate (Regulation of Sales) Act was drafted, but once again the Bill was never taken to Parliament. 

The Ministry of Finance and Planning in 1975 concluded that, based on statements of complaints made up to that time, some JMD$ 6.33 million were paid over by 2,400 persons to 63 developers as down payments on various forms of real estate, which were never realised.

In 1980, based on the issues spelt out in the Duffus Report and its recommendations, a team of legal consultants worked on a draft bill for a Real Estate and Land Development Act. From the report, it was felt that, as matter of urgency the following had to be addressed:

  • unscrupulous salesmen and real estate who sold inaccessible hillside land to Jamaicans overseas, collected deposits and were not in a position to fulfill contracts of sale since the sub-division could not be approved.
  • developers who were unable to fulfill obligations or to refund deposits from purchasers.

It was further concluded that legislation needed to deal with:

  • deposits collected which could not be recovered when schemes proved impossible to complete
  • lack of sufficient resources when the completed scheme did not provide all the features expected, (sewerage, drainage, etc.)
  • sale of land which was not yet in possession of the developer who later absconded with the deposit
  • sale of development schemes prior to securing approved plans

These problems were addressed in the submission to the Interim Real Estate Board appointed in 1982, chaired by Hon. Ewart Forrest, PC. 

Cabinet gave approval for the formal drafting of legislation to make provision for the licensing, regulation and control of persons engaged as dealers or salesmen in real estate; the regulation of dealings in land in development schemes; and for related matters.

The Real Estate (Dealers & Developers) Act, Act 18 of 1987, was signed by the Governor General on July 24, 1987.

 The Real Estate Board, comprising eleven persons, was first appointed on October 1, 1987 under the chairmanship of Honourable Ewart Forrest PC.  The Act came into operation on September 1, 1988.

Dealer obligations to Salesmen

The Real Estate (Dealers and Developers) Act outlines the responsibilities of the Dealers to operate within their areas of practice to which they are the holder of a valid licence.  

  • Dealers must ensure that they maintain an active licence, which should be displayed in his or her office, prior to employing a real estate salesman to practice real estate business under the name which they are licensed. 
  • Dealers are to have in their possession license of all salesmen employed to them for them to be actively practicing real estate business. 
  • Dealers have a responsibility to conduct routine audit of their clients' accounts in accordance with the Real Estate (Dealers and Developers) Act and also Proceed of Crime Act. Written procedures are in place to guide how funds are treated with respect to these transactions.   
  • Dealers must provide continuous training and resources in market trends and update to industry standards in accordance with the law.  
  • Provide adequate supervision and oversight in the day-to-day operations and management as it relates to real estate business under which registration and licence have been procured and issued by the Authority. 
  • Ensure that they adhere, uphold and operate within the guidelines, orders, regulations, policies issued by the Authority or on behalf of the Authority and fulfil all statutory obligations to the Authority. 
  • Make available and provide copies of office policies, rules, guidelines, forms and procedures manual to their salesmen with periodic review. 

A Dealers Obligation to REB

If it is the intention of a registered real estate dealer to engage in the practice of real estate business, he or she should ensure that the Authority is notified of this intention and the requisite licence fee for the financial year is paid on the due date being April 1 of that financial year.

Where a person or entity is registered as a real estate dealer with the Authority and does not intend to practice real estate business in a given financial year, the registrant must complete and submit the requisite application form for dormancy and payment of the relevant dormancy fees within the time permitted for submission to the Board.

Real Estate Dealers are also required to submit annually, the names of all real estate salesmen employed to them. Where there are no salesmen employed to the real estate dealer, a statutory declaration must be provided by the real estate dealer to the Authority. All real estate dealers are prohibited from employing a person to practice real estate business without a  licence being issued for that person to practice such business by the Authority.

Where a real estate salesman is no longer employed to the real estate dealer, both parties should complete and submit the “Declaration of Release of Salesman” form. The dealer should then notify the Authority and immediately return the licence to the Authority. 

If there is any change in the contact information for a real estate dealer, the Authority should be notified of any change in relation to their address and contact information prior to the use of this new contact information.

 A real estate dealer must operate under the name in which they have been registered and licensed and operate from the address specified on their licence.

A real estate dealer must maintain an office for the purpose of carrying on the practice of real estate business.

