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Every developing property market has its teething problems, especially when it comes to regulating transactions between buyers, sellers and their respective brokers. It's an intense and often cut-throat business, where high stakes and charged emotions can sometimes get the better of people.
From buyers pulling out of deals at the last minute to sellers defaulting on a sale in favour of another with a more lucrative profit margin, misconducts have been known to occur. Both buyers and sellers have often cast their nets far and wide, promising listings to anyone who'll have them at the expense of the broker's commission. There have also been brokers who resort to unethical measures, such as the notorious ''bait and switch'' deals or advertising listings that have been sold to flesh out an otherwise weak portfolio.
As with any young and emerging property market, inconsistencies in practice and disappointing interactions are inevitable and part of the learning curve, but hopefully things will now begin to improve further. As of last month, Dubai's Real Estate Regulatory Agency (Rera), a government body established in 2007 to monitor the market, requires brokerage firms to complete a set of three mandatory, standardised contract forms in order to proceed with a legitimate sales transaction- a process that we at Better Homes have had in place for years.
Known in the industry as Forms A, B and F, these contracts validate and legalise the relationships between the parties involved in the purchase and sale of a property, while protecting their respective rights.
So how does it all work and what are the benefits of these mandatory contract forms?
Let's begin with Form A, the contract between a seller and a broker. Once a broker is employed to act on a seller's behalf, both parties will need to complete and sign Form A before they can proceed. The contract lists the names of the seller and broker and property details, ensuring that the property is efficiently and accurately marketed, while laying out the broker's fees and commissions on the table from the get-go. This transparency works both ways by reassuring the broker of a rightful commission for marketing the property and holding the broker accountable for any misgivings.
Upon completion of Form A, only then can the broker list the seller's property, eliminating misrepresentation in the market. Under the new mandate, brokers are also subject to random checks by Rera to ensure compliance and must be able to produce a signed Form A as proof of an advertised property listing.
Form B is a contract between a buyer and a broker. This contract lists the buyer and broker details as well as the property in question. Much like Form A, a clear fee structure is discussed and agreed on, eliminating hidden charges, while the broker's commission is safeguarded in the event the buyer purchases the property from another agent. Once again, transparency prevails and frustrations and disputes in the future are minimised.
Form F is a contract between a seller and a buyer. Once the brokers have held up their end of the bargain and found the perfect property for a buyer and negotiated an ideal price on the seller's behalf, they now bring the two parties together to finalise the transaction. To do this, the buyer and seller must complete Form F, which lists personal. property and financial details that apply to the transaction. As a legally binding document, Form F offers clarity and helps deter a breach of contract by either party.
The enforcement of these three forms by Rera will standardise and streamline processes in Dubai's property market. It can only serve to benefit everyone involved by creating a more professional, ethical and mature property market.
Source: Harneet Singh, Special to Property Weekly
Harneet Singh has worked in real estate in Dubai for the past eight years and is currently the manager of Better Homes' Dubai Marina branch