Agents mainly have an edge in real estate following their experience, network and contacts compared to property owners whose core business may not be in property. Legally, registered agents who make secret profits are in breach of their duties and obligations. They are not supposed to make secret profits from transactions on behalf of their principals – those who engage them on commission basis.
Accountability
? The Law of Agency requires that agents disclose secret profits they would have made out of transactions just as principals reimburse them on extra costs. For instance, the agent may have spent money out of his or her pocket to fuel the car he uses to show houses to would be tenants.
? However, the agent should show receipts of the amount he/she spent to fuel the car before reimbursement. ? According to the law, principals who discover that agents made secret profits out of their personal property are entitled to recover the amounts.
The property owners are empowered to cancel their agreements with the agents whether or not the secret profits had any effects on the transaction. ? Furthermore, the principals can move to court to recover the commissions they paid the rogue agents.
?Moreover, some agents who allegedly assist people to get houses are not registered estate agents in line with the law. Estate agents should be registered with the registrar and details should include the name, address and qualifications of the person.
The registered dealers must have certificates, which are valid for one year but can be renewed on payment of a fee. Names of registered estate agents must be published in the Gazette — the registrar should publish the same annually for the public.
Unregistered estate agents are liable for offences that draw fines of Sh20,000 or imprisonment of up to two years. And some landlords who have increased rents overnight are also on the wrong side of the law as lease/tenancy agreements stipulate the increases.For instance, many of the agreements have clauses that rent would be increasing by between five and ten per cent annually.
Moreover, home owners should give tenants their reasons for increasing rent, which mainly is they have renovated their houses.
The writer is an Advocate of the High Court of Kenya.
