The draft "Real Estate Bill, 2024" is a bold attempt to streamline the real estate sector, offering much-needed regulation and clarity. However, a deeper dive into its provisions reveals significant adjustments that require immediate attention. Below is a critical analysis of the bill's strengths, weaknesses, and areas needing refinement.

Title of the Bill

The title of the bill could be: "The Real Estate Agency and Development Bill". Without the inclusion of the phrase "agency and development", the term "real estate business" or simply "real estate" is overarching and ambiguous in scope. Adding "agency and development" provides specificity and clearly delineates the focus of the bill, ensuring it adequately addresses the primary aspects of real estate practice. 

Inclusion of Key Stakeholders

For avoidance of doubt, the bill could explicitly include real estate managers, brokers (locally referred to as Bulooka), and realtors within the definition or reference of a licensed real estate agent. These individuals are integral to the functioning of the current real estate ecosystem, each playing a distinct yet interconnected role in property transactions, management, and development. By formally recognizing their contributions, the bill not only ensures their responsibilities are acknowledged but also establishes a standardized framework for regulation and accountability across the sector.

For instance, if you recall, the Surveyors Registration Act introduced the term "land agents" without providing a clear definition or proper context. This lack of clarity led to significant confusion 60+ years later when the process of registering real estate agents and brokers began, as many stakeholders, both new and established, were uncertain about whether they fell under the term "land agents" or if they required separate registration.

The ambiguity resulted in confusion about the roles and responsibilities of different professionals within the real estate industry. Had the term been more precisely defined and aligned with the commonly understood terminology used in the real estate sector, such as real estate agents, brokers, or property managers, and provided clear distinctions or amalgamation between them, this confusion could have been avoided. A more thoughtful and explicit clarification of key stake holders at the outset will ensure smoother implementation and better understanding among all parties involved 60 years from now.

Moreover, incorporating the prevailing terminologies and roles currently in practice would create an inclusive and comprehensive legal structure that reflects the realities of the industry and accommodates all stakeholders within the profession. This approach would enhance clarity, foster professionalism, and ensure no key players are overlooked in the implementation of the law.

Property Managers are Missing in the Bill.

Part 3, Section 8, Subsection 2(b) touches on property management but fails to sufficiently highlight or elaborate on the role and scope of property managers. The distinction between the responsibilities of a property manager and a real estate agent remains unclear. This oversight mirrors a similar omission in the recent Landlord and Tenant Bill, where property managers, key players in the real estate sector, were not even mentioned at all, in otherwords, property managers are missing in the Landlords and Tenants Act, and now they are also missing in the Real Estate Bill 2024.

Property managers play a crucial role in maintaining property value, ensuring tenant satisfaction, and acting as intermediaries between landlords and tenants. Their responsibilities warrant explicit recognition and regulation within the bill to address existing gaps and provide clarity on their duties and obligations.

It is important to note that a property manager is typically not involved in buying, selling, or other property transaction-related activities. Instead, their primary role is to manage and maintain properties after the sale has been completed. Unfortunately, the bill does not adequately cover the distinct roles and responsibilities of property managers, once more leaving this critical aspect of the real estate sector unaddressed.

Interestingly, for reasons that remain unclear, those involved in property management seem to have adopted a stance of "loud silence" on this issue, leaving the matter largely unaddressed. It often feels as though I am the only one making noise or raising concerns and advocating for attention to this pressing subject.

This is why I am particularly eager to hear perspectives and insights from some of Uganda's top-rated property managers, including Judy and Mark, Pradip, Moses and Jimmy, Kunnal, Kenneth, Prabhat, Fiona, Vincent and Allen, Lillian, Wilberforce, Andrew and Joan, Phillip and Grace, Richard and Hellen, Cissy, plus many others. "weya yu"? Your expertise and opinions are crucial.

Defining the Sales Role.

The term "salesperson" in the bill could be replaced with "real estate salesperson" to ensure clarity and eliminate any ambiguity regarding the specific type of sales professional being referenced. Real estate transactions involve specialized knowledge, skills, and responsibilities that set them apart from other types of sales roles.

By explicitly identifying the role as "real estate salesperson," the bill accurately reflects the specialized nature of the profession, thereby avoiding confusion and ensuring its provisions are properly targeted to the unique requirements and challenges of real estate practice. This modification underscores the importance of precision in legal terminology, fostering a more robust and effective regulatory framework.

Addressing Sole Agency.

The bill does not address the concept of sole agency, an oversight that leaves room for confusion and inefficiency in real estate transactions. It is crucial to stipulate that a licensed real estate agent must receive formal instructions from the property seller to act on their behalf.  

The current practice, where sellers engage multiple agents offering the same property at varying prices to each agent, creates confusion for buyers and damages the market's integrity. Additionally, sellers often fail to notify all agents once a sale is completed.  

