Will the RESA law affect the brokers only? Think again…

Property buyers will be happy to know that our government has been taking serious steps to provide protection for them, and thus encouraging them to invest more in Philippine real estate. There is already the Presidential decree 957 (Subdivision and Condominium Buyers Protection decree) and the Republic Act 6552 (more popularly known as the Maceda law, which is about Protection of Buyers of Real Estate on Installment Payment). Now, although still being appealed is Resolution 830, which is about the new procedures in securing permits and license to sell (LTS) for the developers (as if the calvary of red tape that the developers are going through right now is not yet enough) requiring new minimum levels of development prior to the issuance of the LTS.

Recently, on June 29 to be exact, a new level of protection for our beloved real- estate investors has been signed into law by President Arroyo, which took effect on July 31. This law intends to protect the buyers, even before they get involved in a real-estate transaction, by assuring them that they are only dealing with competent, professional, duly licensed and registered practitioners whose standards of practice and service shall be globally competitive and who are subject to stiff penalties for certain violations and malpractice. This is Republic Act 9646, or now more commonly referred to as the Real Estate Service Act (RESA).

This new ruling basically requires all real-estate service practitioners to be licensed and registered with the Professional Regulatory Board of Real Estate Service ,which is under the supervision and administrative control of the Professional Regulatory Commission. Prior to the effectivity of this law, these licenses were secured only from the office of the Department of Trade and Industry (DTI). Except for the real-estate salesperson, all levels, meaning the broker, appraiser, consultant and assessor are required to undergo examinations to be given by the board as a prerequisite to licensure and registration. However, a real-estate salesperson is still required to secure a license and can only work under a licensed broker who will have to be a signatory in all the transactions of the salesperson.

Another objective is also to elevate the standards for the practitioners by setting higher requirements for the applicants, especially for the level of the real-estate brokers and salespersons. Until the availability of a Bachelor’s Course on real estate, which will be a prerequisite to get a brokers license, applicants should have completed a four-year college degree. In the case of the salesperson, they should have taken at least two years in college. In this broker-salesperson arrangement, a broker can only accredit a maximum of 20 salespersons. In divisions or departments in partnerships and corporations engaged in marketing or selling any real-estate projects, the heads must be full-time registered and licensed real-estate brokers.

While these sounds all too good for the buyers, it will actually benefit the real -estate brokers who have existing licenses the most. Moreover, if we take a closer look at the implications it will have on the existing structures of real-estate sales and marketing organizations, this law might require major movements which will definitely adversely affect their current operations. This is especially true for companies involved in marketing low-cost and socialized-housing projects, but it does not mean that corporations selling high-end projects are exempted from it. At present, maybe more than 95 percent of the in-house agents of real-estate companies are not licensed salespeople. The same percentage for the department or division heads who are not licensed brokers although most of these people have worked for their respective companies as productive sellers for 5, 10, 15 or more years. In the existing structures of these sales organizations, there can be one head for a division with more than a hundred sales agents with middle managers in the layers. Will all managerial levels be required to be headed by licensed brokers when the law only requires the one directly supervising the salesperson to be a licensed broker? That is just the tip of the iceberg. Many of the sales heads, especially in low-cost housing sales organizations who have worked productively for years in their respective companies, may not even qualify to apply for their broker’s licenses since most of them do not have a four-year college degree although they know the industry extremely well. Will they have to be demoted to mere “coordinators” or “referrers” as some advocates of this law suggest?

It really seems that the in-house sales organizations were not considered in the deliberation of this law, when we should actually give credit to these agents who were responsible for bringing the Philippine real estate to where it is right now and also for bringing in the very useful dollars from abroad through their efforts to sell to the international market.

More of its impact willbe discussed on the second part of this article. Incidentally, this topic will be discussed more lengthily by no less than the chairman of the PRC, Nicolas Lapeña, in the 14th NREA-DCC National Convention on September 24 and 25 at the Makati Sports Club. You may contact the NREA office at 913-4463 to reserve seats.