Ethics Case : Dealing with Unlicensed Real Estate Individual

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Here’s a recent incident involving a Licensed Real Estate Broker that was deprived of a legitimate brokerage deal due to unethical issues by an unlicensed Individual who happens to be a foreigner too and a Property Owner who just wanted to sell the Corporation’s Property.

Mr. Local Broker ( A ) has an online advertisement for a prime commercial property located in a fast booming Commercial Business District in Metro Manila.  “A” has an Exclusive authority to sell the property for six months signed by the President of the Corporation.  The property has been out in the market for about a four and a half months.

About a month and a half ago, A got a call from Mr. Foreign Individual ( B ) about the property.  “B” mentioned that he had a foreign client who is seriously looking at the area and would like to know more about the property and eventually visit the site.  At this point, “A” did think about the RESA Law and the Code of Ethics regarding dealing with unlicensed individuals but was told that to this date, such Code of Ethics doesn’t exist and has not been passed nor implemented by the local governing body.  So “A” thought that what did he have to lose and since the transaction was a sizeable one, it was worth the risk and effort to progress with it so he started dealing with “B”.

Initial details of the property was given by “A” to “B”.  “A” then met with “B” in order to cover his ground if “B” was actually legit and had a realistic client.  Eventually, “A” and “B” showed the site to “B’s” client.  Proper documents were signed  such as registration of the client to the Owner and acknowledgment that the property was viewed by B’s client was also done and copies were given to the Owner.

Now I believe the problem arose when “A” gave copies of the documents ( Title, Tax Declaration, Lot Plan, Vicinity Map ) to “B”.   As a standard operating procedure, I personally just release the copy of the Lot Plan and Vicinity Map and ONLY upon an ACCEPTABLE OFFER do i release copies of Title and Tax Declaration to the Buying Broker / Client.

Upon release of documents to “B” by “A”, “B’s” response to calls or texts started getting  cold, in fact, after three weeks of follow up, complete silence from “B”.   “A” was now really concerned so he followed up with the Property Owner and was told the property was still available and that “B” nor “B’s” client made no attempt to personally contact the Property Owner.

At this point, “A’s” Exclusivity to Sell the property had already expired however, a “Hold Over Clause” exists in the Authority to Sell.  I think you know where I am getting at.

The property was eventually sold to “B’s client and “A” was denied of any participation on the transaction, therefore, “Procuring Clause”  to the sale was totally ignored.

The Property Owner in this case just wanted to sell the property regardless of any agreement made with “A”.  As I always mention, Money changes People and this case is clear example of it.

What would you do now if you were “A” ?  There is no existing “Code of Ethics” to back him up, however, “A” has a case with the Property Owner as a “Procuring Clause” to the sale of the property.

From a contributing lawyer :  Given the above scenario, “A”s remedy/ies will be those provided under the RESA law and other principles of law such as equity, fairness and justice. He will be able to avail of these by filing the proper case/s in court. To do so would mean taking the lead in this area because i don’t think it has been done yet and I believe there are yet no precedents when it comes to judicial interpretation of the RESA Law is concerned.  “A” may also seek assistance from the court, via a civil case, to enforce his agreement with the property owner and invoke the hold over and procuring clause & demand payment of his agreed Professional Fees plus damages & other reliefs.

“A” must be wary, however, because as a real estate practitioner bound under the RESA Law, he may also be found to have fallen short in this area when he dealt with an unlicensed foreign individual acting as a broker in the Philippines (  add the  fact that we do not have a “reciprocity law” with this country on practice of real estate ).    Thus, he may also be held liable as he himself has abetted the violation of the RESA Law by the unlicensed foreign individual. By the way, I don’t think that this is a Code of Ethics case because as a rule, the Code of eEthics, if any, binds only those who are covered by it. It will have limited reach in transactions such as this instant one where people involved do not belong to the Real Estate Profession.

PRBRES people should do their job. They failed to form the AIPO, failed to enact and implement our Code of Ethics, etc.   They keep on admitting new practitioners even violating the RESA Law at that but not really professionalizing them. If they are not up to it, they should now be replaced by more qualified & competent people.  Again, we are just after what’s right for Real Estate Practioners, no politics please.

The Code of Ethics, at least the one we practiced ( which was patterned from National Association of Realtors ) involves our ties with the following: 1. Practitioner with fellow practitioners 2. Practitioner with government (obligations on taxes, etc.) 3. Practitioner with his client 4. Practitioner with the community (society) 5. Practitioner with his association ( AIPO ).

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Robert G. Sarmiento Properties
Professional Affiliation :
Philippine Association of Real Estate Boards
Member, City of Taguig Real Estate Board 2016, 2017
Real Estate Broker’s Association of the Philippines 2000-2015
President, Greenhills Chapter 2008, 2009
Philippine Association of Real Estate Brokers
San Juan Mandaluyong Chapter 1998, 1999
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