Regularising the real estate industry

I had some encouraging feedback from readers following my article on this subject last Sunday, and I take the opportunity to feature the following query and reply featured in our Website's "Interact Section":

I have the following query: Can real estate agents purchase the property they are supposed to sell in order to make a double profit (i.e. make a profit besides their 5% commission?).

Also, can a real estate agent pose as being the owner in an advert or when showing property?

I have had this problem occurring several times, so I would like to know whether such behaviour is regulated by consumer rights law.

Thanks for your help and keep up the good work! (Ivan Grech)

I have referred your query to our legal expert Dr David Fabri and here follows his reply:

I think your reader's concerns are perfectly legitimate and he may wish to consider the following:

1. There is no specific legislation which regulates the activities of estate agents in Malta. This also means there is no public authority overseeing their activities. I have repeatedly pointed this out as a serious failing in our regulatory framework in public seminars and elsewhere.

2. If the estate agent himself is the buyer, it would seem illegitimate for him to charge the commission. It is not as if he has found you a buyer. I would contest any such attempt.

3. Estate agents who pose as private customers may be in breach of the Trade Descriptions Act and the misleading advertising rules in the Consumer Affairs Act 1994. It depends on the nature of the deceptive information, the style, etc. In any event, it would certainly be unethical for an estate agent to try to deceive potential customers who might not wish - for their own reasons - to have dealings with estate agents.

4. Grievances by private clients against estate agents may be brought to the attention of the Consumer and Competition Division because estate agents qualify as traders under the Act.

Indeed the absence of specific legislation to regulate estate agents activities makes it possible for unscrupulous estate agents to pose as private buyers.