MALAYSIAN ESTATE AGENCY STANDARDS

SECOND EDITION 2014

THE BOARD OF VALUERS, APPRAISERS,

ESTATE AGENTS AND PROPERTY
MANAGERS

A-27-15, LEVEL 27
MENARA UOA BANGSAR
NO. 5, JALAN BANGSAR UTAMA 1, BANGSAR
59000 KUALA LUMPUR

TEL: 03-22888815/22888816/22888817
FAX: 03-22888819

E-MAIL: [email protected]
URL: http://www.lppeh.gov.my
INTRODUCTION

The aim of the Estate Agency Standards is to set the required high standards for the
practice of estate agency in Malaysia. In this connection the Standards will aid and
elaborate upon the provisions of the Valuers, Appraisers and Estate Agents Act 1981 and
the Valuers, Appraisers and Estate Agents Rules 1986 in so far as they deal with the practice
of estate agency in Malaysia.

Each Standard deals with a specific topic. Each Standard in turn is in three parts i.e. the
Introduction to the Standard, the Statements of the Standard and the Explanations to the
Standard.

The Introduction to the Standard sets out the broad purpose of the Standard and
encapsulates the essence of the Standard.

The Statements of the Standard comprise the main body of the Standard. It contains, the
mandatory provisions of the Standard. All registered estate agents are obliged to follow the
provisions contained therein. In any disciplinary action, on any registered estate agent,
including probationary estate agent, the Board will apply, the relevant Statement of the
Standard in conjunction with other provisions of the Valuers, Appraisers and Estate Agents
Act 1981 and the Valuers, Appraisers and Estate Agents Rules 1986, or on its own.

The non-mandatory Explanations to the Standards serve as elaborations of the Statements

of each Standard.

It is hoped that the Estate Agency Standards will go a long way towards creating and
maintaining a high standard of estate agency practice in Malaysia.

The Standards should not be taken to be exhaustive of all conceivable situations that may
arise in practice. Notwithstanding the Standards, all registered estate agents should, at all
times, act in a manner consonant with the dignity of the profession.

The Standards shall come into force on 1 June 2014 and shall apply to all registered estate
agents as well as probationary estate agents. The Standards will be subject to periodic
amendments by the Board.

The previous Malaysian Estate Agents Standards dated August 1999 are herewith repealed
and related matters in previous Circulars of the Board are herewith superseded by these
Standards.

DATUK HAJI ABD. HAMID BIN ABU BAKAR

THE PRESIDENT
BOARD OF VALUERS, APPRAISERS AND ESTATE AGENTS MALAYSIA
2 June 2014
 CONTENTS

Page
1. Introduction

2. Definitions 1

3. Part I - Core Values

4. Part II - Statements of Standards

Standard 1 - The Estate Agency Office 7

Standard 2 - Real Estate Negotiators 9

Standard 3 - Types of Estate Agency 12

Standard 4 - Estate Agency Fees 14

Standard 5 - Terms of Engagement 17

Standard 6 - Advertisement / Marketing 20

Standard 7 - Co - Agency Practice 23

Standard 8 - Viewing / Inspections 26

Standard 9 - Clients Accounts 28

5. Part III – Forms

 MALAYSIAN ESTATE AGENCY STANDARDS

DEFINITIONS
In these standards, unless the context otherwise requires:-

"Act"
means the Valuers, Appraisers and Estate Agents Act 1981 (as amended).

"Acting for two parties"

means acting as estate agent tor the vendor and purchaser or the landlord and tenant in
the same estate agency transaction.

"Advertisement"
means any material or product used in the mass media or electronic media and any
published material of any kind whatsoever issued or exhibited by or on the authority of a
registered valuer appraiser or estate agent, primarily designed to promote the registered
valuers's or estate agent's business.

"Appointment/Engagement"
means the act of appointing/engaging an estate agency firm by a particular Client.

"Associateship or Affiliation"
means any business arrangement between two or more parties or firms which leads to the
parties or firms having mutual and or reciprocal interest in their company or firm.

"Binding Contract"
means a contract for the sale and purchase, leasing or letting of a property that is legally
enforceable.

"Board"
means the Board established under the Valuers, Appraisers and Estate Agents Act 1981.

