Strengthening Mandatory Explanations by Licensed Realtors
Must Also Check Floor Cracks with Frequent Disputes
Frontline Complaints: "Practically Difficult"
Administrative Sanctions and Compensation Possible for Violations
"Do we now have to lift up the apartment floor vinyl as well? This is a desk-bound administration that is out of touch with reality."
As the revised enforcement rules of the Licensed Real Estate Agents Act, which reduce real estate brokerage fees to up to half, are about to be implemented, opposition from the brokerage industry is growing. Not only will commission income decrease, but the obligation for brokers to provide detailed explanations is also being significantly strengthened, leading to complaints that "brokerage fees are going down, but the burden is only increasing." Violations of the explanation obligation can lead to administrative sanctions and liability for damages, making frontline brokers very sensitive to these changes.
According to the Ministry of Land, Infrastructure and Transport on the 14th, a total of 1,683 opinions were submitted during the 40-day legislative notice period for the amendment of the enforcement decree and enforcement rules of the Licensed Real Estate Agents Act, which ended the day before. Most opinions opposed the reduction of brokerage fees and the strengthening of the explanation obligation. Despite strong opposition from the industry, the Ministry plans to implement the amendment as early as this month after review by the Office of the Legislative Affairs.
Within the brokerage industry, the obligation to explain floor surface cracks and leaks is emerging as a major issue. Previously, brokers only had to check for wall cracks, but with the amendment, they will also be required to check for floor cracks. A broker in Busan said, "Walls are usually wallpapered, so cracks or leaks can mostly be visually confirmed, but floors are not like that. Especially in older apartments where cracks are a problem, many have vinyl flooring, and if there is large furniture, it is difficult to check."
Another broker said, "Many places have silicone finishing between the floor and walls, making it impossible to see the floor. Many houses are remodeled before moving in, and if cracks are discovered later during this process, many brokers may face damage compensation lawsuits from buyers." Since floor cracks have been a particularly contentious issue between buyers and sellers, some believe the government is shifting responsibility onto brokers.
Going forward, a new confirmation section regarding 'Consent to Provide Information on Multi-family Houses' will be added to the explanation document. Although this aims to strengthen management of multi-family houses where deposit transaction accidents are frequent, since no separate obligations are stipulated for landlords, it only increases brokers' responsibilities and lacks practicality.
However, some argue that since brokers' explanations have been insufficient and many transaction accidents have occurred, some strengthening of responsibility is necessary. Especially since multi-family houses account for 42.7% of all accidents where compensation was paid, there have been many calls for countermeasures. An industry insider said, "Even when contracts are made through brokers, accidents occur in about one out of ten cases. Some improvements are needed, but regulatory strengthening is inevitable."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
