A new regulation in the Valencian Comunidad covering Alicante, Castellón, and Valencia provinces will significantly impact the real estate industry. The law demands higher expertise, commitment, and responsibility from all real estate agents involved in regional transactions. The changes are expected to improve the quality of real estate services provided to clients.
Unlike in other countries like France, Belgium, Germany, Holland, and the USA, Spain’s real estate agent profession has not been regulated for many years. This has led to questions from foreign buyers who come to Spain to look for properties and are shocked to find out that the profession of real estate agent is not regulated or controlled by the State through any kind of training, certification or registration.
In Andalusia, the Canary Islands, Madrid, and Murcia, there are registries in which those working in real estate brokerage must register to perform their activity.
Now the Valencian Community has created a similar registry of real estate agents, aiming to regulate, control, and supervise the activity of all those involved in real estate transactions in the Valencia region.
The requirement for registration is not just a simple entry in a registry but rather a set of guarantees, obligations, and conditions that agents must comply with. This includes training and civil liability for any damages caused during their professional activities. This is similar to the requirements for other professionals, such as doctors, lawyers, architects, and economists.
The implementation of this registration will impact the Valencian real estate sector. It will benefit well-established agencies with solid experience and honest practices, but it will exclude those who act unprofessionally and are unprepared for the important responsibility of facilitating property transactions.
This new legislation establishes fines for those not registered in the registry or failing to comply with any of the obligations imposed by the regulations when exercising their profession.
Serious offences will result in a fine ranging from 10,000€ to 350,000€. Meanwhile, infractions categorised as very serious will result in a fine from 350,00€ up to 950,000€
The new regulation aims to improve the quality of service and greater protection for clients.
The Consell published two decrees. The first Decree 85/2022 approves the Regulation for the Mobilisation of Empty and Disabled Homes. The second one, Decree 98/2022, is the most important as it regulates the Registry of Real Estate Brokerage Agents of the Valencian Community. This decree specifies the requirements for registration.
The Law’s Objective
This new law aims to create a “Registry of Real Estate Brokerage Agents” of the Valencian Community.
When discussing “mediation activity” or “real estate brokerage,” we generally refer to individuals who specialise in facilitating, advising, or overseeing transactions involving assets and property rights for houses, apartments, and land.
The new regulation aims to enhance transparency in services and transactions related to housing and ensure the protection of consumers. It applies to individuals or entities that mediate or offer advice in transactions involving the sale of homes, not land, commercial premises, or industrial premises.
To Who Does The Law Apply?
This law applies to all individuals and organisations, including companies, who plan to regularly engage in residential real estate brokerage within the Valencian Community’s territory. According to the regulations, this includes anyone who provides mediation, advice, and management services related to real estate operations involving sales, rentals, exchanges, real estate assignments, and corresponding rights.
To join the register, agents must demonstrate they fall under one of the following categories:
- API Collegiate real estate agents who follow their specific legislation.
- Those with a university degree in social and legal sciences, engineering, or architecture.
- Any person with the professional training required for collaborating with real estate agents.
- Those who obtain certificates of attendance and achievement for real estate training courses that cover at least 200 teaching hours and focus on mediation services, advice, and real estate management. This can be learned in person, online, or a combination.
In the Valencian region, many agents in the international real estate sector do not have university degrees. These professionals, often of foreign origin, have settled in Spain to engage in real estate activity. To work as real estate agents, they now must take part in professional training courses that offer at least 200 hours of instruction.
Regular Basis Rule
According to the new law, a person is considered a real estate agent if they have acted as an intermediary in more than two purchase or housing operations within the Valencian Community annually. This means that anyone who has provided more than two real estate services in the past 12 months must register in the agents’ registry and fulfil all the requirements set by the regulations.
Real Estate Agents who carry out operations in the Valencian Community but have offices in other parts of Spain and who have already obtained training in their places of origin may sell property in Valencia without further training. That is to say, a property agent in Malaga can carry out sales operations in the Valencian region if they are registered in the Andalusian region and completed previous training requirements. In these cases, they must register in the Valencian Community registry, although likely to be automatically approved to work in the Valencian Community real estate sector.