"Branch Manager"
means an estate agent who heads and manages a branch office of a firm, on a day to day
basis and who at the same time is not in charge of or manages any other estate agency
office or branch of the firm.

"Client"
means a person who appoints/engages a firm and is responsible for the payment of the firm's
fees in respect of the services rendered by the firm.

"Client's Account"
means a current or deposit account in the name of the firm at a bank in the title of which
account the word "client" appears, or a separate account opened in the name of the person
designated in writing by a client over which the firm has power of withdrawal on the signature
of the sole-proprietor or any partner, co-director or any other authorized person connected
with the firm.

Page 1 of 31
"Client's Money"
means money held or received by a firm on account of a person for whom the firm is acting
either as estate agent or in any other capacity including that of a stakeholder but shall not
include money to which the only person beneficially entitled is the firm itself; or money held
in an account by the firm jointly with a third party, not being a client, and over which the firm
does not have a power of withdrawal on the signature of the sole-proprietor or any partner,
co-director or any other authorized person connected with the firm.

"Commission"
means remuneration or professional fees earned upon effectively bringing about a certain
estate agency transaction to its conclusive and is paid to the Estate Agent/Negotiator.

"Conditional Agreement"
means an agreement subject to either a condition precedent or a condition subsequent.

"Conflict of Interest"
means a conflict between an estate agent's obligation to the client and/or to any other
party and his self-interest which may likely affect the estate agent's independent professional
judgment.

"Contract"
means a promise or set of promises, which the law will enforce.

"Contract of Service"
means an employment of a Negotiator on a full-time basis with a basic salary and either with
or without commission.

"Contract for Service"

means an engagement of a Negotiator on a full-time basis, whose commission shall not
exceed the amount as prescribed by the Board.

"Co-Agency"
means where the appointed firm which is the listing agent, enters into an arrangement with
another estate agency firm that has a prospective party to conclude the transaction and
share the fees in a pre-agreed formula.

"Default"
means the failure of a person to perform a legal obligation or default arising from any breach
of trust, embezzlement, fraud or wrongdoing committed by that person.

"Disclosure"
means a full declaration made promptly and confirmed in writing at the first available
opportunity and "disclose" shall have the same meaning.

"Earnest Deposit"
means an initial payment made by a prospective party to indicate serious interest in
purchasing or renting a property and it may or may not form part of the final agreed
purchase price or rent or security deposit in the case of a tenancy and may be forfeitable
depending upon the terms and conditions of the agreement.

Page 2 of 31
"Estate Agency Agreement"
means any agreement between the client and the firm in respect of a sale, purchase, letting,
leasing or renting of a property.

"Estate Agency Practice"

means acting or holding oneself out to the public or to any individual or firm as ready to act,
for a commission, fee, reward or other consideration, as an agent in respect of the sale or
other disposal of land and buildings and of any interest therein or the purchase or other
acquisition of land and buildings and of any interest therein or in respect of the leasing or
letting of land and buildings and of any interest therein Including the act of making known
of the availability of land, building or any interest therein for such sale or other disposal,
purchase or other acquisition, leasing or letting.

"Estate Agency Transaction"

means the process of selling, buying, leasing, letting or renting a property through an estate
agent, from the point in time of granting instructions to the estate agent to the point in time
where the sale or purchase or letting or leasing or renting is concluded.

"Estate Agent"
means a person whose name has been entered under Part III of the Register and to whom
an authority to practice has been issued by the Board under Section 16.

"Fees"
means fees prescribed under the Seventh Schedule of the Valuers, Appraisers and Estate
Agents Rules 1986.

"Firm"
means a body corporate, a partnership or a sole-proprietorship that is registered under the
Act.

"Flyer"
means a handbill, properly done and distributed with the purpose of promoting the sale or
purchase or leasing or letting or renting of a property for which an estate agent has an
instruction to sell or buy or lease or let or rent from a client.

"Forfeiture"
means the act of forfeiting any deposit be it earnest or security deposit in the event of non-
completion of an estate agency transaction.

"Form"
means a form set out in Part III of these Standards.

