Q&A On The New Real Estate Agency Act Of Ghana

Q&A On The New Real Estate Agency Act Of Ghana

  1. What is the Purpose of the Real Estate Agency Act, 2020 (Act 1047)?

The Real Estate Agency Act, 2020 (Act 1047) (the “Act”) was enacted to regulate real estate agency practice, including the sale, purchase, rental and leasing of real estate.[1]. It also introduces licensing of real estate agents and brokers.

  1. Which real estate transactions does the Act regulate?

The Act regulates real estate transactions including the sale, purchase, rental and leasing of real estate.[2] The Act applies only to transactions in which there is a principal-agent relationship for instance between a real estate agent or broker and a client. It does not apply to real estate transactions in which a person acts in their own capacity, as an employee, as a trustee pursuant to a court order or where there is no principal-agency relationship.[3]

  1. How does the Act affect real estate agents or brokers?

Every real estate broker or agent seeking to operate in Ghana must obtain a license from the Real Estate Agency Council (the “Council”). [4]  Additionally, engaging in a real estate transaction in that capacity without a license is a criminal offence.[5] All real estate transactions must utilize the official real estate forms provided by the Council.

  1. Who can obtain a license as a real estate agent or broker?

The four (4) categories of persons who may obtain a license to operate as real estate brokers or agents are: (i) qualified lawyers, (ii) registered valuation and estate surveyors, (iii) licensed real estate brokers or agents from other countries and (iv) any person who passes a qualifying examination conducted by the Council[6].

In the case of a corporate entity, at least one (1) of its officers or partners should be appointed as the representative to obtain the license.[7]

  1. What does the qualifying examination entail?

A person who is required to take the qualifying examination must demonstrate competence through a fair understanding of the principles of real estate practice, real estate law, basic law of agency, rudimentary principles of economics, professional ethics of real estate agency and the provisions of the Act.

Persons who have prior qualification and experience in any of the courses may be exempted from taking an examination in those courses. The examination comes at a fee to be determined by the Board.

  1. Are there any other application requirements?

An applicant must provide a professional indemnity insurance cover or evidence that the person has engaged a surety company duly licensed in Ghana to execute and submit a professional indemnity insurance cover on his behalf.

The person must also have a Tax Identification Number (TIN) and an ECOWAS Identity Card (Ghana Card).

  1. What is the duration of the license?

The license is valid for one (1) year and may be renewed.[8] The license cannot be transferred[9] to another person.

  1. Under what circumstances may the license be revoked?

A license under the Act may be revoked where the license holder fails to use the Council-approved real estate forms for real estate transactions, accepts a cash payment for a real estate transaction or fails to pay money received in a client’s account to the client within a period not exceeding one (1) month[10] or where the Counsel determines that the license was obtained by fraud.

  1. How does the Act address conflict resolution in real estate transactions?

The Act establishes an Appeals Committee to receive, administer and redress complaints lodged by persons. Decisions of the Appeals Committee may be further reviewed by the High Court.[11]

The Act also permits parties to a transaction to explore Alternative Dispute Resolution under the Alternative Dispute Resolution Act, 2010 (Act 798).[12]

  1. Final Comments

The Real Estate sector of Ghana is set to undergo a dramatic revolution on the tails of the newly passed Real Estate Agency Act, 2020 (Act 1047) (the “Act”). Regulation is the first step towards reorienting the sector, and it is hoped that this effort will establish reliability, reduce fraud and boost revenue for the sector.

[1] Act 1047, Long title

[2] Ibid, Section 1 (1)

[3] Section 1 (3) Act 1047

[4] Ibid, Section 22

[5] Ibid, Section 54(b)

[6] Ibid, Section 24(1)

[7] Ibid, Section 24(2)

[8] Ibid, Section 26(3)(f)

[9] Ibid, Section 27

[10] Ibid, Section 30

[11] Ibid, Section 37

[12] Alternative Dispute Resolution Act, 2010 (Act 798)