If you are engaging in the practice of real estate service for properties you do not own, and you are not a duly licensed and registered real estate professional, chances are, you are violating the RESA Law. If you want to be sure you are not breaking the law, I urge you to continue reading.
I wrote this post because of a recent comment wherein the commenter described that they were tasked to find a property they can “lease and sublease”, and I hope this will serve as a gentle reminder for those who might not be familiar with the RESA Law or RA 9646, which covers such acts of engaging in the practice of real estate service.
Based on Section 27 of the RESA Law, acts constituting the practice of real estate service are as follows:
“Any single act or transaction embraced within the provisions of Section 3(g), Rule II hereof, as performed by real estate service practitioners, shall constitute an act of engaging in the practice of real estate service.”
Furthermore, Section 3(g) states that:
“g. “Real estate service practitioners” shall refer to and consist of the following:
(1) Real estate consultant – a duly registered and licensed natural person who, for a professional fee, compensation or other valuable consideration, offers or renders professional advice and judgment on: (i) the acquisition, enhancement, preservation, utilization or disposition of lands or improvements thereon; and (ii) the conception, planning, management and development of real estate projects.
(2) Real estate appraiser – a duly registered and licensed natural person who, for a professional fee, compensation or other valuable consideration, performs or renders, or offers to perform services in estimating and arriving at an opinion of or acts as an expert on real estate values, such services of which shall be finally rendered by the preparation of the report in acceptable written form.
(3) Real estate assessor — a duly registered and licensed natural person who works in a local government unit and performs appraisal and assessment of real properties, including plants, equipment, and machineries, essentially for taxation purposes.
(4) Real estate broker – a duly registered and licensed natural person who, for a professional fee, commission or other valuable consideration, acts as an agent of a party in a real estate transaction to offer, advertise, solicit, list, promote, mediate, negotiate or effect the meeting of the minds on the sale, purchase, exchange, mortgage, lease or joint venture, or other similar transactions on real estate or any interest therein
(5) Real estate salesperson – a duly accredited natural person who performs service for, and in behalf of a real estate broker who is registered and licensed by the Professional Regulatory Board of Real Estate Service for or in expectation of a share in the commission, professional fee, compensation or other valuable consideration.”
In a nutshell, if you are doing any of the acts or rendering the services of a real estate consultant, real estate appraiser, real estate assessor, real estate broker, or real estate salesperson as described above, then you are already engaging in the practice of real estate service.
Who are exempted from the RESA Law?
The very controversial Section 28 of the RESA Law defines what can be considered as exempted:
“SEC. 28. Exemptions from the Acts Constituting the Practice of Real Estate Service. The provisions of R.A. No. 9646 and the IRR shall not apply to the following:
(a) Any person, natural or juridical, who shall directly perform by himself/herself the acts mentioned in Section 3 hereof with reference to his/her or its own property, except real estate developers who are regulated by and registered with the Housing and Land Use Regulatory Board (HLURB) pursuant to law and other resolutions/regulations such as but not limited to Presidential Decree (PD) 957, as amended, and Batas Pambansa Blg. 220 and their Implementing Rules and Regulations;
(b) Any receiver, trustee or assignee in bankruptcy or insolvency proceedings;
(c) Any person acting pursuant to the order of any court of justice
(d) Any person who is a duly constituted attorney-in-fact for purposes of sale, mortgage, lease or exchange, or other similar contracts of real estate, without requiring any form of compensation or remuneration; and
(e) Public Officers in the performance of their official duties and functions, except government assessors and appraisers”
I have said it before and I will say it again, If you own a property, you are exempted from the RESA Law, unless you are a real estate developer. If you don’t own a property and you are engaging in the practice of real estate service in regard to that property (like leasing and subleasing for example), you need to be a licensed real estate professional!
What is prohibited?
Let me quote Section 29 of the RESA Law below:
“SEC. 29. Prohibition Against the Unauthorized Practice of Real Estate Service. No person shall practice or offer to practice real estate service in the Philippines or offer himself/herself as real estate service practitioner, or use the title, word, letter, figure or any sign tending to convey the impression that one is a real estate service practitioner, or advertise or indicate in any manner whatsoever that one is qualified to practice the profession, or be appointed as real property appraiser or assessor in any national government entity or local government unit, unless he/she has satisfactorily passed the licensure examination given by the Board, except as otherwise provided in R.A. No. 9646 and the IRR is a holder of a valid certificate of registration and professional identification card or a valid special/temporary permit duly issued to him/her by the Board and the Commission; and, in the case of real estate brokers and private appraisers, they have paid the required bond as provided for in R.A. No. 9646.”
What are the penalties?
Section 39 clearly defines the penalties for violations:
“SEC. 39. Penal Provisions. Any violation of R.A. 9646, including violations of this IRR, shall be meted the penalty of a fine of not less than one hundred thousand pesos (P100,000.00) or imprisonment of not less than two (2) years, or both such fine and imprisonment upon the discretion of the court. In case the violation is committed by an unlicensed real estate service practitioner, the penalty shall be double the aforesaid fine and imprisonment.
In case the violation is committed, by a partnership, corporation, association or any other juridical person, the partner, president, director or manager who has committed or consented to or knowingly tolerated such violation shall be held directly liable and responsible for the acts as principal or as a co-principal with the other participants, if any.”
Why should you take this seriously?
Let me try to make the penalties clear for everyone:
- Any violation: Php100,000.00 or imprisonment of not less than two (2) years, or both
- Violation is committed by an unlicensed real estate service practitioner: the penalty shall be double (that would mean Php200,000.00 or imprisonment of not less than four (4) years, or both!)
I highly suggest further reading about the RESA Law through the following articles:
- RESA Law IRR published last July 24, 2010
- Approved and published RESA Law IRR full text
- 4 perfectly legal ways to be a real estate investor with the RESA Law
Be very careful!
Just be very careful when someone tells you to do something related to real estate as you might be breaking the law. When in doubt, don’t be afraid to ask questions, and use good old common sense. Besides, I believe the RESA Law and the RESA Law Implementing Rules and Regulations or IRR is fairly easy to understand.
Ever since the RESA was signed into law last year, whenever I meet with other beginning real estate investors, I often end up harping about its implications on activities such as selling other people’s properties, which I believe has become illegal if done by those who are not duly licensed and registered real estate professionals.
There is simply no excuse for anyone to be ignorant of the RESA Law and how it affects everyone doing just about anything related to real estate.
As the famous legal principle says,
“Ignorance of the law excuses no one.”
To our success and financial freedom!
Real Estate Investor
PRC Real Estate Broker Registration No. 3194
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Text by Jay Castillo and Cherry Castillo. Copyright © 2011 All rights reserved.
Full disclosure: Nothing to disclose.