"Instructions"
means terms and conditions of an estate agency appointment or engagement. "Listing"
means the securing from a Client instructions to sell or buy or lease or let or rent a property.

‘Listing”
means the securing from a Client instructions to sell or buy or lease or let or rent a property.

Page 3 of 31
"Listing Agent"
means an estate agent who has obtained a listing and has been given the rights to sell or
buy or lease or let or rent the property by the client.

"Marketing"
means the act of promoting a property or project so that the public becomes aware of its
availability and benefits.

"Misrepresentation" includes: -
The positive assertion, in a manner not warranted by the information of the person making it,
of that which is not true, though he believes it to be true;
Any breach of a duty which, without an intent to deceive, gives an advantage to the person
committing it, or anyone claiming under him by misleading another to his prejudice or to the
prejudice of anyone claiming under him; and causing, however innocently, a party to an
agreement to make a mistake as to the substance of the thing, which is the subject of the
agreement.

"Misleading"
means making a statement that is false or erroneous in any material particular knowing it to
be false or intentionally omitting or authorizing the omission or accession of any matter.

"Multiple Listing"
Occurs when the listing estate agent has an arrangement with other estate agents to
exchange listings. Normally the listing estate agent obtains an exclusive right to sell or buy or
let or rent but permits other estate agents to show the property to prospective buyers, with
the understanding that if a sale is made through the efforts of the co-agent other than the
listing estate agent who obtained the listing, the agency fee is split between the two firms on
a pre-arranged basis.

"Negotiator"
means a person who is either employed or engaged on a "contract of service' or on a
"contract for service" by a firm to list and market properties and shall always be under the
immediate direction and supervision of an estate agent.

"Non-disclosure"
means omission or suppression or concealment of material facts.

"Option"
means a right given by the grantor usually the vendor/landlord to the grantee the
purchaser/tenant to purchase/rent the property within a stipulated time in a prescribed
manner.

"Part Payment"
Is a payment, which constitutes a portion of the purchase price or rental.

"Personal Interest"
means a vested interest in a state of affairs usually with an expectation of personal gain.

"Premium"
means any additional consideration paid by the tenant to the landlord over and above the
rent reserved.

Page 4 of 31
"Probationary Estate Agent"
means a person who is registered with the Board as a Probationary Estate Agent and is
required to comply with the Act, the rules, the Standards, Guidelines, Circulars and all other
lawful decision of the Board.

"Prospective Party"
Refers to a third party who is interested to purchase, rent or lease a property which is put into
the market by the firm.

"Rent"
means a payment by a tenant to the landlord under the terms of a lease or a tenancy
agreement. Such payment may be annually, monthly, weekly or for such period as is
otherwise agreed to.

"Rules"
means the Valuers, Appraisers and Estate Agents Rules 1986.

"Service Tax"
means the tax imposed by the government in accordance to the Service Tax 1975.

"Signboard"
means a board bearing a sign or notice advertising a property.

"Soliciting"
means to ask for or invite estate agency instructions.

"Stakeholder"
means a firm which holds the money that has been deposited by a purchaser or tenant for
the purchase or rental of a property and would be released to the vendor or landlord upon
completion of all the terms and conditions of the agreement in which he himself claims no
interest.

"Third party"
means any other person who may become linked in some way with a particular estate
agency transaction.

Page 5 of 31
 CODE OF CONDUCT AND ETHICS

1. Knowledge of and Compliance with the Law

Estate Agents shall abide by, and be fully conversant with, the Valuers, Appraisers and
Estate Agents Act 1981 and Rules 1986 and have a sound knowledge of all relevant laws,
statutory provisions and procedures applicable to estate agency practice and/or its
business activities.

2. Continuous Professional Development Program

Estate Agents shall follow a required program for the continuous systematic maintenance,
improvement and broadening of knowledge and skills regarding all laws, proposed
legislations, governmental regulations public policies, current market conditions and
matters affecting the real estate agency practice in order to execute their professional
and technical duties to their Clients and the Public competently.

3. Conduct of Registered Estate Agents in safeguarding the best interests of their

Clients by acting with Fairness and Integrity. Estate Agents shall exercise reasonable care
in adhering to the principles of fair competition by conducting themselves in an impartial
and just manner to all parties involved in an estate agency transaction so as to uphold the
professional status and reputation of the profession.

