>Fair Trade Commission Disposal Directions (Policy Statements)on Real Estate Brokerage

Fair Trade Commission Disposal Directions (Policy Statements) on Real Estate Brokerage

Passed by the 496th Commissioners' Meeting on 10 May 2001
Promulgated by Order Kung Yi Tzu No. 01524 on 22 May 2001
Amended by the 688th Commissioners' Meeting on 13 January 2005
Promulgated by Order Kung Fa Tzu No. 0940001278 on 24 February 2005
Amended by the 842nd Commissioners' Meeting on 27 December 2007
Promulgated by Order Kung Yi Tzu No. 0970000190 on 10 January 2008

 

  1. Background Explanation
    Due to the facts that the domestic housing price information is not sufficient; the quotation system is not yet in place; and, the real estate brokerĦ]agentĦ^ possesses a special relationship in the trading system in which the broker is entrusted by the real property owner to sell the real estate on the one hand and represents the buyer to make offer to or bargain with the real estate owner on the other, the broker becomes the only one that has full grasp over information on the real estate's condition; purchaser's offer options; both seller and purchaser's offer and possible settlement price and other relevant trade information.  In comparison with either the purchaser or the seller, the broker possesses an obvious advantageous position in the holding of information and resulted in an imbalanced holding of information amongst the trading counterparts over real estate trades.  Shall the real estate broker able to adhere to the industry standards in information transparency and trustworthy service, then trade disputes may be put done away and thus beneficial to the development of real estate brokerage. However incidences of real estate broker urges trading counterparts to enter into erroneous decisions; to compels the trade parties to proceed into dealings; or earn inappropriate benefits by making use of the nature of imbalanced holding of information and engaged in restricted competition or unfair competition activities are widely known. For example, upon proposing negotiation deposit, if the broker neglects to inform consumer the rights to select between Ministry of Interior Version of the Letter of Offer and negotiation deposit, their differences and substitutive relations, or remuneration agreed by the industry competitors etc, and shall such activity has the essence of restrictive competition or unfair competition, it is not only detrimental to the fair competition that centralizes upon quality, price, service, and other effective competition factors and opposes to the ethics of business competition, it would also deter the normal development of real estate business.  As the Fair Trade Act was enacted for the main purpose of maintaining trading order, protecting consumers' interests, ensuring fair competition, and promoting economic stability and prosperity, and also to ensure that the real estate brokers clearly understand the relevant standards of the Fair Trade Act, the Fair Trade Commission hereby sets this Policy Statements as to notify all related business operators and set reference for future case dealings.
  2. Definitions:
    (1)  Real estate: A real estate means a fixed object on the land or a house and the right of transferring its ownership. A "house" refers to a readily available house or a presale house and the right of transferring its ownership.
    (2)  Real estate brokerage: A real estate brokerage refers to the company or incorporation or person dealing with real estate broking or sales. Whereas broking means acting as go-between or representative in the sale, exchange, tenancy of property. Sale means being commissioned by tenant-builders or the building industry to undertake the plan for the sale of property and assuming the representative position in the sale.
    (3)  Letter of Offer: the Letter of Offer in this Policy Statements is limited to the scope of house purchase. For real estate broker to tender to the seller a written price offer without the purchaser having to pay a certain amount of money to the broker in advance.
    (4)  Negotiation Deposit: A negotiation deposit in this Policy Statements is limited to the purchaser consigning a certain amount of money to the real estate broker to make an offer to the seller on his or her behalf.
    (5)  Real estate franchisor: A real estate franchisor refers to the real estate broker providing its trademark or management skills etc, assist or instruct the franchised stores in the franchise relation.
    (6)  Real estate franchisee: A real estate franchisee refers to a business that uses the franchisor's trademark or management techniques and accepts franchisor's assistance or instructions in the franchise relation.
  3. Concerted Action
