Why is the law making it difficult for my friend to help me sell my house?
The key element here is whether your friend is helping you with a payment of commission. If there is no commission or any benefit (like referral fee, kopi-O) involved, it is not considered “Estate Agency Practice”.
Many a time, the auntie and uncle at home trying to find tenant for landlord are great people with good intentions. In fact, many of them had made a good name for the profession of estate agency.
As an owner, you definitely can sell your house on your own. S.22C VAEP Act, 1981 has that exception in Estate Agency Practice. You directly enter into a contract with the buyer without an agent. It is perfectly fine! But, many a time, owners have no time, and does not want to get involved with the negotiation. With someone they know, especially relatives, this is not nice. So, they get their agents to do so as it makes the price negotiation less awkward, and more professional.
However, the profession is also tarnished by some who took money (earnest deposit or mark-up) without doing a good job for the clients. Sky is the limit, but they promised without doing the job. There is also nowhere these victims could turn to as there is NO proof. Most engagements were never written down or recorded. Such complaints end up with NO action being taken by the authority. When tens of thousands of money is involved, the government had to do something.
As a result, the profession is regulated. It is just like dentists. In the old days, any tukang gigi can extract a tooth. However, in the law now, a dentist must be a registered dentist with the Ministry of Health. Why?
Because there were risks of bad job done by unregulated tukang gigi! You remember a young lady “Nara” who was 20 years old promoting herself as qualified dentist when she was NOT?
The risk of infection, the handling of equipments, potential of disfiguring the patients, etc are all the risks. Estate Agency is not like medicine, dentistry or pharmacy. No health risks are involved. However, money can be involved in huge sum! So, imagine entrusting someone with booking fee of RM10,000 and the person went missing later on?
You may say, I would not hand over the money to a middle man la! I will only do it in the lawyer’s office. Yes, you are smart. How about those who are not? Then, people can say, well… that is not my problem!
Of course, it is not your problem! BUT it is the problem of the society. So, government has to step in. Therefore, a law is enacted and enforced to regulate this profession. If someone holds out to public in dealing with selling, purchase, letting or renting of property for a fee, it is illegal unless the person is issued an authority to practice under the VAEP Act, 1981 (s.16).
Money collected for booking fee has to be deposited into the Client’s Account of the firm, and the money returned to the client if the deal got called off. This Client’s Account is audited by a qualified Auditor every year before the authority to practise can be renewed. Yearly renewal of authority to practise is spelled out in S.16(2) VAEP 1981.