MahaRERA update: 5 things buyers must know about brokerage payable to agents

The Maharashtra Real Estate Regulatory Authority (MahaRERA) on October 22 issued an order stating that a clause be included in the agreement for sale signed between homebuyers and developers mentioning the amount (including tax) to be paid as fees, commission, brokerage, to the agent by the developer, buyer or both as the case may be.
However, legal experts opined that presence of this clause does not empower the real estate agent to file a complaint with MahaRERA concerning brokerage fees.

According to the order issued by MahaRERA on October 22, the agreement for sale executed between the developer and purchaser that is facilitated by the registered real estate agent, should mention the amount (including tax) to be paid as fees, commission, brokerage, to the agent by the developer, buyer or both as the case may be.
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This order by MahaRERA is seen as an enabler for real estate agents to receive their fees and commission on time and reduce disputes that arise on account of non-payment of brokerages.
Legal experts said that even despite the clause defining the brokerage fees due to a broker being included in the agreement for sale, the November 4 order issued by MahaRERA has taken a view that there is no explicit provision within RERA that allows the real estate agent to seek brokerage fees along with interest. The MahaRERA order has in fact set aside a complaint filed by a real estate agent citing that seeking brokerage fees is not maintainable under Real Estate Regulatory Act, 2016.
“On bare perusal of section 34 of the RERA, it appears that the said section does not provide any specific provision under which the claim of brokerage can be given to the complainant (real estate agent) along with interest. In view of these facts and explicit provisions of the RERA, the MahaRERA prima facie feels that the present complaint filed by the complainant seeking his brokerage fees along with interest is not maintainable under the provisions of RERA,” the November 4 MahaRERA order reads.
Consequently, the present complaint stands dismissed being not maintainable. However, the complainant (real estate agent) is always at liberty to exhaust the remedy available to him against the respondent under the applicable law, the order concluded.
According to legal experts, the MahaRERA has not specified that the provision pertaining to brokerage should be compulsorily included in the agreement for sale. Therefore, the provision is interpreted to be negotiable in nature.
“In my opinion, the provision concerning the real estate agent should not be considered a non-negotiable clause. The developer and the buyer have the flexibility to determine who will be responsible for the brokerage fees owed to the real estate agent. The specific brokerage fees can be established through mutual agreement between the parties and the real estate agent, with payment terms outlined separately, ensuring that the fees are governed in accordance with such terms,” said Trupti Daphtary, a Mumbai-based advocate and solicitor.
“Inclusion of the clause in the agreement for sale provides clarity regarding which party will be responsible for the payment of the brokerage fees. However, it is important to note that the mere presence of this clause may not empower the real estate agent to file a complaint with MahaRERA concerning brokerage fees. MahaRERA has recently taken a view that there is no explicit provision within RERA that allows for the granting of brokerage fees along with interest. As a result, any complaint seeking such brokerage fees may be considered not maintainable under RERA,” Daphtary added.
According to legal experts, MahaRERA order has not specified any amount of brokerage to be paid or if to be paid, there is no specification whether the buyer has to pay it or the developer.
“MahaRERA’s recent order has provided the option to include a clause regarding brokerage for real estate agents in the model agreement; however, this is not mandatory. RERA does not specify the amount of brokerage to be paid, as it is governed by market practices. Furthermore, real estate agents cannot approach RERA for disputes over unpaid brokerage by developers. Such matters are to be addressed through courts or law enforcement, much like how chartered accountants (CA) cannot seek redress for unpaid fees through their Institute,” Aditya Zantye, a Mumbai-based chartered accountant who practices in MahaRERA.
Zantye added that homebuyers should note that engaging a RERA-registered real estate agent is mandatory only for transactions involving under-construction properties, where the buyers’ money is at risk. It is not a requirement for secondary sales (second hand sales) or rental transactions.
A few legal experts are of the view that the onus of regulating issues pertaining to non-payment of fees to real estate agents is on MahaRERA and that it should apply its inherent powers under Maharashtra regulations 2017.
“As per the recent orders passed by MahaRERA, the complaint filed by a registered real estate agent for brokerage fees may be considered not maintainable under RERA. We need to see in the future how the Hon’ble MahaRERA and Maharashtra Real Estate Tribunal (MREAT) will interpret the brokerage payable clauses in agreements and whether they will entertain the complaint filed by registered real estate agents as maintainable under RERA by using their inherent powers as provided in the Maharashtra Regulations 2017,” said advocate Sunil Kewalramani, a Mumbai-based real estate lawyer.