Recognizing the prevalent issue of property dealers imposing arbitrary commissions on both property sellers and buyers, Haryana’s Real Estate Regulatory Authority (RERA), Gurgaon, has taken a significant step by imposing a ban on charging more than one percent commission combined from the buyer and seller. The directive was issued by RERA’s bench, led by Dr. KK Khandelwal, with SC Kush as the member.
In a groundbreaking move aimed at protecting real estate buyers, the investigation into the dubious practices of brokers marks the first of its kind. Khandelwal emphasized the potential for strict actions against brokers engaging in nefarious activities and revealed plans for a forensic audit against two dozen brokers facing complaints. Promoters endorsing such brokers will also face penalties.
The order from RERA restrains promoters and brokers associated with registered projects from charging commissions exceeding the limits prescribed in the Haryana Regulation of Property Dealers and Consultants Rules, 2009, under the Haryana Regulation of Property Dealers and Consultants Act, 2008. Rule 10 of these regulations specifies a commission of one percent on the agreed consideration value, to be equally divided between the seller and buyer upon finalizing the deal.
Instances of brokers charging exorbitant commissions, reaching as high as 5 to 10 percent of the property value, prompted RERA’s intervention. Licenses for brokers and property dealers are granted by the Deputy Commissioner under the Haryana Regulation of Property Dealers and Consultants Act, 2008.
RERA’s registration of property dealers, responsible for negotiating and mediating real estate deals, is conducted under Section 9 of the Real Estate (Regulation and Development) Act, 2016, with the condition that agents comply with all applicable laws. Khandelwal stated that RERA is in the process of establishing a code of conduct for property dealers to ensure adherence to ethical practices and prevent unfair trade practices.
The code of ethics will include provisions for maintaining additional books of accounts to verify lawful commission charges. Brokers failing to possess necessary project documents face penalties, including registration cancellation. The code will also mandate the display of real estate project details by brokers during facilitated sales.
Khandelwal explained the need for promoters to disclose broker details in prospectuses and advertisements to prevent unauthorized brokers from engaging in malpractice. The proposed code of ethics will address various issues, including the practice of brokers acquiring units at predetermined rates from builders and selling them at higher prices for personal gain, which is deemed illegal.
Concerns over oral deals, enticing offers under the guise of attractive discounts, and misleading project features have also been addressed by RERA, emphasizing the need for ethical practices in the real estate market.
