When you deal with a “XYZ Consultancy” in a property transaction, is it the same as “XYZ Real Estate E(8)9876” (number is just for illustration)?
The legal position of you as a client in a real estate transaction is very important. When you deal with a Registered Estate Agent (REA) in a firm you are entering into a contract with the third party, engaged by this agent. The agent is in an agency contract with you, and that has the effect of binding the third party. Therefore, anything that is done or promised is protected by law.
When you deal with “XYZ Consultancy”, it is like you deal with a friend or a stranger. The friend/stranger can be very nice, but there is no legal position indeed in the whole dealing. The third party can walk off any time. There is no legal agency contract between you and the friend/stranger, or the third party.
If this XYZ Consultancy collects booking fee from the third party, it is in contravention of the VAEP Act, 1981. If there is an agreed fee of commission for the transacted property, this also contravenes the law. All wrong doings can be punishable under S.30 of the VAEP Act, 1981, which carries the maximum fine of RM300,000 and/or jail term of 3 years. As to why this is so, I will write in tomorrow’s post.
If anyone who comes to you eventually failed to buy your house, and you suffered losses, you cannot blame the “XYZ Consultancy” because what this consultant did was just giving advice! He is not your agent. He has no obligation in law. In fact, he can just empathize with you but cannot do anything.
If he is a REA, he owes the duty. He is in agency contract with you as his principal. Whoever runs away or has caused you to suffer losses, he is responsible (unless proved otherwise). That is the difference! If you are not happy with him on matters of dealings, you can take action against him by lodging a complaint with the Board of Valuers, Appraisers, Estate Agents & Property Managers, Malaysia (BOVAEP). www.lppeh.gov.my.