The real estate agency sector in Ghana has long operated in an unregulated and informal environment, leading to issues such as fraud, unprofessional conduct, lack of consumer protection, and market inefficiencies. Over the years, there have been multiple attempts to regulate the industry but the absence of a proper legal framework meant that anyone could act as a real estate agent without professional training, licensing or accountability. 

The Real Estate Agency Act, 2020 (Act 1047) marked a turning point in Ghana’s real estate agency sector, leading to the establishment of the Real Estate Agency Council (REAC), a state authority mandated to regulate real estate agency practice, ensure professionalism, and protect property buyers and sellers from fraudulent individuals. 

The purpose of this article is to examine the historical background of an unregulated real estate agency practice in Ghana, the coming into force of the law and the implications of the law on real estate agents and brokers.   

Characteristics of the Unregulated Real Estate Agency Market 

Before the passage of the Real Estate Agency Act, 2020 (Act 1047), the real estate agency profession in Ghana was completely unregulated. Unlike other professions such as law, medicine, or engineering, where practitioners must obtain licenses and adhere to industry standards, any individual could act as a real estate agent regardless of qualifications or expertise. This led to high incidence of fraud and scam transactions, lack of consumer protection and dispute resolution mechanisms, market inefficiencies, poor transparency, misrepresentation of property ownership, fake property listings targeted at scamming prospective buyers or tenants, illegal agency fees with no structured commission system etc, with many unsuspecting Ghanaians including those in the diaspora, fell victim to real estate scams, leading to loss of investments and distrust in the system. 

The Coming into Force of the Real Estate Agency Council (REAC) 

Recognizing these challenges, the Government of Ghana passed the Real Estate Agency Act, 2020 (Act 1047) to establish the Real Estate Agency Council (REAC), which officially began operations in 2022.  The objective was to sanitize the system by weeding out the fraudulent practitioners and the general unprofessional conduct that characterized the real estate agency sector for decades.

Object and Function of the Real Estate Agency Council (REAC)

Pursuant to section (3) and (4) (a) to (r) of the real estate Agency Act, 2020, (Act 1047), the object and functions of the Council is to facilitate and regulate the real estate agency practice and the provision of real estate agency services”. The performance of these functions includes but not limited to regulating real estate agency practice by setting standards, licensing of agents and brokers, enforcing ethical conduct, protecting consumers from fraudsters, standardizing agency fees and commissions, maintaining a national database of real estate transactions whilst ensuring the sector is not used as conduit for money laundering.

Implications of Act 1047 on Real Estate Agents and Brokers

The coming into force of the Act, 2020 (Act 1047) puts a huge responsibility on the shoulders of real estate agents and brokers. It is the arrival of a new dawn that makes agents and brokers quite uncomfortable whilst protecting all parties to real estate transactions including all parties alike. By implication, it is therefore mandatory for all persons and institutions practicing real estate agency before the coming into force of Act, 2020 (Act 1047) to quickly formalize their operations to avoid potential damaging legal consequences.

The question however is, how many real estate agents and brokers are familiar with the provisions of Act, 1047 relevant to the core business of real estate agency and their legal implications in the event of a breach of any. In the subsequent considerations of this article, we shall be examining some selected provisions of the law and their implications on the operations of real estate agents and brokers for today. We shall visit that of the implications of Act, 1047 on developers, property owners and investors in subsequent articles.

Implications of Section 22 of Act 1047 on Real Estate Agents and Brokers

Pursuant to section (22) of Act 1047 “a person shall not (a) provide real estate agency services (b) provide services as a real estate broker or real estate agent (c) engage in any business connected with the provision of real estate agency services or (d) engage in a real estate transaction if that person is not a licensed real estate broker or a licensed real estate agent under this Act”. The law mandates that all individuals and companies engaging in real estate agency services to be licensed by the Real Estate Agency Council.

What this means is that, all persons and institutions practicing real estate agency whether now or before the coming into force of Act, 1047 or persons and institutions showing interest in real estate agency practice must all be licensed under this Act, failure to do so amounts to an illegality that may subject one to the full rigors of the law. The purpose is to ensure that only qualified professionals operate in the industry, adhere to a code of conduct to protect clients and ensure transaction transparency etc. 