Real Estate Dealers must have regard for all the mandatory Continuous Professional education training and development as stipulated by the Board and must participate in such courses being offered or directed by the Board

All real estate dealers upon receipt of clients money, must lodge and maintain a Clients’ Account with an authorized financial institution and must produce an audited report of the clients account when requested by an Inspector of the Authority. If no funds have been received from a client and a clients accounts is not being maintained by a real estate dealer, you are to submit a declaration which must be dated, signed by the real estate dealer and duly witnessed by a Justice of the Peace.

A Real estate dealer must assist in maintaining the integrity of the practice of real estate business and uphold all laws and regulations which relates to the practice of real estate business or real estate development.

Undertake only such duties and responsibilities for which they are properly registered and licensed under the Real Estate (Dealers & Developers) Act.

Code of Ethics and Best Practice

Real estate professionals are expected to abide by a code of ethics which demand integrity and honestly in their conduct.  They should also desist from any conduct which can bring the profession into disrepute. Some of these are spelt out in the Real Estate (Dealers and Developers) Code of Ethics Regulations.

Among the codes of practice, as well as general best practice guidelines real estate professionals are expected to follow include:

  1. Ensure that the content of advertisements published by him/her comply with the requirements of the Act and Regulations.  This includes the accuracy of the contents of the advertisement, and include the name(s) and registration information of the professionals involved, and as much information about the land/unit as is practical.
  2. Registration certificate should be displayed in a conspicuous position in his/her office.
  3. Dealers must maintain an office used specifically for practicing real estate. The Dealer must display a sign on the outside of the building, bearing the business’ name
  4. Dealers and salesmen must report to the Board, any unprofessional or dishonest conduct of another dealer, salesman or developer. 
  5. Dealers and salesmen should never discourage any party to a transaction in which he or she is involved, from seeking legal advice.
  6. A professional should never become involved in any conduct which is or could be perceived to be a conflict of interest, such as representing both the seller and vendor in a transaction.
  7. A real estate dealer or salesman should never knowingly permit any property under his control to be used unlawfully.
Understanding Penalties and How they are applied

Understanding Penalty for Registering a Real Estate Developer

Where a developer commences a development scheme without paying the total fees to register that development scheme the Real Estate Developer will incur and must pay a penalty of one hundred percent (100%) of the total fees to register as a Real Estate Developer they should have paid pay to register as a Real Estate Developer initially.

To commence a development would constitute the carrying out of building, engineering, or other operations in, on, over or under any land, or the making of any material change in its use or in the use of any building.

Understanding Penalty for Renewal of Registration as a Real Estate Developer

In order for a registered Real Estate Developer to maintain their registration annually, the total prescribed fee must be paid on or before April 1st after the date of registration.

Where the total fee or a portion of the fee to maintain the registration as a developer remains outstanding after April 30th of that financial year a penalty of one hundred per cent (100%) is accrued on the total fees the Real Estate Developer should have paid initially to maintain their registration for that financial year.

The initial and late penalty fees are as follows:

Developments of 6-20 lots/units: $40,000.00

Developments of 21- 40 lots/units:  $60,500.00

Developments of 40 and over lots/units:  $99,000.00

Understanding Penalty for Renewal of Registration as a Real Estate Salesman

In order for a registered Real Estate Salesman to avoid incurring penalty for the renewal of their annual licence fees, the total prescribed fee of Twenty –two Thousand Dollars ($22,000.00) or total first instalment Eleven Thousand Dollars ($11,000.00) must be paid on time. The prescribed due date to pay the licence fee is on or before April 1st of that financial year. The first penalty of Five Thousand Five Hundred Dollars ($5500.00) is incurred if the total prescribed amount is paid after April 30th. Prior to making any payment within this financial year, kindly ensure that your account is current and all outstanding fees for the prior years have been clear.

If the licence fee or portion of the licence or the second instalment and any portion thereof as a Real Estate Salesman remains outstanding after September 30th the second penalty amounting to Five Thousand Five Hundred Dollars ($5500.00) will be incurred.

Understanding Penalty for Renewal of Registration as a Real Estate Dealer

In order for a registered Real Estate Dealer to avoid incurring penalty for the renewal of their annual licence fees, the total prescribed fee of Forty-four Thousand Dollars ($44,000.00) or total first instalment Twenty-two Thousand Dollars ($22,000.00) must be paid on time. The prescribed due date to pay the licence fee is on or before April 1st of that financial year. The first penalty of Eleven Thousand Dollars ($11,000.00) is incurred if the total prescribed amount is paid after April 30th. Prior to making any payment within this financial year, kindly ensure that your account is current and all outstanding fees for the prior years have been clear.