4. Providing quality Services with Courtesy, Fairness and Integrity

Estate agents are duty bound to render quality services to their Clients with absolute
fidelity, and to practice their profession with devotion to the highest ideals of integrity,
honour and courtesy, and also to conduct their business activities in the spirit of fairness
and goodwill to the Public and to his fellow professionals in the real estate industry.

5. Transparency and Accuracy of Statements

Estate agents shall exercise a reasonable duty of care to protect the Public against error,
fraud, misrepresentation, concealment of pertinent facts and unethical practices in any
real estate transaction for which terms of engagement have been accepted.

6. Personal Interests and Relationships to be Disclosed

Estate agents shall disclose any past, present or foreseeable future interests and/or
relationships, either with the Client or the property being transacted, that could lead to,
or be construed as, possible conflicts of interest, when accepting any terms of
engagement for sale, purchase, let, rent or lease.

7. Acting within the Law

Estate agents shall act within the law and shall avoid selling, transferring, subletting or
otherwise permitting any other person to use any authority to practice issued to them
under the Act or risk facing the most severe of disciplinary sanctions imposed by the
Board.

Page 6 of 31
 MALAYSIAN ESTATE AGENCY STANDARDS

STANDARD 1
THE ESTATE AGENCY OFFICE

1.1.0 INTRODUCTION

1.1.1 As estate agency is a recognized profession and therefore it is necessary

to conduct the business from a proper office. This is essential in order to
provide a high standard of professional service to the public and to
prevent the practice of estate agency on a temporary or ad-hoc basis.

1.2.0 STATEMENTS OF STANDARD

1.2.1 Every firm, including every branch or other office of the firm approved
by the Board shall operate from a proper office.

1.2.2 Any office or branch office of any firm must be under the day to day
control and management of an estate agent unless otherwise allowed
by the Board.

1.2.3 No estate agent shall permit an office administrator or negotiator or any

other person to carry on the duties and functions of an estate agent in
his firm.

1.2.4 An estate agent shall operate an office or a branch only after obtaining
prior written approval from the Board.

1.2.5 The firm may establish a site sales/leasing office where it markets
properties for a developer/client for a specific period of time as
approved by the Board. The firm shall not conduct estate agency
transactions other than the marketing of the developer's /client's
properties from the site sales/leasing office.

1.2.6 Where offices or premises are shared by the firm with another firm/person
not registered as an estate agency firm, the office or premises of the firm
concerned shall be partitioned off, with a separate and distinct
entrance from that of the other firm/person. Service and virtual offices
are not considered as proper offices.

1.2.7 All estate agents shall notify and obtain approval from the Board on any
change of address of any office or branch of the firm at least fourteen
days before such change.

Page 7 of 31
 1.2.8 All offices of the firm shall have proper signages and shall comply with
the following:-

1.2.8.1 The name and registration number of the firm shall be

included

1.2.8.2 All signages shall comply with the relevant local authority's
by-laws and the Board's Rules

1.2.9 Every office and branch of the firm shall display the practicing certificate
of the firm and that of the managing estate agent.

1.2.10 Every office and/or branches of the firm shall maintain proper records
and proper accounting system relating to the estate agency practice.

1.2.11 Each firm shall operate and maintain a separate client's account and
have adequate professional indemnity insurance cover.

1.2.12 It is the responsibility of the firm to ensure that all its employees,
Probationary estate agents and Negotiators are familiar with the
provisions of the Act, Rules, Standards, Circulars and Guidelines and
abide by them at all times.

1.3.0 EXPLANATIONS TO THE STANDARDS

1.3.1 A proper office is defined as follows:-

1.3.1.1 It must be located in an area that is deemed appropriate as an

office under any Local Government Law, by-law, regulation or
guideline;

1.3.1.2 It must be a business premise or a place that has been approved

for commercial use by the relevant authorities;

1.3.1.3 It must not be a place of residence such as an apartment

condominium, a temporary place of abode or a house;

1.3.1.4 It must not be a temporary site sales office or a property gallery

or a project sales office of a particular project.

