Beware the Unregistered Property Agent

It is exceedingly common in Malaysia to sell and purchase properties with the help of a middle person, colloquially known as a ‘property agent’. Conventionally, a property agent will help to market a property for sale, liaise with potential purchasers, coordinate inspections of the property, and organise necessary paperwork for the transaction to go through – in exchange for a fee or commission, usually a percentage of the value of the transaction.

In Malaysia, property agents are required to be registered and be issued with an ‘authority to practice’ before they may carry on their business as a property agent[1]. However, would a property agent be entitled to their commission if they are not duly registered?

Before we dive into this discussion, we must ascertain the applicable law. The relevant statute in question is the Valuers, Appraisers, Estate Agents and Property Managers Act 1981 (the “Act”), as amended via the Valuers, Appraisers and Estate Agents (Amendment) Act 2011 (“A1404”) and the Valuers, Appraisers and Estate Agents (Amendment) Act 2017 (“A1550”).

Now that that’s out of the way, the Act provides that a person shall not carry on the business of a property agent unless they have been issued with an ‘authority to practice’.[2] The specific prohibitions imposed upon an unregistered estate agent is comprehensive, and includes that the person may not:

1. practise, carry on business, or take up employment as an ‘estate agent’, ‘house agent’, ‘property agent’, ‘land agent’, ‘house broker’ or similar name;
2. carry on business or take up employment as an estate agent;
3. use marketing materials which imply (either directly or indirectly) that he is a registered estate agent or is engaged in estate agency practice or business;
4. offer or invite offers for the sale, rent or lease of property; or
5. be entitled to recover in court any fees, commissions, charges or remuneration for any professional advice or services rendered as an estate agent.

In the event that a person carries on the business of a property agent while unregistered, that person would have committed an offence and is liable, on conviction, to a fine of up to RM300,000.00 and/or imprisonment up to 3 years, as well as a further penalty of RM1,000.00 for each day during the continuance of the offence.

The strict provisions of the Act are there to protect both property sellers and purchasers from dealing with potentially unscrupulous persons. Given that property agents regularly receive monies in the transaction (e.g. earnest deposits) and are given access to properties, parties to transactions for properties should verify that the property agent in question is duly registered, which can be done on the website of the Board of Valuers, Appraisers, Estate Agents and Property Managers, specifically at search.lppeh.gov.my.