 Implications of Section (30) of Act 1047 on Real Estate Agents and Brokers

With reference to section (30) and (31), the law spelt out the conditions under which the agency license of an agent or a broker can be suspended or revoked whilst section (30) (1) mandates that, “the Council may suspend the license of a real estate broker or a real estate agent, where the Council determines that the real estate broker or real estate agent, in the performance of a function authorized by the license (a) fails to use the real estate forms required for the real estate transaction (b) accepts cash in payment for the real estate transaction (c) fails within a reasonable time which shall not exceed one month to payout moneys received, into the client’s account (d) pays a commission or fees to or divides a commission or fees with a person who is not a licensed real estate broker or a licensed real estate agent or (e) fails to give a copy of the sale and purchase agreement to both the seller and purchaser of real estate.

With particular reference to section (30) (1) (d)  which frowns on the sharing of commissions with uncertified brokers or agents, it says “pays a commission or fees to or divides a commission or fees with, a person who is not a licensed real estate broker or a licensed real estate agent;”. This commission sharing is a common practice in the real estate agency space in Ghana where one property can have more than five (5) agents involved who are most often not agents in the first place, in some instances, they just heard someone ask for a place to rent or lease and that alone is enough for anyone on the street to turn a real estate agent demanding commission on such transactions. It is good news the law is very categorical on this and it is important agents and brokers are conscious of this in order to stay away from the grip of the law.

Implications of Section (26) (29) (31) and (48) of Act 1047 on Real Estate Agents and Brokers

For want of space and time, we are unable to discuss into detail section (26) of Act 1047 which spelt out the eligibility for the licensing, section (29) on the renewal of licenses and section (31) on the revocation of licenses. Section (31) (2) states “the Council shall revoke the license of a real estate broker or real estate agent if the Council determines that the license was obtained by fraud”. Subsequent to this, section (31) (3) says the Council may revoke the license of a real estate broker or real estate agent (b) if that broker or agent is convicted by a court of competent jurisdiction for a serious offence or (c) if in the performance of a function authorized by the license, the real estate broker or real estate agent (i) knowingly makes a fraudulent misrepresentation, (ii) acts in the dual capacity of broker and undisclosed principal in the same transaction, (iii) acts for more than one party in the same transaction without the knowledge and consent of the parties that the licensee represented in the transaction, (iv) accepts, gives or charges an undisclosed commission, rebate or profit on expenditures from a principal, (v) or commingles the money or other property of a property owner with those of the licensee; (vi) fails to disclose information on a property which is the subject matter of a transition just to state a few of the grounds on which the agency license of an agent or broker may be revoked.

With special interest in section (31) (3) (vi), and section (48) (2) where “a licensed real estate broker or a licensed real estate agent shall disclose to the seller any defect with the property that the real estate broker or real estate agent is dealing with. This places a huge responsibility on agents and broker to disclose all information about the property in question, it is one of the areas both agents and brokers take for granted over the years. There are many instances where agents, brokers and property owners even collude and hide relevant property defects information from prospective buyers. This practice is a common phenomenon and has led to trust issues between consumers, agents, brokers and property owners.

In an environment where substandard construction works is the order of the day with many agents, brokers and property owners prioritizing monetary gains at the expense of the consumer, many clients are being shortchanged in the process.  But now is a wakeup call on all agents and brokers that the era where one can get away with deceptions such as these is over and anyone found guilty of this act faces the full rigors of the law. Moreover, the law also frowns on the misrepresentations stipulated in section (31) (3) (iii) (iv) and (v) in the aforementioned paragraph, the commingling, the conduct of acting on behalf multiple parties without their knowledge and consent etc. which is also a common practice in the agency sector. But the multimillion dollar question now is, how many agents and brokers will ensure quality works or compel developers deliver defect-free properties in order to avoid litigations that may risk them their licenses. This is another huge responsibility on all agents and brokers and it is important agents and brokers are conscious of these provisions of the law and walk by them accordingly.