Page 8 of 31
 MALAYSIAN ESTATE AGENCY STANDARDS

STANDARD 2
REAL ESTATE NEGOTIATORS

2.1.0 INTRODUCTION

2.1.1 Real Estate Negotiators are salespersons engaged by the estate agents
in the listing and marketing of properties for sale/purchase/rent /lease.
They shall be under the direct supervision of the estate agents and shall
be engaged either on a 'contract of service' or on a 'contract for
service'.

2.1.2 Since Negotiators are persons who come into contact with the public in
many estate agency transactions the manner in which they are directed
and supervised by the estate agent is of concern to the Board.

2.1.3 Generally the Board requires the estate agents to ensure that
negotiators assist in the conduct of the practice of estate agency and
are in full compliance with the provisions of the Act, Rules, Standards,
directives, circulars, guidelines and decisions of the Board.

2.1.4 In any disciplinary action against an estate agent a plea in mitigation

founded on the claim that the estate agent was unaware of the
wrongful actions by the negotiator will not be accepted and neither will
it be a defense.

2.1.1 STATEMENTS OF STANDARD

2.2.1 Real Estate Negotiators REN(s) are salespersons who are

employed/engaged by the estate agent's Firm to list and market
properties, negotiate the terms, assist purchasers to procure the
property, the tenant to rent or lease a property and conclude the
transaction.

2.3.2 The estate agent shall employ/engage REN(s) who are trained and have
the competency & skills to represent the firm professionally.

2.3.3 The estate agent shall ensure that the REN(s) are employed/engaged
on a full-time basis and they shall work for only one firm.

2.3.4 Estate agents shall ensure that all REN(s) employed/engaged by them
work under their direction and supervision.

2.3.5 Estate agents shall ensure that all REN(s) furnish to the prospective

Page 9 of 31
 parties all information pertaining to the property including the probable
length of the transaction and should avoid anything that may tend to
mislead a party not represented by them.

2.2.6 Estate agents shall ensure that REN(s) do not when offering a property
for sale, purchase, let or rent, quote a price different from that agreed
upon with the Client.

2.2.7 The Estate agent shall ensure that REN(s) work for only one estate
agency firm at any one time, and usually under a contractual or
employment agreement.

2.2.8 Whilst REN(s) may perform some or all of the necessary negotiations in
an estate agency transaction the estate agent remains responsible to
the Client for carrying out the estate agency instructions.

2.2.9 An estate agent shall provide adequate training to his REN(s) so as to

ensure the display of positive characteristics by his REN(s) in dealing with
the public.

2.3.10 Estate agents shall ensure that a REN(s) negotiating on behalf of the firm
shall be adequately acquainted with all material facts of the property in
discussion.

2.3.11 The commission payable to REN(s) shall not exceed the maximum
prescribed by the Board.

2.3.12 A REN who has any interest, direct or indirect, in any property that is listed
with the Firm must immediately disclose his interest in the property to the
Firm and the Client.

2.3.13 An Estate Agent is not allowed to employ/engage more than the

number of REN(s) as prescribed by the Board.

2.3.14 The estate agent shall maintain a register of all his REN(s) with details
including the date of employment/engagement, mobile phone
number(s), and the date of resignation or termination. The Board shall
be notified of any changes in the status within 2 weeks month from the
date of such occurrence.

2.3.15 The estate agent shall ensure that his real estate negotiators do not sign
any contractually binding documents on behalf of the firm including the
letter of offer, letter of engagement, letter of co- agency arrangement
and flyers.

Page 10 of 31
 2.3.16 The estate agent shall ensure that all REN(s) employed/engaged by him
must be registered with the Board via the Firm and the Board shall issue
the REN with a name tag which must be worn at all times during the
course of doing business.

2.3.17 The estate agent shall ensure that any REN(s) terminated by the Firm or
wishing to leave the firm shall surrender his tag to the firm and the Board
shall be notified in writing of such termination/resignation immediately.

2.3.18 An estate agent who engages any REN(s) who has left his previous
company must apply afresh to the Board with the prescribed fees.

2.3.19 The estate agent shall ensure that REN(s) do not place signages on
properties that are not listed with the Firm, or in any undesirable places.

