Talking tall: Land brokerage is largely unregulated in India (Photo: AFP)

When Palash Roy wanted to buy a house, he thought a visit to the neighbourhood real estate agent was the best thing to do. The encounter went off well. The agent was friendly and promised a good deal. Until the New Delhi-based television journalist enquired if he had a licence or something like that. ?Are you mad?? the broker burst out angrily. ?Nobody talks about such things in India.?

Strange though it may sound, the agent wasn?t far away from the truth. Land brokerage business is largely unregulated in India. An aspiring broker needs little more than a shop, a telephone, a desk and a couple of chairs to start business. Some don?t even need that.

Certainly, no qualification is required. Often, a person providing advice or consultancy on real estate matters is not conversant with even the basic rules and regulations of the property market, its legal and administrative provisions, etc. And, he is hardly accountable.

But finally, there is some good news for the long-suffering consumer. The Union government is formulating a policy that would regulate the unorganised real estate brokerage business. It is early days though. ?The draft policy is far from being finalised,? says a senior official in the Union urban employment and poverty alleviation ministry. But then, better late than never.

Earlier in June, 2004, the Naredco (National Real Estate Development Council) had submitted a general framework on the subject to the same ministry. Much of the information submitted was about the real estate brokerage practices prevalent in the US, Australia, Singapore and Malaysia. A similar outline was also submitted to Sheila Dixit?s Delhi government in September.

Property and land are state subjects. Therefore, any law on real estate brokerage has to be formulated by the respective state governments. The Central government can only provide a model or assist in the procedure. R.R. Singh, executive director, Naredco, points out that the body has not drafted a model licensing procedure. ?Instead, we have requested the Union government to prepare a comprehensive model. We are looking for feedback from all states. We need a law which makes the real estate business transparent and accountable,? he says.

According to sources, the draft policy will seek to address issues such as licensing of real estate agents, their possible revocation, suspension, the possibility of a judicial review of a particular deal, etc.

At present, a real estate broker primarily acts as a middleman who gets two parties to meet and deal with each other. Says Singh, ?He seldom has full knowledge of a property in regard to its legal viability.? Such a practice, says the Naredco executive director, is totally contradictory to the practice in developed countries where a broker takes upon himself the full responsibility of a deal. That apart, there is also a system of deal review. Penalties are slapped in case there are any violations of the law.

That?s not all. In the UK, the US and many other Western countries, real estate salesmen and brokers are properly licensed. There is a regulatory mechanism and a legal framework under which they operate. They also require a basic educational requirement. The draft policy is likely to address these issues.

Not every real estate broker is enthused by the development. Real estate agent Dinesh Ralli believes that Indian conditions are vastly different from the West and the same parameters cannot be applied here. In the West no transaction is done without the solicitor. ?But in India, we expect a broker to do a lawyer?s as well as an architect?s job,? he says.

But well-known real estate agent Samant Jerath feels that there should be a minimum qualification for a real estate broker. ?He should have a licence, a registered office, a staff of at least three and be an income tax assessee. For new entrants, there should be a compulsory short certificate course. Similarly, there should also be a rating system for brokers. The chaff must be separated from the grain.? He also suggests that the government should create an institution for brokers where it is mandatory for those with five years? experience to register. On its part, Naredco wants an organisation similar to the Institution of Realtors, the body which regulates real estate business in the US.

Real estate agents feel that no proper policy is possible without inputs from the community. Says Jerath, ?If brokers are part of the panel that formulates the policy, they can bring to notice problems that exist at ground zero.?

One hopes that consumer forums are also part of the panel. For it is the consumer who has been at the receiving end so far.

before you buy

• Delve deep: Always check out the original title deeds. This is to ensure that the property is not mortgaged or under lien.

• Nitty-gritty: Verify from the sub-registrar’s office whether the property is legal or not.

• Clean chit: Check out whether the house tax and property tax are clear till date. Ditto for the electricity and the water bill. There are several instances of buyers being forced to pay for a huge arrear.

• Look who’s watching: While buying property ensure that the family members or the heir witness the transaction. There should be no quarrels over the legality of the deal later.

• In good hands: The sale deed should be properly drafted by a lawyer. If possible, take a civil engineer friend along to assess the building’s quality.

(Tips provided by real estate agent Samant Jerath)