Jail Terms for Dishonest Real Estate Agents
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wo Court rulings have each confirmed that real estate agents should serve a minimum of 2 years in prison for defrauding both buyers and sellers in at least two property deals. The punishment meted out to these professionals relates to the dishonest -albeit not common- habit of structuring their commission payment, in addition to what % they formally agree on with either party, on the difference between what the buyer pays and what the seller receives…without telling either party what these amounts were.
The Courts, on finding the estate agents guilty on counts of criminal fraud, concluded the following:
- Both buyer and seller were unaware of the real terms of the deal, having the estate agent effectively obtained the consent of both parties on different prices to those reciprocally agreed with either party, causing loss to both.
- The dual agreements are not a reflection of the real facts, the price for the buyer and the vendor are different and the “agreed commission” is not real, as it was jacked up.
- The “buyer’s price” was not the lowest he could get away with and the “seller’s price” was not the highest the property could achieve, owing to an artificial and fabricated deal.
- The Court refutes the defense allegation that the real estate bought and then sold the property, at a profit, on grounds that it is improper conduct for real estate brokers to act in such manner, in addition to concealing the true nature of the deal to its customers.
- The Court neither accepts that both buyer and seller were satisfied at the time with the terms of the agreed transaction: they probably were as they did not know otherwise, owing to the disinformation and deception devised by the agent.
- There is an aggravating circumstance in that the real estate agents, operating via an establishment opened to the public, added further credibility to their actions and facilitated the removal of objections by buyer and seller.
Similar behaviours as those described are known to have happened in the Costa del Sol but the likelihood of them resurfacing, considering that approximately 95% of all transactions included 2 real estate agents, is mostly residual.
Excellent news Antonio. Any legislation which makes the would be wrong doers lool over their shoulders is welcome. Now if we can just get the Spanish courts to work a bit faster…
This is a very informative and interesting website and I hope that many people find its way to a greater education before purchasing a house in Spain. As an American looking to purchase our new home in Spain, I am completely taken aback dealing with real estate agents in Spain; Is almost like dealing like in the US Western frontiers. I understand that IF I place a contract for a property and for some reason the contract is withdrawn I would lose my 10% upfront fee. In the US buyers secure the property with a security deposit of about up to $5,000 for properties ranging in price from $350,000 up to $1,000,000 and if the contract is withdrawn you loose the security deposit after a 10 day grace period. Additionally, buyers are entitled to pay an additional $200 for an extension fee as needed. Here in Spain, agents collect 5,000 euros to reserve the property followed by a 10% of the price of the property. That means that If I pay 10% upfront of say a 600,000 euro purchase and I withdraw the contract for some reason I loose 60,000 euros and if the seller withdaw it would be twice that amount. That been the case, is that legal? and who keep the money? Thanks in advance.
This is a very informative and interesting website and I hope that many people find its way to a greater education before purchasing a house in Spain. As an American looking to purchase our new home in Spain, I am completely taken aback dealing with real estate agents in Spain; Is almost like dealing like in the US Western frontiers. I understand that IF I place a contract for a property and for some reason the contract is withdrawn I would lose my 10% upfront fee. In the US buyers secure the property with a security deposit of about up to $5,000 for properties ranging in price from $350,000 up to $1,000,000 and if the contract is withdrawn you loose the security deposit after a 10 day grace period. Additionally, buyers are entitled to pay an additional $200 for an extension fee as needed. Here in Spain, agents collect 5,000 euros to reserve the property followed by a 10% of the price of the property. That means that If I pay 10% upfront of say a 600,000 euro purchase and I withdraw the contract for some reason I loose 60,000 euros and if the seller withdraw it would be twice that amount. That been the case, is that legal? and who keep the money? How can I best protect myself? Thanks in advance.
Hello Lionel,
Thank you for your kind words of encouragement.
The scenario you have depicted does happen ocassionally but it is, thankfully, not the norm. Typically, when you have found a property you will make an offer in writing alongside a holding deposit. This deposit (3-6k Euros) should stay with a law firm until such time the paperwork is received and the legal due diligence carried out and “subject to” conditions are met.
If the legal investigation proves correct and any other condition is met (i.e. mortgage loan approved), buyer and seller generally exchange contracts for a 10% of the price. Depending on the status of the vendor (resident or non resident) the buyer can request that this deposit also stays in escrow.
Completion then follows with the balance of the payment being made simultaneously on irrevocable transfer of ownership.
If you follow the above itinerary, supervised by a qualified lawyer, your purchase should be a success.