2.3.20 The estate agent shall ensure that REN(s) do not misrepresent on the
nature of their engagement of the properties listed including advertising
as exclusive agent(s) on signages and other marketing materials.

2.2.0 EXPLANATIONS TO THE STANDARD

2.3.1 The Standards make it clear that at all times REN (s) shall be under the
direct control and supervision of the Estate agent.

2.3.2 These amended Standards supersedes the Boards previous Circulars

namely Circular 10/95, Circular 11 /96 and Circular 2/98.

2.3.3 Circular 1/2013-Mandatory Salary Requirements.

Page 11 of 31
 MALAYSIAN ESTATE AGENCY STANDARDS

STANDARD 3
TYPES OF ESTATE AGENCY

3.1.0 INTRODUCTION

3.1.1 It is important for the client, the estate agent and any other related third
party to be aware of the different types of estate agency appointments
under which properties are listed, sold, purchased, let or rented through
estate agents.

3.1.2 It is equally important that the type of estate agency appointment is

agreed between the estate agent and client prior to the estate agency
appointment.

3.2.0 STATEMENTS OF STANDARD

3.2.1 Before executing the Letter of Engagement/Appointment, the estate

agent shall take reasonable steps to explain and acquaint the client with
the types of estate agency appointments and amplify on the
differences between the various types of estate agency appointments
including its implications and repercussions.

3.2.2 Before accepting an appointment as an exclusive or sole agent, the

estate agent shall enquire from the client confirmation as to whether
there is any current exclusive or sole agency appointments executed
with other firms.

3.2.3 An estate agent upon becoming aware of an exclusive or sole agency

appointment with another firm shall work on a co-agency basis in
respect of that property with the exclusive or sole agent and not with the
client for the duration of the appointment.

3.2.4 When a firm that is not appointed enters into a co-agency arrangement
with an appointed firm, the appointment terms of the listing firm shall be
respected.

3.2.5 Any listings secured through co-agency shall not be passed to another
firm or its branches or subsidiary without the consent of the listing firm.

Page 12 of 31
3.3.0 EXPLANATIONS TO THE STANDARD

3.3.1 For the purposes of 3.2.1 reasonable steps means that at a minimum the
firm must explain to the client the differences between the various types
of agencies and its implications.

3.3.2 The various types of estate agency appointments are as follows:-

3.3.3 Exclusive Aaencv

This refers to the instructions from a client to a single firm to act on his
behalf. The client may make introductions and will leave the closing of
the transaction to the firm. The client must pay the appointed estate
agency firm the agreed fee even if the firm was not the effective cause
of the transaction.

3.3.4 Sole Aaencv

In a Sole Agency appointment, a single estate agency firm is engaged.
The client may however, wish to reserve the right to market and
conclude the deal himself without the services of other estate agency
firms. In this instance, the client and the appointed sole agent shall agree
on the fee based on a pre-agreed formula.

3.3.5 Joint Aaencv

This is where more than one estate agent is appointed and only the
estate agent who closes the deal gets paid. The number of agents
appointed is limited and each is aware of the appointment of the others.

3.3.6 Ad Hoc Basis or commonly Referred to as "Open Listing"

The client may engage an unlimited number of firms on an ad hoc basis
and fees are paid only upon successful conclusion of the estate agency
transaction.

Page 13 of 31
 MALAYSIAN ESTATE AGENCY STANDARDS

STANDARD 4
ESTATE AGENCY FEES

4.1.0 INTRODUCTION

4.1.1 Estate agency fees are based on the Seventh Schedule of the Rules.

4.1.2 In addition to the fees, the estate agent is entitled to claim, again in
accordance with the Seventh Schedule of the Rules, costs of printing,
plans, copies of documents, lithography, travelling, other expenses
actually incurred, cost of media advertisements, signboards, brochures
and other promotional materials.

4.1.3 Estate agency comes under the Law of Contract and estate agency
fees are generally dependent upon the agency agreement between
the firm and the client. It is thus important for the estate agent to always
obtain written instructions from the client before the commencement of
the estate agency assignment.

4.2.0 STATEMENTS OF STANDARD

4.2.1 The first rule in so far as estate agency fees are concerned is that it
depends upon the terms and conditions of the agreement between the
firm and the client.

