Correction programs regarding real estate brokers' receipt of negotiation deposit

Chinese Taipei

Case:

Correction programs regarding real estate brokers' receipt of negotiation deposit

Key Words:

negotiation deposits, letter of offer

Reference:

Fair Trade Commission Decisions of February 19, 1997 (the 277th Commission Meeting) and March 19, 1997 (the 281st Commission Meeting)

Industry:

Real estate brokerage (6812)

Relevant Laws:

Article 24 of the Fair Trade Law

Summary:

1.The receipt of "negotiation deposits" by real estate brokers before their representing the buyers in negotiating with the sellers is becoming a pattern of transaction. However, such practice was created by the brokers without clear definitions or specific laws regulating it, resulting in numerous disputes. This Commission has also received several complaints alleging that after real estate brokers received negotiation deposit (or negotiation guarantee fee, offer guarantee fee, coordination fee, etc.) from the buyers, the brokers represented them in negotiating transaction conditions (such as purchase prices of the house, methods of payment) with the sellers (or owners of the houses); however, such fees were confiscated even though the transactions were not completed within the period of authorization; the rights and benefits of the complainants were therefore impaired.

2.In order to elucidate the nature of "negotiation deposit" and its legality, this Commission has invited the competent authorities, brokers, scholars, experts, and representatives of consumers groups to hold several public hearings on the reasonableness and legality of the real estate brokers in receiving negotiation deposits. Although the representatives did not object to the negotiation deposits, they agreed that clear provisions on both parties' rights and obligations and the conditions of transactions should be provided. Furthermore, the Ministry of Interiors has, in the meetings of "Task Force on Standard Forms of Contracts for Housing Sales Brokerage", conducted several discussions on the system of negotiation deposits; also, in order to prevent problems of negotiation deposits, it has designed a "Letter of Offer" intended to replace the current practice of receiving negotiation deposits.

3.The 277th and 281st Commission meetings of this Commission resolved on the following Corrective Measures:

(1) Points of Resolutions: When real estate brokers request for negotiation deposits, they shall at the same time inform the consumers of the option to use the Letter of Offer provided by the Ministry of Interiors. If the consumers choose to pay negotiation deposit, then the brokers shall by written provisions specify the purposes of the negotiation deposit and expressly inform the consumers of their rights and obligations. If the brokers fail to do so and do deceptive or obviously unfair acts, they will be considered to have violated Article 24 of the Fair Trade Law.

(2) Correction Period: From June 1, 1997 to August 31, 1997. In other words, from September 1, 1997 on, brokers shall handle their business in accordance with the resolutions of this Commission. The failure to do so is a violation of Article 24 of the Fair Trade Law.

Summarized by Chen, Yun-Shang
Supervised by Hu, Kuang-Yu

＆: For information of translation, click here

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