Strengthened requirements for the activity of brokers in Latvia in order to ensure more reliable service provision – Events

In the final reading of the Saeima approving the amendments to the Law on the Operation of Real Estate Transaction Intermediaries, the requirements for the operation of real estate transaction intermediaries in Latvia were specified, ensuring more effective supervision of the professional activity of these persons, as well as promoting the provision of stable, safe and reliable mediation services. Amendments to the law have yet to be announced by the President.

The legal norms in force until now provide that real estate brokers must be included in the register of real estate brokers and participate in qualification raising events every year. If the real estate transaction intermediary has not raised his qualifications, the existing regulation requires the real estate transaction intermediary to be excluded from the register of real estate transaction intermediaries. At the same time, the regulation did not include the requirement to raise the qualification if, after exclusion, the real estate transaction intermediary wants to re-register. As a result, a situation had arisen that real estate brokers often deliberately did not comply with the requirement contained in the law to attend qualification raising events.

Along with the amendments to the law, an additional mechanism for limiting the activities of real estate brokers who have not raised qualifications in the calendar year is established. The law includes a provision that if the real estate transaction intermediary has not met the requirements for raising the qualification, then the real estate transaction intermediary, after exclusion from the register of real estate transaction intermediaries, will have the possibility of being renewed in the register, if the requirements for the qualification improvement measure are met. In addition, the law has been supplemented with a norm that obliges the real estate transaction intermediary to carry out qualification raising measures, if the exclusion from the register of real estate transaction intermediaries has been based on the application of the real estate transaction intermediary, providing that the qualification measure must be carried out if the real estate transaction intermediary repeatedly wants to register in the register of real estate brokers.

According to the information of the State Revenue Service, there are around 1,450 real estate brokers in Latvia – economic operators, but as of May 10, 2023, 781 real estate brokers were registered in the register maintained by the Ministry of Economy, so about half of the real estate brokers in Latvia are not included in the real estate register. in the register of property brokers, but provide brokerage services, and penalties are not applied to these service providers. In addition, during inspections, the State Revenue Service has found cases where natural persons provide mediation services without registering their economic activity with the State Revenue Service, thus making it difficult to monitor the services provided by such persons.

Along with the amendments to the law, it is also established that a natural person can register in the register of real estate transaction intermediaries only if the person has registered his economic activity with the State Revenue Service.

in the same way application of a certain administrative penalty (warning or fine) to those real estate brokers who will provide mediation services without registration in the register of real estate brokers.

Finally, along with the amendments to the law, the administrative burden on the businessmen of this industry has also been reduced. Currently, the law stipulates that real estate brokers must submit to the Ministry of Economy by January 31 every year information on brokerage service contracts concluded in the previous calendar year, indicating their number and transaction amounts. Considering the fact that real estate brokers, as economic operators, must submit various reports to the State Revenue Service, this requirement has been deleted from the law.

Detailed with the amendments approved by the Saeima In the Act on Real Estate Transaction Intermediaries can be found on the website of the Saeima.

As you know, on August 1, 2020, the Law on the Activities of Real Estate Brokers entered into force, which regulates the legal basis of the professional activity of real estate brokers and ensures the supervision of the professional activities of these persons in order to prevent the legalization of proceeds of crime, the financing of terrorism and proliferation, and to promote a stable , providing safe and reliable mediation services. The law provides that the real estate broker must insure the civil liability of his professional activity. Regulations of the Cabinet of Ministers of September 29, 2020 No. 602 “Provisions of civil liability insurance for the professional activity of a real estate transaction intermediary” determines the minimum annual liability limit of the insurance contract and the mandatory risks that must be insured by the real estate transaction intermediary. At the same time, the law provides that from July 1, 2021, mediation services may be provided only by persons included in the Register of Real Estate Transaction Intermediaries. The register is publicly available on the website of the Ministry of Economy.

Ministry of Economics