4.2.2 When there is no agreement, written or otherwise, between the firm and
the client then fees are generally due upon the creation of a binding
contract between the parties to the estate agency transaction.

4.2.3 If the sale and purchase agreement or letting or leasing agreement is

unconditional, the estate agency fee is due upon the signing of the sale
and purchase agreement or letting or leasing agreement.

4.2.4 Where the sale and purchase agreement or letting agreement or

leasing is conditional, the estate agency fee is due when the last of the
conditions are met i.e. when the agreement becomes unconditional.

4.2.5 Notwithstanding 4.2.4, the firm and the client may agree to vary from the
general rule and agree to specific terms and conditions on payment of
fees. Such an agreement must be in writing.

4.2.6 If the client to the Firm aborts the deal either after the signing of an
unconditional Sale and Purchase Agreement or Letting Agreement or

Page 14 of 31
 after a Conditional Agreement becomes unconditional, then the Firm is
entitled to the full estate agency fee.

4.2.7 If the other party to the deal aborts and the Client to the Firm forfeit the
deposit before the signing of the Sale and Purchase Agreement or
Letting Agreement, the Firm is entitled to claim 50% of the full fee or 50%
of the forfeited deposit whichever is the lower.

4.2.8 Where earnest or rental deposit is paid and accepted by the client and
subsequently the transaction is aborted by the client, before the signing
of the sale and purchase agreement or letting agreement, where in the
lease/letting, occupation has not taken place, the firm is entitled to 50%
of its full fees plus all disbursements or 50% of the earnest or rental deposit
plus all disbursements, whichever is the lower.

4.2.9 Where a firm has been appointed/engaged and has been given an
exclusive agency, the firm is entitled to its fees if any introduction made
during the period of its appointment/engagement leads to a
successfully concluded sale or letting after the expiry of the
appointment/engagement provided always it is within a reasonable
period of time and the firm has records of written communication with
its client where the client is aware of the introduction of that party during
the period of appointment / engagement.

4.2.10 Where an exclusive agency has expired it is necessary for the firm to
obtain a fresh appointment/engagement from its client as the previous
appointment/engagement cannot be automatically renewed.

4.2.11 The computation of fees payable for any transaction shall be as per the
Seventh Schedule of the Rules.

4.2.12 The firm may only deduct its fees from the earnest deposit or rental
deposit from its client's account after the parties have signed the sale
and purchase or letting or leasing agreement provided always that it is
an unconditional agreement and the client has given prior written
consent.

4.2.13 The firm may also claim for disbursements actually incurred by it during
the course of its appointment/engagement and in furtherance of its
service to the client, in accordance with the Seventh Schedule of the
Rules provided always it is substantiated with supporting documents.

Page 15 of 31
4.3.0 EXPLANATIONS TO THE STANDARD

4.3.1 Statement 4.2.1 I would be in line with the common law on agency.

4.3.2 A binding contract shall be when a sale and purchase or letting or

leasing agreement has been signed.

4.3.3 The term Agreement referred to in item 4.2.3 and inferred to in item 4.2.4
includes a written agreement to enter into a contract.

4.3.4 An example of an unconditional agreement is where no approvals are

required from the Foreign Investment Committee, the Securities
Commission, State Excos, shareholders or other relevant authorities or
bodies.

4.3.5 Determining Sales Consideration

In determining the fees for any sales which are not explicitly stated the
following shall apply:-

a) The firm shall be entitled to claim for fees based on the total sales
consideration (in cash, company shares or in kind) which shall include
sums paid for all assets and chattels including furniture, fittings and
household appliances.

b) In the case of property swap, the sales price shall be based on the
agreed consideration or the market value whichever is higher.

c) In the case of a joint venture, the fees shall be based on the market
value of the property or the joint venture consideration, whichever is
lower at the date of the signing of the joint venture agreement.

4.3.6 Determining Rent

a) The term rent refers to the gross rent which is inclusive of:-

i) Service/maintenance charges.
ii) Furniture, fittings and household appliances that are rented together
with the property.

b) First year's rent refers to the first 12 months' rent receivable by the landlord
disregarding any rent-free period.

c) Where a premium is payable under the letting or lease, the amount of pro-
rated premium shall be added to the rent for determining the fee payable.

