A registry and sanctions are being created to curb informality. Operators who carry out real estate brokerage tasks will be registered with the Ministry of Education and Culture.

Parliament has approved a bill that aims to formalise the real estate market. Those who act as intermediaries in purchase or leasing transactions must be registered. Penalties are also foreseen for those who fail to comply with the new provisions. The text aims to mitigate the existing informality in the sector.

The bill, which is now awaiting promulgation, seeks to regulate the professional real estate activity carried out by service providers, commission agents, agents, brokers and brokers.

For this purpose, it defines real estate operators as individuals or legal entities that carry out tasks of intermediation, commercial advice, management, processing, administration, appraisal and promotion of the purchase, sale and leasing of properties.

“The challenge is to formalize the sector and make it transparent,” Michelle Fleitas, academic coordinator of the Real Estate Operator program at ORT University, told El Observador.

He added that although there was no specific law, real estate operators are currently required to have a legal status and make their corresponding tax contributions and be registered with the National Secretariat against Money Laundering and Financing of Terrorism (Senaclaft). In addition, if they work in certain areas of the country they must comply with the payment of insurance.

The project establishes the creation of the National Registry of Real Estate Operators, which will operate within the Ministry of Education and Culture and will be administered by an honorary commission composed of three members of the Executive Branch and two of the most representative associations of the sector.

To be part of the registry, operators must prove that they are registered with the Social Security Bank (BPS) and the General Tax Directorate (DGI) and also registered as obligated subjects with Senaclaft.

The bill provides that individuals or legal entities that can prove that they carried out real estate activity during the year prior to the enactment of the law will be entered into the registry.

It proposes that administrators of common expenses and auctioneers and brokers who register must demonstrate suitability by means of documentation that accredits their uninterrupted participation in real estate transactions and register with Senaclaft.

Fleitas explained that there is also a one-year window period for those who do not meet the requirements and want to formalize their work in the sector.

One of the complaints about the project came from the Uruguayan Chamber of Brands and Real Estate Companies (CUMEI). The association claimed that the text did not recognize the activity of the real estate operator who acted independently, that is, without a relationship of dependency. The final project established that real estate franchises will continue with their activity but with the support of an operator registered in the registry.

The text also provides for sanctions for non-compliance with the established provisions. Violations will be punished by the Ministry of Education and Culture with warnings, observations, fines or suspension from the National Registry of Real Estate Operators. Fines will have a maximum of 500,000 Indexed Units (UI), equivalent to US$ 74,600.

Fleitas said that the real estate sector had been demanding regulations for more than 30 years. “The registry will provide traceability to whoever is behind a real estate transaction,” he said. This will allow the identification of actors in the sector who work informally. “We will try to mitigate this; combating informality will continue to be a challenge,” he said.

The expert stressed that the project makes it clear that operators have the right to collect fees for the intermediation work carried out.

One of the most frequent questions operators receive is whether the upcoming law will impose additional costs on customers. Fleitas assured that it will not. “It will affect the customer because they will know if the person serving them is registered,” he said.

“There is also the question of whether the owner will not be able to sell his property directly. First, there is the right of ownership; then, everyone can sell in the way they want. This is the case when there is an intermediary,” he said.