How the new regulation of the sector in the Balearic Islands will affect real estate agents Real Estate Law

The Balearic Government has just published the draft of a Decree that aims to regulate the requirements for real estate agents, as well as the obligations they must fulfil in the exercise of their activity, and the creation and regulation of the functioning of the Register of Real Estate Agents in the Balearic Islands.

In today's society, housing is a primary need and, therefore, the rights relating to it are worthy of protection. Real estate transactions involve the disbursement of large sums of money by consumers, therefore it is necessary to guarantee that real estate intermediary services are of high quality and under guaranteed conditions.

Among the rights and duties of users of real estate agent services are the right to sign with the real estate agents the contract note between the professionals and the users of such services, in accordance with the requirements established by regulation and, in any case, to obtain all the documents accrediting the terms of the contracting of the real estate agent's services and proof of payment.

Furthermore, among the rights - but not obligations - of estate agents is that of registering in the Balearic Islands Register of Estate Agents.

Agents must have a university degree in social and legal sciences, engineering or architecture; non-university training of at least 200 teaching hours related to mediation, consultancy and management services, or have demonstrable experience in the rendering of real estate services for at least four years immediately prior to the date of submission of the application.

With regard to the obligations of real estate agents, it is imperative that they provide a guarantee and keep it in force for as long as they carry out their mediation activity in order to respond to the amounts they receive in the exercise of their activity, until these amounts are made available to the persons to whom they are addressed. The guarantee, which may be contracted directly or collectively through the professional associations, will consist of assurance of a surety insurance or a bond signed with a duly authorised insurance or financial institution, in accordance with its specific regulations. Finally, it should be noted that the minimum amount of the guarantee is €60,000 per year of coverage.

The decree regulates the obligation for real estate agents contract a civil liability insurance in order to "cover the damages and losses that they may cause in the exercise of their activity". The minimum capital to be insured will be 100,000 euros per claim and 600,000 euros per year.

It is true that the exercise of the activity of real estate agents is unrestricted, with the applicable legal limitations, but the draft of the Decree adds another requirement in order to be able to carry out real estate activity in the territorial scope of the Balearic Islands, and that is the prior presentation of the statement of responsability or the communication and acquisition of the appropriate authorisation, where appropriate, in the legal or regulatory terms established.

A statement of responsibility of initiation of activity as a real estate agent is understood to be the document signed by an interested party in which they state, under their own responsibility, that they comply with the requirements established in the current regulations for commencing the exercise of an activity of those established in this regulation, that they have the documentation accrediting this and that they undertake to maintain their compliance during the period of time inherent to this exercise.

In fact, the draft of the Decree itself highlights a warning; advertising by any means of dissemination or the effective performance of a real estate agent activity without having presented the statement of responsibility of commencement of activity, or having presented it but without complying with the legal or regulatory requirements for its exercise, will be considered as an illegal offer or clandestine activity, intrusiveness and unfair competition, and implies the initiation of the corresponding sanctioning proceedings subject to the provisions of Law 5/2018.

In conclusion, the future Decree that is expected to be approved at the end of the year so that it can come into force in January 2023 will professionalise the activity of real estate brokerage in the Balearic Islands, better protecting the rights of both the seller and the buyer.

Paula Sureda
Illeslex Lawyers