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.

Submitting Annual Returns

Section 4 (7) of The Registration (Strata Titles) (Amendment) Act, details what is called Annual Returns and requires strata corporations to file same, within one hundred and twenty (120) days after the end of the current year.

What constitutes Annual Returns

Annual Returns include the following financial information:

  • Audited Financial Statements or, financial statements prepared in accordance with generally accepted accounting principles
  • Form 13A – Income and Expenditure Statement;
  • Form 13B – Outstanding Contributions
  • Form 13C – Outstanding Payables

They also include a report on the Corporations activities during the year. This requires submitting Minutes of meetings (Annual General Meeting and Extraordinary General Meeting) held outlining:

a) The names of the Executive Committee members,
b) Resolutions passed to adopt budget or for non-insurance unanimous resolution is necessary to waive insurance coverage
c) Details of insurance coverage

Why are Annual Returns Important?

Annual Returns are the primary way the Authority keeps a check on the operation and management of a Corporation. In a very direct and transparent way, it is an indication of the operations of a Corporation over a one year period. It therefore allows the Authority to intervene or offer assistance to the Corporation where it deems it necessary.

It also provides information to third parties that might have an interest specifically mortgagors and prospective buyers. This will tell the parties is there is any risk of danger in providing a loan to purchase or buying into a unit in the property. Persons may ascertain this information and other information in relation to the status and operation of a Corporation via a status certificate.

How to Calculate Unit of Entitlement
1 Vol.  8888       Fol. 501 3
2 Vol.  8888       Fol. 502 9
3 Vol.  8888       Fol. 503 3
4 Vol.  8888       Fol. 504 1
5 Vol.  8888       Fol. 505 4
  • How to calculate the maintenance fees to be paid by the proprietor of strata lot 4, who has 1/20th units of entitlement?
    • The owner of strata lot 4 pays:  1/20 x $100,000   = $5,000/yr,
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.                .

RETI Course Material goes Paperless

The Real Estate Training Institute has taken the environmentally-friendly decision to go paperless, substituting the stack of printed course material usually given to persons doing the pre-licensing courses, to an electronic format.  The move is also intended as a cost-saving measure to the organization.

For persons who are insistent on receiving the printed documents, there will be a $10,000 cost to do so.  While previous cohorts received the documents included in the overall course fee, the Board has decided to go this route as a means of containing its own cost in lieu of any course increase at present.   

The package of documents for the pre-licensing course for salesmen, of which seven cohorts were held in 2022, includes at least seven sets of documents at a combined page count of over six-hundred pages, including coloured pages.  This is in addition to miscellaneous documents and handouts such as test papers.  Considering that each course includes a cohort of approximately ninety (90) students, the printing cost can easily reach one-million dollars annually.   

The Board did significant research in reaching this decision, undertaking a cost/benefit analysis, even considering the cost of out-sourcing printing, or purchasing a new, heavy-duty print machine.  This confirmed the position that neither option was viable without a significant increase in the course cost, a last resort the organization was ready to make.

The promoted the change heavily to the industry to give persons the necessary notice.  The information was placed on its website, in the notification to successful applicants and in the print media.  The Board also designed a Going Paperless logo which will feature in its public education initiatives, The change was implemented with the first 2023 cohort.

The Real Estate Training Institute offers pre-licensing training for real estate dealers, salesmen and property managers, and has been in operation since 2016.

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