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The Death of Dual Agency- The Uganda Real Estate Agents Bill 2021

Posted by APE on April 12, 2021
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The Uganda Real Estate Agents Bill No 1 of 2021

The Parliament of Uganda, will soon bring into law the Real Estate Agents Bill 2021 which is very ambiguous in nature.  This will bring about the Death of Dual Agency as we know it, and also the actual death of many Real Estate businesses following difficulty in  compliance with the Law.

The soon to be Law puts the management and/or the conduct of Real Estate business under the Ministry of Land, Housing and Urban Development, the bill further presupposes in its permeable; to establish a code of conduct and a real estate agent committee to address incompetence, fraud, recklessness, and unscrupulousness in real estate business.

Yes, the need for a legislative framework to cover real estate business in Uganda is indeed past overdue and has indeed escalated fraudulent transactions, which may point to the fact that the Ministry of Lands, Housing and Urban Development, and the Courts of Law in Uganda may have failed to control, curb and effectively shape the conduct or real estate business in Uganda.

Death of Dual Agency

Being in the East African Community comes with its own benefits, and one such benefit is the harmonization of certain laws including Real Estate business. What should  be of great concern in the bill in its current state, is Section 36 under Part V – “Duties Relating to Carrying On Business as a Real Estate Agent”.

Section 36- Agent Not to Act for Both Parties To a Transaction.

(1)          An Agent shall not act for both parties to a transaction at the same time except where there is a prior agreement in writing attested to by both parties.

(2)          A person who contravenes this section commits an offense and is liable on conviction to a fine not exceeding one thousand currency points or imprisonment for a period not exceeding three years or both.

This provision and probably the entire bill sends chills down the spinal cord of every experienced real estate practitioner in Uganda, because a careful re-examination of the entire bill, may need to be done by looking at among others, the actual real estate practice in Uganda, similar laws and actual practice within the East African Community partner states, then by borrowing  and understandings the spirit of the legal provisions in countries like the UK and particularly different federal laws in different states in the USA.

Right from the start, the above provision murdered the basic concept of freedom of contract and negating the existence of Real Estate Agents and Real Estate Brokers, the provision presupposes that all players in the real estate business are individuals.

The legal concept of Dual Agency allows an individual agent to represent both parties to the transaction, except that they shall not  receive a double commission without declaring it and getting the consent to earn it, and when it comes to an agency firm or a legal entity, it allows representation two parties to a transaction, by the appoint different individual agents within the firm to represent each party as a dedicated agent i.e., a separate dedicated agent for the seller and another separate dedicated agent for the buyer both with the same frim.

But in all instances, the Agency agreement must have had a provision for dual agency, which must then be followed by the signing of a consent to a dual agency agreement.

The bill, in its current state asks for the impossible – by requiring a single prior agreement signed by both the seller and buyer “An Agent shall not act for both parties to a transaction at the same time except where there is a prior agreement in writing attested to by both parties”.

Perhaps an addition of the true fiduciary duties of a real estate agent could have made the above provision much clearer. It would be better however,  if the entire section is removed from the proposed law just like, it doesn’t exist in the Kenya law,  nor in the proposed amendments to the Kenya Estate Agents Act Cap 533.

For further legal analysis, consult your legal counsel, this is not an exhaustive opinion of the above provision and is intended only for members of the African property Exchange.

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