The buoyant real estate sector in Mauritius has for long remained unregulated and somehow fragmented. Government recently introduced a commendable piece of legislation creating a conducive legal framework for real estate players – the Real Estate Agent Authority Act 2020 (the “Act”). Its overall objective is to promote transparency, accountability and integrity in real estate transactions, and protecting and assisting clients engaged in real estate transactions with real estate agents, land promoters and property developers. Real estate transactions being inherently of high value make them vulnerable to money laundering; that is why the National Money Laundering and Terrorist Financing Risk Assessment of Mauritius report classifies Mauritius real estate sector as “medium high” from money laundering risk perspective. Hence, the Act also aims at ensuring compliance with recommended international best practices and norms combating money laundering, terrorist financing, and proliferation financing (i.e., financing of nuclear, chemical or biological weapons in contravention of national laws or international obligations).
The Act provides for the establishment of a Real Estate Agent Authority (the “ Authority”) which will be administered and managed by a board known as the Real Estate Agent Board (the “Board”) comprising a Chairperson (a law practitioner) and twelve other members. The Authority will essentially act as a watchdog over the real estate arena in Mauritius. In particular, it will regulate and control the business activities of real estate agents (the term “real estate agent” includes land promoters and property developers), promote transparency, accountability and integrity in such activities, and protect and assist clients in their real estate transactions with real estate agents.
The Authority will also cooperate with the Financial Intelligence Unit (the “FIU”) and other relevant public sector agencies to assist in the detection and prevention of money laundering and terrorist financing, and proliferation within the real estate sector. In addition, Money Laundering Reporting Officers and Deputy Money Laundering Reporting officer of real estate agents need to be approved by the Authority.
The Authority has the power to register, renew or cancel registration of real estate agents, and will keep a Register of Real Estate Agents (available for public inspection).
An individual of at least 21 years old, holding a diploma in real estate or such other equivalent qualification as the Board may approve, or having a minimum of 5 years’ experience in the business of real estate transactions, may apply to the Authority for registrations as real estate agent. In the case of a company and a société /partnership, at least one of its directors or its partners respectively must have been registered as a real estate agent under the Act.
Registration will not be allowed, inter alia, where an individual (a) has been convicted of a financial crime offence, (b) is on a United Nations Sanctions List, (c) has been convicted, within 10 years of his application, of an offence involving fraud or dishonesty in any country.
It is mandatory for all real estate agents to register with the Authority. A person who prior to the commencement of the Act, was acting as a real estate agent should, no later than 6 months after the commencement of the Act, make an application to be registered as a real estate with the Authority.
A real estate agent duly registered with the Authority is required to furnish a security.
Henceforth, no real estate transaction may be carried out by a real estate agent on behalf of its clients unless it is captured in a written contract between the real estate agent and the client. Interestingly, the Authority may act as a mediator with respect to nay dispute relating to the performance of a contract, provided the parties so agree.
Real estate agents have a duty to keep accounts of all their receipts and expenditures showing clearly and separately any amount received from, or on behalf of, their clients for a period of 7 years following completion of the transaction.
In carrying out a real estate transaction, the real estate agent will be charging a fee (of such percentage as may be prescribed) of the value of the transaction.
Real estate agents are required to comply with the provisions of the Financial Intelligence and Anti-Money Laundering Act, the United Nations (Financial Prohibition, Arms Embargo and Travel Ban) Act 2019 and related legislation, and in particular have an obligation to file a suspicious transaction report with the FIU no later than 5 working days after (a) they become aware of a suspicious transaction, or (b) ought reasonably to have become aware of a suspicious transaction. Failure to so report constitutes an offence which, on conviction, renders the real estate agent liable to a fine not exceeding Rs. 1 million rupees and to imprisonment for a term not exceeding 5 years.
The Act lists certain acts of a real estate agent which would constitute professional misconduct, for instance, gross incompetence or gross negligence in the discharge of his functions or the use of another real estate agent’s description to procure his services as a real estate agent. The Authority is empowered to investigate any complaint and may call for disciplinary proceedings before a Disciplinary Committee.
The Real Estate Agent Authority Act 2020 will ensure a level of professionalism amongst real estate agents, instil trust and confidence within the property market, and insulate it against illicit money. It will no doubt comfort local as well as international buyers, particularly in the current and post-pandemic era where real estate assets are sought after as a safe investment alternative.
Source: Business magazine