    (1)  Concerted Action: In accordance with Article 7 of Fair Trade Act: "Concerted Action in this Act means the conduct of any enterprise, by means of contract, agreement or any other form of mutual understanding, with any other competing enterprise, to jointly determine the price of goods or services, or to limit the terms of quantity, technology, products, facilities, trading counterparts, or trading territory with respect to such goods and services, etc., and thereby to restrict each other's business activities." The term "concerted action" is limited to horizontal concerted action at the same production and/or marketing stage which would affect the market function of production, trade in goods, or supply and demand of services."  The standard held by Fair Trade Act towards a concerted action is "forbid in principle, but exceptions are permitted".  In accordance with Article 14 of Fair Trade Act: "No enterprise shall have any concerted action; unless the concerted action that meets one of the following requirements is beneficial to the economy as a whole and in the public interest, and the application with the central competent authority for such concerted action has been approved: 1. unifying the specifications or models of goods for the purpose of reducing costs, improving quality, or increasing efficiency; 2. joint research and development on goods or markets for the purpose of upgrading technology, improving quality, reducing costs, or increasing efficiency; 3. each developing a separate and specialized area for the purpose of rationalizing operations; 4. entering into agreements concerning solely the competition in foreign markets for the purpose of securing or promoting exports; 5. joint acts in regards to the importation of foreign goods for the purpose of strengthening trade; 6. joint acts limiting the quantity of production and sales, equipment, or prices for the purpose of meeting the demand orderly, while in economic downturn, the market price of products is lower than the average production costs so that the enterprises in a particular industry have difficulty to maintain their business or encounter a situation of overproduction; or 7. joint acts for the purpose of improving operational efficiency or strengthening the competitiveness of small-medium enterprises. After receipt of the application referred to in the preceding Article, the Central Competent Authority shall make a decision of approval or rejection within three months, the period of which may be extended once if necessary."
    (2)  Possible concerted action behavior by real estate brokers:
    1. Jointly decided price: If real estate brokers achieve contracts or agreements or other mutual consensus with other real estate broker(s) and jointly decide service charges (known as remuneration, i.e. standard service charges), or restrict adjustment of service charges, and such act is sufficient to impact on the functioning of market supply, irrespective of whether the standard service charges is within the scope set by the supervising organization of the designated business, such act would be suspected of infringing Article 14 of the Fair Trade Act.
    2. Jointly divided market territory: If real estate brokers achieve contracts or agreements or other mutual consensus with other real estate broker(s) and jointly divide operating territory and/or trading counterparts, and such act is sufficient to impact on the functioning of market supply, shall be suspected of infringing Article 14 of the Fair Trade Act.
    3. Jointly boycott: If real estate brokers achieve contracts or agreements or other mutual consensus with other real estate broker(s) to jointly obstruct or exclude other competitors or potential competitors from competing and such act is sufficient to impact on the functioning of market supply, shall be suspected of infringing Article 14 of the Fair Trade Act.
  4. Inappropriate Restriction on Sservice Charges Charged by Franchisee as a Condition for Securing the Franchise:
    Real estate franchisor shall permit its franchisee to freely set its own service charges. Should the franchisor inappropriately restrict the service charges standards charged by the franchisee as a condition for establishing or continuing the franchised relation, would be suspected of infringing Article 19 (vi) of the Fair Trade Act.
  5. Deceitful or Obviously Unfair Act Sufficient to Influence Trading Order:
    (1)  Standards on deceitful or obviously unfair acts that are sufficient to influence trading order: Article 24 of the Fair Trade Act reads "In addition to what is provided for in this Act, no enterprise shall otherwise have any deceptive or obviously unfair act that is able to affect trading order."  The said unfair competing conduct generally stipulates any conduct that has the nature of unfair competition and where no other articles in the Fair Trade Act is applicable, then may investigate whether Article 24 of the Fair Trade Act is applicable. This Article  is established upon "market competition order", and restricts over "deceptive conduct" or "obviously unfair act" that is "sufficient to influence trade order".  Hence emphasis upon whether in an individual dealing, a party used "deception" or "concealed important facts", or other erroneous methods etc to induce the trade counterpart from entering into the trade, or to cause competitor to lose a trade opportunity due to "deceptive conduct"; or any "obviously unfair act" that inappropriately suppresses trade counterpart, hinders the trade counterpart's freedom in deciding whether to trade or and the trading terms. 
