This Act provides for registration of estate agents who negotiate and act on behalf of buyers, sellers, landlords or tenants and also provide for regulation of estate agents as professionals.
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The Act was enacted to provide for the registration of persons who, by way of business, negotiate for or otherwise act in relation to the selling, purchasing or letting of land and buildings erected thereon (estate agents); and for the regulation and control of the professional conduct of such persons.
· Under section 2 of the Act “practice as an estate agent” means the doing, in connection with the selling, mortgaging, charging, letting or management of immovable property or of any house, shop or other building forming part thereof, of any of the following acts— (a) bringing together, or taking steps to bring together, a prospective vendor, lessor or lender and a prospective purchaser, lessee or borrower; or (b) negotiating the terms of sale, mortgage, charge or letting as an intermediary between or on behalf of either of the principals.
· Indeed, estate agents are almost always employed in all transactions relating to transfer of land and houses, and are therefore key to smoothing of transactions.
· Section 3 of the Act establishes the Estate Agents Registration Board whose responsibility under section 4 is registering estate agents and ensuring that the competence and conduct of practising estate agents are of a standard sufficiently high to ensure the protection of the public. The Act also sets out conditions and qualifications for registration as estate agent.
· Section 18 restricts unregistered persons from practicing as estate agents either individually, in partnership or through a body corporate. The penalty for violating this provision is a fine of Ksh 20, 000 or a jail term of two years or both. This monetary penalty appears too low to act as a disincentive.
· Relatedly, section 19 of the Act requires estate agents to take insurance or indemnify themselves by taking an indemnity bond so as to guarantee compensation of persons who may suffer monetary loss by dealing with them.
· Section 21 and 22 allows the relevant Minister and the Estate Agents Registration Board to prepare a code of conduct and rules of practice that are to govern the practice of estate agents.
· Real estate agents are regularly engaged in the buying, renting and selling of property in Kenya, acting at the behest of either buyers, landlords, tenants, seller or even financiers. There have also been cases of fraud including hiking of rental payments than is the case and outright theft perpetrated by estate agents. Many real estate agents are also individuals who undertake the trade as a part-time job (side hustle) thus becoming difficult to regulate or take enforcement action against as a withdrawal of a licence may not be quite deterrent enough. Consideration may be given into the Ministry and the Board liaising with county governments who have enforcement officers to enhance enforcement. The Board should also leverage on use of technology to have a functional website of registered and licenced estate agents, and also conduct awareness among the public on the need to only engage licensed real estate agents. There may also be need for issuance of different categories of licences for different agents depending on the acitvities they are engaged in-for instance those engaged in renting residential premises could simply be issued with a letting licence, while those involved in other complex transactions may be licensed differently to encourage registration.
· Many estate agents engaged in this practice are also unregistered, which has meant that they operate outside of law as they are not regulated persons/entities-this is partly as a result of low fines provided in law and lack of proper enforcement by the relevant agency, in this case the Estate Agents Registration Board. Any acts done by an unregistered estate agent (including negotiating, or entering into a contract for rent or sale of property on behalf of any party) is illegal. This was the decision of the Court of Appeal in where the court stated: “After careful consideration we have decided that it is clear from the evidence before the superior court and the provisions of Section 18 of Cap 533 that, if the contract alleged by Mapis and Mr. Shompa (the director of the appellant company) to exist, did in fact exist, the conduct of Mr. Shompa and the appellant company was in breach of express provisions of the statute and illegal…That being the case it was then a matter of law as to whether the non registration resulted in the illegality of the contract; it is clear that a contract to perform estate agency services can only be legal if entered into with a registered estate agent.” A similar finding was made by the Environment and Land Court in where the court stated thus at paras 33 and 34: “The agency agreement that the plaintiff and the defendant entered into inter alia allowed the plaintiff to sell and negotiate the terms of sale and thus the plaintiff needed to be registered as an estate agent under the Estate Agent Act, before getting into such activities. A contract such as the one presented in this case is an illegal contract and cannot be enforced… It follows that the contract relied upon by the plaintiff is an illegal contract which cannot be enforced by this court. The plaintiff has claimed capacity to sue as an agent based on the agency agreement that he had with the defendants. Given that this contract is illegal, it follows that the plaintiff cannot derive any strength from it, including the strength to sue on the terms thereof, for such agreement is not worth the paper that it is written on, and is null and void, incapable of vesting any rights upon the plaintiff.”