To become a registered real estate agent, it is necessary to have a public establishment unless services are exclusively provided online or through telecommunications.
Suppose you own a business open to the public, such as a professional address, commercial premises, or offices. In that case, it must meet all legal requirements and have the necessary permits, activity licenses, and tax registrations to operate. When services are provided exclusively through electronic, telematic, or online means, a physical address within the Valencian Community is required.
If an agency operates solely through electronic means, such as online or via telecommunication, then it is necessary for not only the company administrators or agency managers to receive training but also for the person linked to the physical address that provides the electronic services. For instance, if an agency in Malaga offers services in the Valencian Community through a physical address but without an establishment, then the individual in charge of that physical address must also undergo training.
When hiring a professional or intermediary agent, it is essential to ensure that they have insurance and service guarantees to cover their liability for any damages caused by their work. To guarantee the return of deposits received in purchase operations, the agent must either hire a guarantee issued by a bank or insurance from an insurance company. This guarantee must be obtained before receiving any amounts or provisions due to the price.
If an agent operates through a physical establishment in the Valencian Community, they must have a minimum guarantee or surety insurance of €60,000 per establishment per year of coverage. This guarantee protects the corresponding party in case the agent becomes incapacitated. For those who conduct their activities through electronic, telematic, or online means, the required amount is €300,000 per agent per year of coverage.
As well as the guarantee, they must have civil liability insurance covering the entire European Union for responsibilities that may arise from damages caused to their clients due to error or professional negligence.
The insurance must provide a minimum coverage of €600,000 for each claim and year of coverage while limiting it to €150,000 per individual victim.
If an agent operates exclusively online, they must have a minimum of one million euros in civil liability insurance coverage per claim for one year and an additional €150,000 per victim. Agents must provide their policy number and the name of their insurance company or financial institution, along with any guarantees, to anyone who requests it. This information must be included in the agent’s mandate contract with their clients. These insurances and guarantees can be obtained individually or collectively through professional associations such as lawyers, real estate agents, engineers, architects, and more.
To register in the registry, you must apply electronically through the Generalitat Valenciana registration service. You can apply individually or as a group. If applying individually, you must provide a declaration of responsibility that includes your identification documents and the following information:
If you have a public establishment or if providing services exclusively online, provide your physical address within the Valencian Community.
You have obtained the necessary permits, activity licenses, and tax registrations as a self-employed real estate broker. This means you have business premises with a valid opening license and are registered with the Spanish tax agency for tax purposes.
You agree to abide by professional ethics, behavioural ethics, and professional secrecy and communicate commissions, fees, and other remuneration under principles of conduct.
You have professional civil liability insurance and surety policy and have subscribed to guarantees to protect clients against the inability to transfer amounts received in the exercise of brokerage activity.
That you undertake to maintain the conditions and requirements that this regulation requires for carrying out the activity of a real estate agent.
In addition, in this responsible declaration, the agent authorises the people who manage the register of agents of the Valencian Community to carry out all the checks and verifications of the documentation provided to verify that they comply with the requirements established by law.
Inscription In the Registry
Once the application has been submitted with a responsible declaration and the registration agreed upon immediately in the registry, the document accrediting the registration will be delivered to the interested person.
Each agent must qualify personally, even if the application is submitted as a group. Registration will be done individually for each agent included in the application.
The registration has an indefinite duration.
TRegistration enables immediate accreditation of individuals who meet the conditions and requirements for engaging in a specified activity. Maintaining the obligations and commitments assumed during registration over time is crucial for continued eligibility.
Registered professionals must ensure that their data is always up-to-date and inform the administration of any changes. They must provide a responsible declaration to carry out any updates or modifications of their data.
The registration entry will be cancelled::
- Due to death
- Due to the withdrawal of tax activity in the case of a legal entity
- If one fails to comply with the registration requirements at any point during their professional activity, it may result in cancellation or financial penalties.
The deadline for individual application registration is one year from the date of this decree’s enactment. If you are engaged in professional real estate activities and subject to this law, you have until August 2023 to register in the Valencian Community’s real estate brokerage agent registry and provide civil liability insurance policy and guarantees.
The deadline for collective applications or associations had a maximum period of six months from this decree’s enactment, so they should have submitted applications before April 2023.