Source: ba.bloombergadria.com
- Risks are caused by poor or no knowledge of the subject matter
- Clients often do not distinguish between legal and illegal agencies and agents
- Currently, 119 agencies are entered in the Register of Intermediaries
The Law on Real Estate Brokerage in the Federation of Bosnia and Herzegovina, whose full implementation began in April this year, regulates a number of key issues, especially those related to the work of real estate agencies. Namely, until the adoption of the law, this area was not adequately regulated, which is why agents who were not qualified for this job worked in this field, exposing buyers to numerous risks.
The law prescribes the conditions that an agency must meet in order to be entered in the Register of Intermediaries and thereby essentially obtain a license to operate. Thus, among other things, a legal entity must be registered in the Register of Business Entities at the competent municipal court, and if it is a natural person, it must be registered for performing the activity (craft) with the competent administrative authority. Agencies must also employ at least one person who has passed the professional examination (agent license) before the commission of the Ministry of Trade of the Federation of BiH on a full-time basis, as well as an insurance contract with an insurance company for a case that could cause damage to the principal or a third party through brokerage activities. The minimum insured amount may not be less than 50,000 KM per insured event, or 150,000 KM for all claims in one insurance year.
Every year, new evidence is submitted to the Ministry of Trade of the Federation of BiH, and if one of them is missing, the intermediary will be deleted from the Register of Intermediaries and practically lose the operating license.
When it comes to the professional qualification of agents, it is determined by passing a professional examination before the commission of the Chamber of Economy of the Federation of BiH, and according to the Training Program, which keeps the Register of brokerage agents.
”Every agent must have a good knowledge of real property law governing ownership rights, construction and urban planning, because they must be able to explain the nuances of these areas to the client and not mislead them. For example, an agent must know how to read and understand public documents such as spatial and regulatory plans with construction regimes, and every piece of information given to the client must be accurate,” Edin Batlak, director of Agency Plus, tells Bloomberg Adria.
A large number of unregistered agencies on the market
Batlak points out that buyers working with illegal agents or agencies are exposed to risks, often of unimaginable proportions.
”The risks are caused by poor or no knowledge of the subject matter, a low level of professionalism, with an expressed interest in quick collection on a ‘take it or leave it’ basis, with no concern for client protection. When a problem arises, the client has no possibility of legally resolving the problem, unlike working with a legal agency,” Batlak emphasizes.
He explains that clients often do not distinguish between legal and illegal agencies and agents, which is why agencies that operate legally are exposed to dissatisfaction and a bad reputation. Therefore, it is very important that buyers, when choosing an intermediary, find out in what status the intermediary is and thus immediately make the necessary selection at the outset and do not expose themselves to unnecessary risk.
”We warn clients that the information about the agent’s license number is not proof that someone is a legal intermediary. A legal intermediary can only be a company or craft registered in the Register of Intermediaries,” Batlak adds.
Currently, 119 agencies are entered in the Register of Intermediaries. However, if we look at Dun & Bradstreet data, we can see that the highest revenues were achieved by those agencies that are not even entered in the Register. This means that there are still agencies on the market that do not meet the legal requirements for operation.
‘I assume that there are those here who build and then sell, as well as those who buy old properties, renovate them and then sell them,’ says Batlak, adding: ‘In any case, I believe that investors who sell their own properties should have licensed agents and be registered. Namely, in sales through an agency or independently, they should maintain professionalism and relevant expert knowledge with uniform standards.’
Illegal agencies and agents also cause damage to the state, as well as to those agencies that operate in accordance with the law.
Illegal agents and agencies do not pay taxes and contributions and have inappropriate commissions that are disproportionate to the scope of work and the required quality of service, which kills any thought of fair competition. In all such cases, the state suffers a major loss due to unpaid taxes and contributions, profit taxes, VAT, various fees,” Batlak emphasizes.
Legal penalties for illegal performance of this activity range from 2,000 to 10,000 KM, and for registered agencies that are not entered in the Register from 5,000 to 30,000 KM. And in the event of violations of the provisions of the Law, such as failure to conclude a Brokerage Agreement, penalties range from 2,000 to 10,000 KM.
When it comes to inspection supervision, Batlak points out that the competent inspection carried out very serious preparations in March this year and then conducted a series of controls.
”We no longer see certain agencies in advertisements, but there are still agencies that you cannot see in the Register of Intermediaries, and especially there are private individuals with a large number of properties, which indicates illegal work,” says Batlak.
