By Daniel KONTIE
A couple of weeks ago, we published the implications of Act 1047 on Brokers and Agents. Today’s article will deal with the implications of Act 1047 on property owners, developers or investors.
Similarly, we also gave background information that necessitated the enactment of Act 1047 which brought in a new dispensation to the real estate agency sector in Ghana.
If readers will recollect, we stated the importance of replacing the informal and largely unregulated real estate agency landscape which in the past has led to widespread fraud, unprofessional conduct, market inefficiencies and the erosion of investor confidence, especially among diaspora and foreign investors.
Therefore, this made the coming into force of Act 1047 and the Real Estate Agency Council (REAC) in 2020 timelier than ever.
This article as mentioned earlier, explores the implications of specific provisions of Act 1047 on property owners, developers, and real estate investors, whilst providing insights into compliance and strategic opportunities for property owners, developers and investors.
Implications of Act 1047 on Property Owners
Just as Act 2020 (Act 1047) has implications on real estate agents and brokers which we treated in the previous article on the implications of Act 1047 on agents and brokers, the Act also has implications on property owners, developers and real estate investors and all other stakeholders alike.
Implications of Section 22 on Property Owners
Pursuant to Section 22 of Act 2020, (Act 1047), there is an obligation on property owners to engage only licensed practitioners in all real estate transactions.
Property owners who wish to sell, lease, or rent their properties must now engage professionals recognized by the Real Estate Agency Council only.
What this means essentially is that, it is illegal for anyone including the property owner to sell a property or engage in any real estate transaction without engaging a certified agent or broker certified by the Real Estate Agency Council unless otherwise the property owner is himself a certified broker or agent.
Making reference to the explicit provisions of Section 22, it says; A person shall not (a) provide real estate agency services, (b) provide services as a real estate broker or real estate agent, (c) engage in any business connected with the provision of real estate agency services, or (d) engage in a real estate transaction if that person is not a licensed real estate broker or a licensed real estate agent under this Act.
The purpose is to ensure greater security in property transactions, reduce the risk of engaging fraudulent middlemen, caretakers etc. This has put a huge responsibility on all property owners to verify the licensing status of agents or brokers before engaging them.
To conclude on the implications of Section 22 on property owners, it is important to note that, all real estate transactions conducted without using licensed agents or brokers may be nullified or attract severe legal consequences in the event one finds himself guilty by any court of competent jurisdiction.
Therefore, the era of I know an uncle who is highly connected or I have a caretaker who can sell my property for me, or the engagement of anyone parading himself an agent or broker without proof of certification is long over. It is about time property owners understand and accept this reality in good faith.
Implications of Section (44) (48) & (51) of Act 1047 on proper owners
The law also mandates that there must be a written contractual agreement and records of real estate transactions and fees pursuant to Section (44) and (51).
The era where a property owner will accept cash from a buyer and hand over keys to him and tells him the property is yours without any written agreement is no longer done without legal consequences.
This has made the understanding of the law necessary by agents, brokers and property owners in order to avoid any unwarranted legal implications. By these provisions, property owners are protected from hidden charges and other exploitative fees.
Besides, it also promotes formalization of agency agreements thereby discouraging informal arrangements often based on verbal promises, and finally, it ensures transparency in all transactions and sets expectations for performance.
Implications of Section (36) & (48) on Property Owners
Also, because Section (36) & (48) provides that accountability and dispute resolution are mandated by law, this comes as a sigh of relief and protection for property owners giving property owners the right to resort to legal actions for redress in the event of any significant breach of contract or unethical behavior on the part of the agent or broker.
By implicit interpretation, Section (36) (1) recommends legal action as the last resort as it states that; “Parties to a transaction under this Act may agree to resolve a dispute that arises in relation to a transaction in accordance with the Alternative Dispute Resolution Act, 2009 (Act 798), whilst Section (48) spells the roles of General conduct in real estate agency practice.
Implications of Section (44) (30) and 42 (5) on Property Owners
Section (44) (30) (d) and (42) (5) mandates a clear documentation of agreements that includes sale and purchase agreements as well as other charges. This is to eliminate arbitrary demands that may have arisen as a result of verbal arrangements.
With this, property owners can now make informed decisions backed by standardized fee structures, encourages legal documentation and transparency in all transactions etc.
This is in stark contrast to the past where both agents and property owners engage in arbitrary charges and commission determination, with many agents charging commissions on both the property owner and the client and the worst of this is the arbitrariness in agency fee determination where property owners allow agents and brokers to add margins to price thresholds given to them by property owners.
This has led to the inflation of property prices to even over 200% in some circumstances making the real state sector a jungle ground for prospective buyers.
Implications of Section 47 (5) on Property Owners
It is also important to note that, Section 47 (5) frowns on any misrepresentation resulting in the over or under valuation of property prices. Section 47 (5) states that “where the Council has reasonable grounds to believe that there has been any misrepresentation in respect of a real estate transaction, or payments made in relation to the real estate transaction which is the subject of the application have been under-declared or far exceeds the value of the property, the Council may; (a) conduct an investigation into the transaction, (b) cause an independent valuation of the property to be made, or (c) refer the transaction to the Economic and Organized Crime Office, the Ghana Revenue Authority, the Financial Intelligence Centre or any other competent institution for investigation”.
This is a caution to all property owners using speculative information to unilaterally determine their own property prices.
