The Russian government has approved new professional standards for domestic real estate practitioners, with the aim of making their activities more efficient and transparent and to better protect the interests of clients.
Denis Manturov of Russia’s Minister of Industry and Trade says the new standards divide practitioners into two groups similar to the way it is done in North America, with different standards for real estate agents and brokers.
The term “agents” will refer to those specializing in the organization and control of real estate transactions, while brokers will be those who are involved in the management of real estate firms.
Tatiana Demenok, president of the Russian Guild of Realtors (RGR), which helped develop the new standards, says they will create a solid legislative base for the activities of real estate professionals in Russia. The industry has always been largely unregulated.
The agent will be responsible for the design of the contract and its implementation, while the broker will sign the contract with the client and will be subject to civil law. The broker will co-ordinate the activities of an agent and be responsible for his work.
The new standards have been approved by the Russian government and are expected to come into force in April.
Some Russian analysts say the changes are long overdue.
“I think we were too late by five to 10 years. It should have been done long ago,” says Ruslan Bannikov, head of Bannikov and Partners Law Firm, one of Russia’s leading law firms. “To date, real estate services have been one of the most disorganized segments of the Russian real estate and property market. A significant (number) of market transactions were signed illegally.”
Ruslan says the legal status of real estate professionals “has always been significantly weaker than those as, for example, lawyers and notaries” whose activities are subject of a strict controls by regulators. “The provision of poor professional services – including in the field of real estate – always leads to the introduction of serious sanctions against them.” He says real estate practitioners “often act like freelancers” and their duties have not been subject to clear legal requirements.
Manturov says the adoption of the new standards is just the beginning. The government will soon start working on a long-awaited federal law that will regulate the activities of real estate agents and brokers. It will become the most important legislative act for the industry for the last 27 years and since the collapse of the USSR.
The new law is expected to be approved by the end of the year and may introduce a self-regulation model. The government is also considering returning to licensing real estate professionals in Russia, which hasn’t been in place for many years.
It’s hoped this will more efficiently fight real estate fraud, which has seen a significant increase in recent years.
Analysts at the Russian Ministry of Industry and Trade believe that Russian real estate professionals should pay more attention to how those in western countries conduct business, where the reputation of a real estate agent and broker is much more important. Manturov says the new standards will allow customers to get an idea of how the real estate agents and brokers will serve them.
However, he says the industry needs to introduce a clear description of each service that will be provided. Manturov says the contract should clearly state what obligations the practitioner takes on and what he does for this money. Russian regulators often receive complaints about additional fees claimed by real estate professionals. These extra fees must be clearly explained to clients, he says.
Eugene Vorotnikov is a contributing writer for REM.
