Regulation for the Real Estate Sector in Spain
One of the characteristics of the property market in Spain has been the traditional lack of enforceable regulation over who may or may not be allowed to sell properties.
Real estate agents have not had a compulsory professional training, they have not needed to pass any exams, or to meet certain professional standards and have had no liability for mis-information, at least in most cases in almost all regions in Spain. This, especially in the countryside where planning is more vague, has led to misinformation for buyers and sellers, often with serious consequences.
This is changing with a new law LAW 1/2018 dated 26th April, which modifies the LAW 1/2010 which rules the right of housing (Derecho a la Vivienda) in Andalusian region. The aim of this Law is to guarantee the consumers protection and to improve the quality of the professional sector of real estate agents and for this purpose the Law creates a Public Registry in which any agent or agencies will need to be registered. This makes Andalucia the second one after Catalonia which regulates the profession of real estate in Spain with compulsory registration. In Madrid they have also passed a new regulation on this matter this year but the registration is optional.
The Law provides the guidelines but there is going to be a Regulation (Reglamento) which will rule all this in detail and it will be passed within a period of one year from last April. We will know the facts then but for now these are the key questions to be considered:-
A.- DEFINITION OF REAL ESTATE AGENT FOR THIS LAW PURPOSE
The Law defines to whom it applies:-
Real estate agents or agencies, so either individuals (self-employed/automono) or legal entities, who provide the following services, on habitual and remunerated basis:
- mediation services, advice and management in real estate transactions, including purchase and sale operations
- option of purchase, rental, exchange or transfer of real estate and the rights relating to such operations, including the constitution of guarantees
B.- COMPULSORY REQUIREMENTS IN ORDER TO GET REGISTERED:
It includes several requirements which, in order to simplify, we can classify as follows:-
- Location and service: to have an office opened to the public or at least a physical address in case the service is provided online.
- Capacity & professionalism: the individual agents or agency directors in case of a company will need to be qualified in accordance to what the future regulation will establish as “sufficient professional training”. In Catalonia it is necessary to have a university degree (company management, architecture, law, economy etc) or a certificate from an academy which is recognised as official for this purpose including certain specific subjects like property and rental law, marketing skills, consumers law, deontological principles. We do not yet know if it will go that far in Andalucia. In addition they will need to prove lack of criminal record, with the exceptions that will be provided for by regulation.
- Solvency requirements:-
- civil liability insurance must be permanently in place for the duration of the activity that is to cover the potential damages that could be caused in the exercise of the activity. So we wonder what kind of coverage will be required. In Catalonia for example they require: 100.000 euros per accident/loss and 600.000 euros per year and per office opened there; and in case of online activity they require 150.000 euros per loss and 1.000.000 euros per year.
- Bank guarantee to cover for the amounts that they receive in the exercise of their mediating activity (similar to the promoters when selling off-plan).
- Information & consumer protection:
- to provide their clients with information about their rights & duties as consumers as well as the specific regulation that relates to the properties they are selling in relation to planning, technical issues, taxation, environmental, energy certificate or any other imposed by the authority. Possibly we can include here the touristic rental rules in Andalusian region even if they do not mention it specifically.
- to provide terms of business letters and instruction forms to the clients which must include the authorisation to advertise, sign contracts, take deposits
- Real Estate Agents also need to ensure the Public Housing rules are observed if they are selling this type of properties (maximum prices, authorisation/discharge etc).
Those who are already registered at a Professional Association (Colegio Oficial de API) will only need to provide the certificate from the Association where they are registered to access this Public Registry.
C.- INFRACTION & PENALISATION:
Those who work as agents and ignoring the registration duty will risk getting a penalty as it would be a major infraction bring a penalty up to 6,000€.
So that is the outline of the law. A sub committee of politicians and public servants of the Andalucian authorities are going through the fine points and we can look forward to a higher standard from agents with obvious benefits to buyers and sellers alike.
If you have any questions on buying or selling your property or need to ‘fact-check’ some information that you have heard, don’t hesitate to contact me.