It is illegal and has legal consequences if one is found guilty of the law. This practice has been one of the biggest challenges in the real estate sector in Ghana; the speculative property pricing that has succeeded in pricing out several Ghanaians who tried helplessly over the years to acquire properties in Ghana.
This also comes as a warming and wakeup call on agents and brokers alike who yield to pressures of property owners or the pressures of agents and sell or lease these properties using the speculative prices given to them by these property owners or agents. We therefore advise that only information from the Land Valuation Department of the Lands Commission should be used when it comes to property price determination.
Implications of Act 1047 on Real Estate Developer
Even though the real estate agency sector is known to have been flooded with fraudulent practitioners, the developer’s side has always been quiet and appears to have no issues. Act 1047 has provisions putting responsibility on developers.
This is to ensure a cleaner, more transparent market environment by eliminating fake agents and unethical practices whilst keeping a check on developer behavior.
Interestingly, Section (22) is no respecter of persons, the developer is not also allowed to sell his own development without involving a certified agent or broker or he himself being a certified broker or agent.
This could have legal implications on developers who have established in-house marketing departments to sell their own development. It is important for developers to collaborate with licensed agencies for secure property marketing and sales, improves brand reputation and investor confidence in their projects whilst reducing exposure to litigation resulting from illegitimate sales agents.
However, Section 23 (c) (ii) and (iii) permits developers to maintain their marketing departments or establish an in-house brokerage unit on the condition that; (ii) has designated at least one of the officers or partners as the representative for the purpose of obtaining the license; and (iii) has, for the purpose of the license, designated one of the officers or partners who, as an individual, has a license to practice as a real estate broker as a representative of that company, society, association or partnership.
This is to ensure full control over the sales and leasing process, opportunity to build licensed sales team and reduce dependency on external agents, strengthens operational efficiency and customer service, promotes formalization of agency agreements etc.
The coming into force of Act 1047 is also welcoming news for developers as they can now call for the arrest of uncertified agents listing their properties and misrepresenting their brands.
Over the years, many developers have had challenges with their diaspora clients because many agents were posing as officers of their companies and defrauding innocent buyers. The clearing of all uncertified agents and brokers will bring back trust and confidence to their brands in the eyes of prospective buyers.
Implications of Act 1047 on Real Estate Investors
The coming into force of Act 1047 will enhance the conduct of due diligence. This makes it easier for prospective buyers to conduct due diligence through the Real Estate Agency Council. It will ensure consumer protection and transaction transparency at all levels.
The purpose is to reduced risk of fraudulent property sales and land title disputes, raise higher investor confidence, especially for off-plan projects and long-distance purchases. Investors can now verify licenses through the Council’s database before committing funds.
Apart from this, there will be clarity in commissions and transaction costs to all stakeholders. Investors are often subjected to inconsistent and excessive commission charges. Under the Act, commission structures must be standardized and clearly disclosed.
Investors are also protected because they can take action actions against unprofessional conduct and the agents or brokers risk legal penalties, suspension or revocation of their licenses.
Challenges and Areas of Caution
Before I conclude this article, let me take a few moments to highlight a few areas of caution. While the Real Estate Agency Act is comprehensive, its success hinges on robust implementation, public awareness, and institutional coordination.
Some foreseeable challenges include: low awareness among property owners and small-scale agents, the potential for proliferation of unlicensed agents, especially in informal areas, delays in setting up and digitizing the National Real Estate Transaction Database needed for collaboration between REAC, the Lands Commission, and legal professionals. Also, the purpose of Act 1047 may also be defeated if the current lack of funding, staffing and logistics challenges persist.
Recommendations for Stakeholders
Property Owners must always verify agent licenses before engagement, insist on written contracts outlining fees, services, and timelines, report unprofessional agents to REAC to help sanitize the market.
Developers must ensure all sales agents are registered and certified, adopt in-house training programs to license internal sales teams, and use REAC guidelines to strengthen compliance and consumer trust.
Also, investors must conduct due diligence through REAC’s licensed agent registry, avoid informal transactions; demand written agreements, use the REAC complaints system when necessary for dispute resolution.
Conclusion
The Real Estate Agency Act, 2020 (Act 1047) marks a historic shift in Ghana’s property market, ushering in a new era of professionalism, transparency, and legal accountability. The implications for property owners, developers, and investors are both practical and transformative.
When fully enforced, the Act has the potential to elevate Ghana’s real estate sector into a more structured, investor-friendly, and globally competitive industry.
But this vision can only be achieved through awareness, compliance, and collective action from all stakeholders. As we move forward, the Act should not just be viewed as a legal requirement but as a powerful catalyst for growth, integrity and investment confidence in Ghana’s real estate space.
Finally, it is important to issue this disclaimer that this article is not an interpretation of Act 1047 as the writer does not have the locus to interpret the law. The 1992 Constitution gives power to only the Supreme Court of Ghana the locus and jurisdiction to interpret the laws of the land.
Therefore, this information in this article shall not be taken as professional legal advice. Always seek the counsel of a certified lawyer in all real estate transactions. Also remember that the Africa Continental Engineering & Construction Network Ltd is the leading Engineering, Real Estate and Construction Firm in Ghana and beyond.
For all your civil engineering, construction, architecture, real estate, surveying, project management, urban planning, facility management, services etc do not hesitate to contact us.
Reference
• Real Estate Agency Act, 2020, (Act 1047); date of Gazette Notification: 29th December, 2020.
• The Anti-Money Laundering Act, 2020 (Act 1044) (and where there is any conflict, the provisions of Act 1044 shall prevail).
