Industry Insights

Bogus Deeds, Altered Wills & Real Estate Fraud in Sri Lanka

BOGUS deeds, altered last wills, thumbprints taken from elderly & senile people, and threats and extortions

An Urgent Need: A Professional Real Estate Association

A deterrent to fraudulent real estate deals.

Vendors should never give copies of deeds and/or survey plans to brokers or anybody else other than to purchasers or lawyers. These are legal documents that can be altered by unscrupulous people. Extortion by underworld characters has become common once transactions are finalized.

Real estate transactions in Sri Lanka have become increasingly corrupt and fraudulent.

BOGUS deeds, altered last wills, and thumbprints obtained from elderly or senile individuals are among the fraudulent tactics threatening the real estate sector. Intimidation, extortion, misrepresentation and threats have also become part of the real estate trade.

Some Sri Lankan expatriates too have fallen victim to fraudulent real estate deals. Their properties have been sold using bogus deeds while they were out of the country.

Investigations have revealed that some govt. officials as well as other professionals are also participating in such unscrupulous activities, according to media reports.

Many “brokers” who are involved in real estate trading have no knowledge of the complexity of a real estate transaction. As there are no accepted Industry standards in Sri Lanka, these “brokers” who are conducting this business today have no responsibility towards their clients.

There are very few professional real estate practitioners in Sri Lanka. These agents are competent and have acquired knowledge and skills over the years. They are few and far between.

Therefore, there is a definite need for professional Real Estate marketing and selling organizations in Sri Lanka. There is also a need for an active Real Estate Association with defined objectives, to meet urgent fundamental challenges facing this industry.

The following is an article the writer has published before on how to set up and organize a Real Estate Association, Real Estate Boards and a Real Estate Training Institute. Now is the time to give serious consideration to these issues to protect the Industry.

Why a Real Estate Association? The current status of the Real Estate industry in Sri Lanka brings into focus an almost complete absence of organizational, institutional, and training ingredients essential for a vibrant Real Estate industry.The consequences have been that, there are no accepted industry standards, professionalism and skills among many practitioners of the business. This is in addition to poor marketing, and lack of information available to the public..To most people, Real Estate business means, merely introducing the buyer to the seller, and hence the term “broker”, has acquired a bad connotation among the public.Outside this popular notion, many buyers and sellers have little knowledge or access to the expertise that a professional practitioner of the trade can provide.

 

It is recognized that a demand for professional Real Estate skills exists among the buyers and sellers, property developers, and others in the related fields.

Such demand, to a large extent, is currently met in less than an ideal manner by a wide range of people. They could be professionals in other fields, who have had no training in all aspects of Real Estate marketing.

Therefore even people such as street vendors who are unable to provide a complete package of services in the best interest of the buying and selling public also act as “brokers”.

Outline of the proposed Association

The proposal is to set up an organized body of Real Estate practitioners or Realtors, with the descriptive title, “Real Estate Association of Sri Lanka”.

The members of this Association shall include all genuine practitioners of the profession. Associate membership status will be available to others in related professions such as, lawyers, architects, engineers, developers, valuers, mortgage brokers, financiers, etc.

At the inception, those engaged in the business of marketing and selling property can apply for Association Membership.. They will be the founder members. Subsequent members will need to complete a study programme and pass a written examination conducted by a recognized Real Estate Training Institute.

Objectives of the Association

The end objectives of the Association is to provide highly professional services to the buying and selling public and to keep the enthusiasm alive in the industry.

In the developed countries it is a legal requirement that all practitioners of the real estate business must be registered and there are legally binding responsibilities that go with the profession.

The Association shall therefore seek to:

* Provide to all those engaged in the profession the opportunities to develop and improve their skills. An important step in this direction is the establishment of a Real Estate Training Institute, which will conduct training courses leading to the award of a diploma in Real Estate Marketing & Sales. Proper training shall be the corner stone in professionalizing the industry.

* Formulate and oversee the implementation of industry- wise professional standards, ethics, and rules which the members are bound to observe.

* Expand the scope of the Real Estate services offered to the public, to include such areas as property management, financing, consultation on land assembly, land development and planning, and condominium, in addition to many more.

* Improve marketing and sales infrastructure. A first step in this direction is to facilitate Members to share and pool marketing information and create a comprehensive database with multiple listing of the properties and services available. Access to such information to be made easy through the print media (newsletter) or the electronic media (World Wide Web).

* Develop a close liaison with related professions such as lawyers, architects, engineers, the Construction Chamber, Appraises, Property Developers, Lending Institutions etc.

* Provide an impartial and ethical professional marketing service for financial institutions, as well as the borrowers, in respect of Power of Sale and Foreclosure situations.

* Set up Real Estate Boards comprising of Real Estate practitioners in different regions/provinces. These can be independent Boards, under the supervision of the National Real Estate Association.

Benefits

An organized body of Realtors acting in the pursuit of the above objectives will be of immense benefit to its Members as well as to the country at large in the following manner.

* The Real Estate profession: By improving the professional standing of its members and enabling it to act as any other recognized profession in the country. Furthermore, a vibrant and an expanded industry will result in higher potential earnings, which its Members well deserve.

* The construction industry: The Realtors provide the marketing interface between the sellers and the buyers. Efficient and professionally competent service in this field will no doubt be an impetus to the building industry.

* The economy: The building trade and transactions in housing are considered to be a barometer of economic growth and welfare. An effective body of Realtors will create more economic activity even in lean times.

Organizational Issues

The Association will function as an independent body not affiliated to any other organization or interest group.

Once the concept is accepted, one of the first tasks will be to draw up a constitution for the Association, and be formally adopted by ratification by its general membership.

The governing body of the Association shall be a council comprising of elected representatives of Realtors, and persons of standing in the commercial world who are able to make a significant contribution to the Association’s activity.

The Association will require to have its own office premises with dedicated staff, and facilities to manage its database.

The foregoing identifies some of the major pressures facing the industry, in a period of rapid social and economic transformation.

There is a clearly identified demand for professional real estate services, and wide opportunities also exist for realtors to branch out into more specialized services, other than brokering. The proposed Association will, no doubt, be of immense benefit to its Members, as well as to the country at large.

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The writer was a Condominium Specialist and Independent Consultant. He was a former member of the Canadian Real Estate Association and the Ontario Real Estate Association, and a past member of the Realtor Political Action Committee in Canada.