    (2) No advice on the options between the negotiation deposit and the Ministry of Interior Version of the Letter of Offer, their differences and substitutive relations: should the real estate broker, during the course of conducting real estate trades, made use of the characteristic of trade information dissymmetry, to conceal the differences and substitutive relations of negotiation deposit and Ministry of Interior's version of the Letter of Offer; upon receiving the negotiation deposit, if the broker does not advise the purchaser the right to select between the Ministry of Interior's version of the Letter of Offer and the negotiation deposit and their differences and substitutive relations, would be suspected of infringing Article 24 of the Fair Trade Act. Therefore, real estate broker should, in written form, advise the purchaser the right to select Ministry of Interior's Letter of Offer and such written content should explain the differences and substitutive relations between the Letter of Offer and negotiation deposit and have the purchaser signed in confirmation so as to discharge the broker's obligation to advise (written notice is as attached).  On the other hand, if the real estate broker is to make payment of the negotiation deposit, the broker is advised to record, in written format, the purpose of the negotiation deposit, so as to clearly advise consumer of its rights and obligations.
  6. Penalty and Legal Responsibility of Infringing the Fair Trade Act and Related Regulations
    (1)  Infringing Article 14 of the Fair Trade Act, in accordance with Article 35(1), pursuant to Article 41 of the same Act, to cease therefrom, rectify its conduct, or take necessary corrective action within the time prescribed in the order, and after the lapse of such period, shall such enterprise fail to cease therefrom, rectify such conduct, or take any necessary corrective action, or after its ceasing therefrom, shall such enterprise have the same or similar violation again, the actor shall be punished by imprisonment for not more than three (3) years or detention, or by a fine of not more than one hundred million New Taiwan Dollars.
    (2)  The Fair Trade Commission may, in accordance with Article 41 of the Fair Trade Act, order any enterprise that violates any of the provisions of the same Act to cease therefrom, rectify its conduct or take necessary corrective action within the time prescribed in the order; in addition, it may assess upon such enterprise an administrative penalty of not less than fifty thousand nor more than twenty-five million New Taiwan Dollars. Shall such enterprise fails to cease therefrom, rectify the conduct or take any necessary corrective action after the lapse of the prescribed period, the Fair Trade Commission may continue to order such enterprise to cease therefrom, rectify the conduct or take any necessary corrective action within the time prescribed in the order, and each time may successively assess thereupon an administrative penalty of not less than one hundred thousand nor more than fifty million New Taiwan Dollars until its ceasing therefrom, rectifying its conduct or taking the necessary corrective action.
    (3)  If any enterprise infringes the regulations of the Fair Trade Act, the enterprise, in additional to any criminal or administrative responsibilities, shall also be responsible for civil loss and damage in accordance with Chapter 5 provisions of the same Act.
  7. This Policy Statements only demonstrates commonly encountered infringing conducts to the Fair Trade Act, should there be any unattained issues, this Commission would add or amend at any time, and individual incidences should still be conducted on its own merits.  Also, with respects to real estate advertisement cases and multiple-listing system, this Commission has set "Fair Trade Commission Guidelines on Cases of Real Estate in Advertising" and "Fair Trade Commission Policy Statements on Real Estate Brokers Engaging Multiple Listing Services" and real estate brokers should note and observe the provisions.
  8. Trade disputes that do not come into Fair Trade Act provisions or trade disputes that do not involve with business competition conduct or are pure consumer dispute cases should still be dealt with in accordance with Civil Law, Consumer Protection Law or other regulations (details see attachment). 

ĦiAppendix IĦj

Written Example of Notifying the Letter of Offer or Negotiation Deposit

Note:  Purchaser may select either the Letter of Offer by the Ministry of Interior or negotiation deposit
To protect your rights and to prevent future disputes, our company, in accordance with the resolution of the Fair Trade Commission of Executive Yuan, provide Ministry of Interior's Version of Letter of Offer and negotiation deposit agreement for your reference, purchaser may select either one, please tick your selected document for execution:

ĦiAppendix IIĦj Dispute Not  Classified under Fair Trade Act

Type of Dealings

Applicable Rules
Return of negotiation deposit Resolve via civil action in accordance with Civil Law
Price Difference Gain React to the Ministry of Interior in accordance with Real Estate Broking Management Act or to follow Civil Law and resolve via civil case action.
Other Benefits React to the Ministry of Interior in accordance with Real Estate Broking Management Act or to follow Civil Law and resolve via civil case action.
Leak Warranty Dispute Resolve via civil action in accordance with Civil Law.
Performance Guarantee Dispute Resolve via civil action in accordance with Civil Law or performance guarantee contract.