If the licence fee or portion of the licence or the second instalment and any portion thereof as a Real Estate Dealer remains outstanding after September 30th the second penalty amounting to Eleven Thousand Dollars ($11,000.00) will be incurred.

Woman Convicted for Failing to Register as a Developer

Nerris Hawthorne was found guilty in the Hanover Parish Court for the offence of failing to register as a developer contrary to Section 35(7) of the Real Estate (Dealers and Developers) Act (REDDA).  The decision was handed down by Senior Parish Judge Nateisha Fairclough-Hylton on Monday December 12, 2022.

The complainant in the case initially made a report to the Real Estate Board in January 2019.  In her complaint, she claimed that in March 2008 she entered into an agreement with Miss Hawthorne for the sale of a subdivision located at Lot 238 Haughton Court, Hanover.  She further claimed that a deposit was made in the sum of $US125,000 for said property. 

Based on the complaint, an Inspector of the Board wrote to Miss Hawthorne and outlined the nature of the breach.  She was advised to register the development with the Board and the necessary list of requirements provided on two separate occasions.  She was also advised in-person, regarding Section 35 of the REDDA, which requires that, “every person who proposes to carry out any development under a development scheme to which this section applies shall before commencing such development apply to the Board.” 

Based on the enquiries made the Board, the matter was handed over to the police at the Counter Terrorism and Organized Crime Investigation Branch (CTOC) on May 5, 2021 for further investigation. Their investigations led to Miss Hawthorne being charged with the offence of failing to register as a developer, as well as entering into prepayment contract without being a registered developer. Section 26 (1) of the REDDA prohibits persons not registered as a real estate developer, from entering into a pre-payment contract. Under the REDDA, this is where monies are paid or are payable to the vendor/developer where at the time of entering into it, the vendor/developer has obligations to be performed or discharged in respect of building roads or carrying out engineering or other operations in the development or where construction of the units/lots in the development remain incomplete. 
The matter was first mentioned in the Hanover Parish Court on February 15, 2022, where the accused pleaded not guilty to both charges.  In the trial, the Crown presented evidence from representatives from the Real Estate Board, National Land Agency, The Hanover Municipal Corporation, the Jamaica Constabulary Force, and one of the purchasers.       

In her ruling, the Senior Parish Judge however ruled that the Crown did not present sufficient evidence to establish the agreement between Miss Nerris Hawthorne and the complainant, as a pre-payment contract.                

The Board is again using this opportunity to remind persons to make application for registration as a developer, where the number of lots or units being developed exceed five, or where they are doing more than one development of whatever size. over a 24-month period. Secondly, the public is reminded to check with the Real Estate Board, whether by phone, email or visiting its website, to confirm if a particular developer and/or the development is registered.                .

Real Estate Board Policy Changes Now Effective

The Real Estate Board, the Government regulator of the private real estate sector, has enacted a number of  policy changes intended to better serve the interest of the public and the industry  These changes affect how dormancy is treated, the issue of attachment and supervision, and finally how Dealers with overseas qualifications can become qualified to practise locally.

The changes were ratified at the June 22 meeting of its Board of Directors.  These policy changes were subject to substantive deliberations of the Board, guided by legal advice and review of the legislative framework provided by the Real Estate (Dealers and Developers) Act, consultation with key stakeholders, and its own observation and assessment of the industry. 

Commenting on the policy changes, Board CEO, Phillip Chambers said, “The Real Estate Board takes very seriously any change that affects how our practitioners operate, how we regulate them, and also how those changes are likely to affect the public at large.”  Mr. Chambers went to explain that some of these changes have been in gestation for some time now, and that the discussions were guided by the Board’s learned in-house counsel.  “Of course, we are constantly surveying the landscape to see how we can better do what we do to improve the service provided by Salesmen and Dealers, which will ultimately redound to the benefit of the public.”