Beside this, a close scrutiny of the licensing requirements, in section (26), the renewal procedure in section (29) and the suspension of licenses in section (31) for a license that only last for 12 months is such a huge responsibility on all agents and brokers and it is very important for all agents and brokers to be conscious of this in order not to fall victims to the law.

Implications of Section (41) of Act 1047 on Real Estate Agents and Brokers

Section (41) makes it mandatory for all real estate agents or brokers to maintain physical office locations, section (41) (1) states “a licensed real estate broker or a licensed real estate agent shall maintain a place of business in this country and conspicuously display in that place of business (a) the license of that broker or agent or a certified true copy of that license and (b) the fees to be charged by the real estate broker or real estate agent etc.

Unlike the status quo where we have over 90% of the self-acclaimed agents and brokers as nomadic agents and brokers that cannot be identified with any specific physical address. This has a huge cost implication on existing real estate agency practitioners who are nurturing plans to get their certification from the Council as well as potential agents and brokers who are also nurturing same interest to enter into the real estate agency space. Again, it is important for all those operating without certification yet nurturing the plan to get certified and all potential agents and brokers to beware of this and braise themselves up for the task.

 Implications of Section (43) of Act 1047 on Real Estate Agents and Brokers

Section (43) (1) “a licensed real estate agent shall not undertake any real estate transaction unless that agent is affiliated to a licensed real estate broker”, section (43) (2) says “a licensed real estate agent who is affiliated to a licensed real estate broker shall not (a) act as a real estate agent for any other real estate broker or (b) accept valuable consideration for the performance of any act as a real estate agent from a different real estate broker to whom that agent is affiliated.

By this explicit provision, the law has spelt out the roles and how brokers and agents must relate in the agency space and it is important this education is taken seriously at the training stage for all persons undergoing training to be licensed to practice real estate agency in Ghana. What is happening currently is agents acting as brokers in many instances whilst many other agents work with several brokers simultaneously, as many brokers as they come across at a time. This has created a lot of hatred, acrimony leading to transaction opacity in the sector.   

 Implications of Section (54) of Act 1047 on Real Estate Agents and Brokers

Pursuant to the provision of section (54) of Act 1047, “a person who (a) advertises as a real estate broker or a real estate agent without a license issued under this Act; (b) (c) (d) (e) engages in a real estate transaction without a license contrary to section (22) transfers a license issued under this Act contrary to section (27) falsifies a document under this Act, obstructs an officer of the Council or any other person authorized by the Council in the performance of the duties of that officer or person under section (39) or (f) fails to submit transaction reports contrary to section (49) commits an offence and is liable on summary conviction to a fine of not less than five thousand penalty units and not more than ten thousand penalty units or to a term of imprisonment of not less than five years and not more than ten years or to both.

Section (54) defines the penalty for breaching the law. This is an era of sanity, a clarion call on all agents and brokers. In any case, the law is binding on all of us whether we are aware of it or not.

Conclusion

In conclusion, the coming into force of the law is crucial and will help clean up the system even though the provisions may have given us additional responsibilities which may cost us time and other resources to operate in this sector. That notwithstanding, it will restore confidence, integrity and dignity to the profession whilst ensuring transaction security and transparency. We call on the state to resource the Council well to be able to clean up the system. Since the enactment of the Act 1047 and the setting up of its office, the office has been challenged with understaffing, lack of funding and lack of relevant logistics to take full swing. Until now, the Real Estate Agency Office have not been able to issue any permanent license save a few temporary licenses issued to just a hand full of agents and brokers. We also call on all prospective agents and brokers to offer full support to the Council to be able perform its function effectively. Together, we can make our sector as clean, transparent and organized to the envy of the likes of the medical and legal professions. 

References

• Real Estate Agency Act, 2020, (Act 1047); date of Gazette Notification: 29th December, 2020.
• The Anti-Money Laundering Act, 2020 (Act 1044) (and where there is any conflict, the provisions of Act 1044 shall prevail).

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