Introducing a sole agency model could streamline the process. The sole agent could manage coordination with other sub agents, ensuring uniformity in pricing and facilitating price adjustments. If the seller opts for a private sale after issuing instructions to the sole agent, they should be obligated to:

1. Notify all agents and subagents involved.  
2. Compensate the designated agents for their efforts.  
3. Withdraw the property from all publications, whether digital or otherwise.  

In this context, the term "instruction" should carry legal weight, akin to a "sale agreement", as neither term is adequately defined in the bill. 

Dual Agency and Conflict of Interest.

The issue of dual agency has been overlooked in the draft bill, leaving room for potential conflicts of interest that could undermine the integrity of real estate transactions. Dual agency occurs when a single agent represents both the buyer and the seller in the same transaction, Dual agency is one of the many ethical dilemmas faced by real estate agents and a practice that can lead to partiality, especially if one party offers higher compensation or incentives. This arrangement creates a situation where the agent's loyalty is divided, compromising their ability to serve the best interests of both parties equally.

To address this, the bill could mandate that buyers and sellers engage separate agents, ensuring that each party has independent representation to advocate for their interests. This approach would foster transparency, build trust between all stakeholders, and create a fairer and more balanced transaction process within the real estate ecosystem.

Professional Fees and Commission.

The bill mentions a professional fee, but it remains unclear whether this is equivalent to search fees or if it includes the same. The bill must specify:

1. Who is responsible for paying this fee, the buyer, the seller, or both?  
2. How this fee is calculated or determined, and also its purpose.

Surprisingly, the word commission does not appear anywhere in the bill, despite being the lifeblood of the real estate agency business. The bill could compel buyers and sellers by law to honor commission agreements to prevent agents from being cheated, a common problem in the industry.

Simplifying Terminology.

The phrase "real estate real estate agent" appears unnecessarily repetitive. It could be streamlined to "real estate agent". The long version of term should also be clearly defined at the beginning of the bill and then the short version of the same term would be consistently used thereafter. 

Clarifying Licensing vs. Membership.

On Page 11, the phrase "has not renewed his or her membership for two consecutive years" appears. This seems to reference the renewal of a license rather than membership. If so, the language should be revised for accuracy. Membership typically pertains to associations or organizations, whereas licensing is a regulatory requirement for practicing real estate agents.  

Can Agents Partner with Multiple Firms?  

The bill does not explicitly address whether a licensed real estate agent can be a partner in two or more firms, leaving a significant gap in clarity and regulation. This omission raises concerns about potential conflicts of interest in the partnership, as an agent affiliated with multiple firms may inadvertently or intentionally find themselves representing both the buyer in one firm and the seller in another firm within the same transaction, creating a situation ripe for bias and ethical dilemmas.

Such dual affiliations could also lead to operational inefficiencies, misaligned priorities, and exploitation of the system, ultimately undermining trust in the real estate profession. To prevent these issues, the bill could establish clear guidelines limiting agents' partnerships to a single firm or implementing strict conflict-of-interest protocols to ensure transparency and fairness in their dealings.

Added Bureaucracy for Developers.

I have observed that the bill seems to introduce additional bureaucratic requirements for developers. In addition to obtaining permits, licenses, and authorizations from other authorities such as the construction review board and city or local councils, developers will now also be required to register and seek approval for their developments from another regulatory body, as well as obtain licenses for their real estate agents and sales agents to proceed with their projects.

Role of the Disciplinary Committee.

The bill could clarify whether the disciplinary committee has the authority to handle disputes involving real estate agents and clients or property buyers. For instance, can a licensed real estate agent file a complaint against a buyer for failing to honor contractual obligations or is a committee limited to "complaints of professional misconduct"? Extending the committee's jurisdiction to include such cases would provide a formal mechanism for dispute resolution. 

Delayed Implementation of Accompanying Regulations.

Many crucial issues have been deferred to accompanying regulations, which will follow the Act. However, based on experience with previous laws, these regulations often take years to materialize, delaying the implementation of vital provisions. The bill could set clear timelines for drafting and enforcing these regulations to ensure the law's effectiveness.

Conclusion: A Positive Step Forward with Room for Improvement.

The Real Estate Bill 2024 is a commendable step towards establishing a regulated and organized real estate sector. It is evident that the bill has been thoughtfully developed and meticulously presented, reflecting the dedication and expertise of the team behind it.

I extend my heartfelt appreciation to the line minister, Princess Persis Namuganza, the Commissioner for Housing, and the entire team at the Ministry of Housing and Urban Development for their exceptional work on this landmark legislation.

Their efforts, alongside the invaluable contributions of stakeholders, including the AREA Uganda team, individual real estate agents, developers, and other industry players, are truly praiseworthy.

However, addressing the gaps highlighted earlier will be critical in creating a more robust framework that promotes transparency, enhances professionalism, and builds trust within the real estate industry, ensuring it becomes a beacon of efficiency and fairness for all.

Click here to read (or listen to) a copy of the draft bill online, or click here to download a PDF copy of the same

Kind Regards
Julius Czar
Author: Julius Czar
Company: Zillion Technologies Ltd
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