With regards to dormancy, the previous policy requiring a dealer who acts as Qualifying Director of a dealer company, to place his or her individual license on dormancy is revoked. The individual dealer is now at liberty to decide whether or not he or she will apply for a license to practice in his or her individual capacity for a particular year, or whether he or she wishes to apply for dormancy.  Dormancy is a provision which allows persons who do not intend to practice within a given year, to indicate this to the Board and pay the requisite fee, in lieu of the standard licence fee to practice.

On the issue of attachment, a supervising dealer can have a maximum of four persons attached, to him or her, up from two previously.  However, the Supervising Dealer must:

· Complete the Real Estate Supervisory Dealers Continuing Professional Development Course.

· hold a current Dealer’s licence.

· have been a practicing dealer for at least three years

· be fully compliant with filings under Proceeds of Crime Act and Terrorism Prevention Act.

· not have any complaint, except for one which is deemed frivolous or vexatious, lodged with the Real Estate Board against him/her/it.

have a registered office and displays required by paragraph 3 (a) and (b) of the Real Estate (Dealers and Developers) (Code of Ethics) Regulations.

· not have been found to be in breach of the Real Estate (Dealers and Developers) Act by the Court or the Real Estate (Dealers and Developers) (Code of Ethics) Regulations, by the Real Estate Board.

Further to point number one, a Real Estate Dealers Course will be offered over two days, with the first day designated for all dealers and the second for all supervising dealers.  The Real Estate (Dealers and Developers) Act dictates that a person who has completed the pre-licensing Dealers Course, must complete a period of attachment, or training as means of observing first-hand, the operations of a dealer, to be eligible to apply for registration by the Board as a Dealer.

Finally, applicants from overseas who hold similar qualification in other jurisdictions, must complete the Dealers’ Training Course at the Real Estate Training Institute (RETI), together with a period of attachment of at least one-year in the office of a real estate dealer approved by the Board.

The CEO in his assessment stated that the Directors and management are confident that these changes will improve the overall professionalism and competence of practitioners and be of significant benefit to the public. The Board has written to various professional stakeholder groups and Associations, as well as disseminated a mass email to all Dealers and S5alesmen, to inform them of these changes.  It will also be publicized in the print, social and electronic media.

Practitioners may contact the Board directly, for further information or to seek clarity on any of these changes.     

Unregistered Developer Convicted for prepayment contracts

Another real estate developer was brought to book when Harry Douglas was convicted on May 14 in the St. Ann Parish Court. Mr. Douglas was found guilty of accepting monies for land ahead of completion (known as prepayment contracts), for an unregistered development scheme, in violation of the Real Estate (Dealers and Developers) Act).  He was also found guilty of failure to register with the Board as a real estate developer.

“While we see this as positive outcome, we acknowledge the impact such acts invariably have on purchasers.  This can lead to, among other things, an inability to receive a title or receiving something other than what was agreed.  This case, once again, should underscore the need for vigilance in Real Estate transactions.  We also hope that it will discourage other developers from doing the same,” explained Real Estate Board’s, Chief Executive Officer, Sandra Garrick. 

The Court heard evidence that in July 2012 the Board received a letter from an attorney one behalf of its client, querying if lands in Wakefield, St. Ann registered to Mr. Douglas, was registered with the Board as a development scheme.  Checks by the Board indicated that the development was not in fact registered as such, neither was Mr. Douglas a registered real estate developer. 

An inspector with the Board subsequently visited Mr. Douglas in September that same year, and advised him in person and in writing, of the legal requirement to register as a Real Estate Developer.  He was further informed that he was in breach of the Real Estate Dealers and Developers Act, by commencing the development scheme without the Board’s approval, advertising lots for sale and accepting prepayment for the lots in a development called Sea Cool Heights.  He was given a deadline within which to take the necessary corrective action to regularise his practice and development, but failed to do so.

The Court also heard evidence from a retired returning resident who said he made payment of US$25,600, prior to handover of the land.  Upon taking possession, he was made aware that the parcel of lot which he was initially shown and agreed to purchase, was different, and not equal in size to the lot that he finally received.  The returning resident has since constructed his house, but is unable to get a title for the land.    

Under Section Sections 26 of the Real Estate (Dealers and Developers) Act, a Real Estate Developer is prohibited from entering into prepayment contracts, where he or she is not a registered developer.  Additionally, where the developer is registered, there are mechanisms for the reporting, monitoring and control of such sums to ensure probity.

This conviction follows on the heels of a similar conviction of another Real Estate Developer in January of this year.

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