Ghana Real Estate License Act, 2012 Presentation Michael B. Gorham, Consultant Overview Licensing Should Benefit the Public The Purpose of any real estate broker licensing act should be to protect the public interest. This is accomplished by requiring those wishing to practice as a professional be competent and honest. Future changes The Act will obviously change over time. As implementation proceeds, real estate practices will alter in order to both comply with and avoid compliance. Furthermore, as enforcement occurs, case law will result in further adjustments. Particularly, issues dealing with laundering of illegal income and tax evasion will result in learning experiences likely requiring modifications to the Act. Fortunately the Act is structured in such a way that modification from time to time can easily be accommodated. United States Model In the United States, every state has laws requiring a license to engage in real estate brokerage. The primary purpose is to protect the public interest by preventing incompetent and unqualified persons from engaging in activities which can cause substantial harm to the public. The authority is most often referred to as a board or commission. The Board The Association of Real Estate License Law Officials (ARFELO) compiles statistics from all of its member jurisdictions. ARELLO statistics show the large majority of boards/commissions are comprised of between 5-9 members. Similar to other professional licensing bodies (ie, appraisers, surveyors, doctors), in nearly all cases, the regulated industry makes up the majority of a board’s membership. Most jurisdictions have 1 or 2 appointed public members, who cannot be licensed brokers or salespersons. The case for having a majority of the Board come from the licensed profession itself is two-fold: (1) persons with strong knowledge, education and experience backgrounds are desirable in order to deal with the multitude of issues facing the regulated industry, and (2) a regulated industry should be able to operate independently, free from undue influence from other groups. Implementing the Act The critical elements in implementing this law, as is the case with most new licensing acts are that: Administration is objective and unbiased thereby treating all practitioners alike; and 1
Administration is executed with sufficient speed so that markets and practitioners are not unnecessarily burdened by unreasonable delays. Elements of a Successful Licensing Program The proposed Act contains a number of necessary and ambitious undertakings before licensing becomes a reality. I have divided my comments into three categories: (1) Timing, (2) Program Administration and (3) Funding. An excellent resource for information, models and practices is the Association of Real Estate License Law Officials (ARELLO). ARELLO is comprised of licensing authorities from the United States, Canada, Africa, Central and South America, Europe and Asia. It is the recognized authority on broker regulation. I would suggest contacting ARELLO to inquire about membership and resources. The website is: www.arello.org Timing It is important the Authority give itself sufficient time to develop and put in place a licensing program which encompasses rules/regulations Board appointment, staffing, education, testing, application review, enforcement, hearings and communication. As an example, when real estate appraisers were first licensed in my state of Colorado in 1990, it took a full year to put the program into effect, even with most staffing and application procedures already in place. Program Administration The draft bill requires the Authority to regulate the practice of real estate brokerage (Article 4) and to propose regulations to the Minister (Article 50). Regulations should be enacted in the areas of education, testing, applications, enforcement/conduct, and communication. An important consideration for the Authority is whether to establish and implement programs for education, testing and license application within the proposed governmental structure or whether to outsource some or all of these functions to private or educational entities. Handling all of these functions “in - house” may all ow for greater control by the Authority. However, outsourcing may have advantages related to funding and staffing (discussed later). Education Section 4(b) gives the Authority power to “prescribe or approve courses for real estate brokerage and conduct ….” Section 4(h) gives the Authority power to “facilitate and promote education which is necessary for the development and growth of real estate brokerage practice.” Recommendations: Determine who will provide the educational course. Courses are often offered through universities, trade associations or private government-approved organizations. Real estate associations could serve as an excellent provider. 2
1. Develop the course by using generally accepted academic standards (consult with ARELLO and local education experts). 2. Have the pre-licensing course reflect subject matter areas relevant to actual practice, rather than purely academic studies. 3. Determine how and where the courses will be offered. Will the environment be a traditional classroom setting or will it be by distance learning (where instructor and learner are separated by distance or time). 4. Course completion must be certified to the Authority, either manually or electronically through data uploads. Testing Section 4 (b) authorizes the Authority to “… set standards for qualifying examinations for registration as a real estate agent or broke r.” Section 21authorizes the Board to issue a license to a person who “has passed a qualifying examination conducted by (i) the Board or, (ii) an independent testing service designated by the Board.” Recommendations: 1. Tests should be impartial, accurate and valid. 2. Tests should be developed and maintained in conformance with generally accepted psychometric standards and methods (consult with ARELLO and local testing experts). 3. Tests should be developed by the Authority, universities or businesses that specialize in exam development and administration. 4. Tests should initially be reviewed and accredited by an independent and recognized accreditation authority. 5. The content upon which the test questions are derived should come from actual practice of real estate activity. 6. It is preferable for tests to be offered and administered electronically, either by a pre- programmed data devise that contains test questions and stores candidate responses to a removable storage device or by a computer-based and Internet-based format. This allows for secure, effective uploads of candidate information and test scores directly to the government database. Enforcement/Conduct Purpose: To assure a process for investigation and taking action on complaints involving wrongful conduct by persons holding real salesperson’s and broker’s licenses. In addition, to set forth the grounds for any action to be taken. Finally, to provide a hearing process for licensees accused of wrongdoing. 3
Sections 29(2) and (3) allow for complaints from the public and require the Authority to refer a complaint for hearing. Sections 28 and 45 enumerate grounds for disciplinary action and wrongful conduct. Sections 28 and 32 provide for types of sanctions the Authority can impose. Sections 28(6), 29, 30, 31 and 32 provide for hearing and appeal procedures and give the Authority the right to take disciplinary action against a licensee for violations of the Act. Suggested language: A. “ The Authority, upon its own motion, may, and, upon the complaint in writing of any person, shall, investigate the activities of any individual or organization which holds a license or any person who assumes to act in such capacity. If it is shown that probable cause exists that a violation of the Act has occurred, the Authority, after the holding of a hearing may impose an administrative fine not to exceed (insert amount) for each separate offense and to censure a licensee, to place the licensee on probation and to set the terms of probation, or to temporarily suspend or permanently revoke a license when the licensee is found guilty of: B. (list violations in draft Act 28(5) (b)) Communication/ Outreach Purpose: To insure official communication as to implementation and interpretation of the Real Estate Agency Act. Recommendation “ The Authority shall set up a constant information system on the Real Estate Agency Act and the real estate market, including providing accurate and up-to-date information to individuals and organizations who hold licenses and to the public, in general. The Authority may consider all available means and methods for providing communication and outreach. The Authority shall coordinate, as needed, with other Ministries and ministerial- level agencies. ” Funding Section 16 provides that funding of the Authority shall include (1) moneys approved by Parliament (2) money from fees charged by the Authority in the performance of its functions and (3) donations, grants and other moneys approved by the Minister for Finance. Parliament (General Funding v Cash Funding In many jurisdictions, especially the United States and Canada, funding for real estate broker regulation comes from the government, licensee fees or a combination of the two. Government funding is often referred to as “general funding,” meaning funding is part of the overall cost of government and paid for by all citizens. If an agency is general funded, 4
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