Page 16 of 31
 MALAYSIAN ESTATE AGENCY STANDARDS

STANDARD 5
TERMS OF ENGAGEMENT

5.1.0 INTRODUCTION

5.1.1 The terms of engagement given by the client to an estate agency firm
dictates the scope of its authority and it is therefore important that such
terms are precise in language and should never be ambiguous.

5.1.2 Upon receiving the terms of engagement, the firm is obliged to provide
the client with the required services as stipulated therein. The firm shall
take all reasonable steps to ensure pertinent facts concerning the
property are well within its knowledge.

5.2.0 STATEMENTS OF STANDARD

5.2.1 Estate agency engagement can be either verbal or written, however

firms are encouraged to obtain written terms of engagement.

5.2.2 Terms of engagement can either be in the form of written terms and
conditions from the client or written confirmation of agreed terms by the
firm. Written terms and conditions from the client refers to a formal and
signed letter or document from the client. A written confirmation on the
other hand refers to a formal letter or document from the estate agency
firm sent to the client and confirmed by the client.

5.2.3 The estate agent's engagement shall clearly state the firm's name, a
clear identification of the subject property, the terms and conditions of
the engagement and the intended transaction.

5.2.4 Subsequently to the agreement on the terms and conditions of the

engagement and the transaction, if there are any variations to the said
terms and conditions it shall be agreed upon by the client.

5.2.5 All estate agency firms are encouraged to use the Board's Standard
Forms.

5.2.6 In line with Rule 97 and when obtaining the terms of engagement from
the client, the estate agency firm shall not, where another estate
agency firm has been exclusively appointed or appointed as a sole
agent, as evidenced by a signboard or any other form of advertisement
in any media referring specifically to the property:-

Page 17 of 31
 5.2.6.1 solicit for the same business;
5.2.6.2 accept terms of engagement without written verification from
the previous estate agency firm that its appointment has been
terminated.

5.2.6.3 the appointed firm is required to inform all other firms that it has
been exclusively appointed or appointed as sole agent by the
client.

5.2.6.4 all exclusive and sole agency appointments shall specify the
period of validity of the appointment.

5.2.7 All firms are encouraged to obtain exclusive agency appointments in

writing from the client whenever possible and to point out very clearly to
him the rights and responsibilities of each party arising out of the
arrangement.

5.2.8 An estate agent must not directly harass any person in order to gain
instructions and neither shall he repeatedly try to gain instructions in a
way likely to cause offence.

5.2.9 If the Client withdraws his terms of engagement of the firm, the firm must
advise the client of any circumstance in which the client may have to
pay more than one fee and the probability of any continuing liability on
the client.

5.2.10 An estate agent shall not give an opinion of value of a property in

order to obtain an engagement. An estate agent is only allowed to
furnish the selling price based on a comparative market analysis of
transacted values in the area or as evidenced in the JPPH/NAPIC
Reports.

5.3.0 EXPLANATIONS TO THE STANDARD

5.3.1 Rule 97 reads:-

"A registered estate agent shall not engage in any practice or take any
action inconsistent with the agency of another estate agent".

5.3.2 Written terms of engagement can either be in the form of written terms
of engagement from the client or written confirmation of the terms of
engagement by the estate agent. Written terms of engagement from
the client refers to a formal and signed letter or document of
engagement from the client that is addressed and communicated to
the estate agent. A written confirmation of engagement on the other
hand refers to a formal and signed letter or document that is prepared

Page 18 of 31
 by the estate agent and sent to the client and confirmed by the client
as to the agreed terms and conditions.

5.3.3 Terms and conditions of engagement refers to the agreed terms and
conditions appointing the estate agent whist terms and conditions of the
transaction refers to agreed terms and conditions upon which the
property will be purchased, sold, secured for rent or lease or let.

5.3.4 For the purposes of item 5.2.8, the term "harass" means acting in a
threatening or oppressive manner likely to cause alarm, annoyance
and/or distress.

Page 19 of 31
 MALAYSIAN ESTATE AGENCY STANDARDS

STANDARD 6
ADVERTISEMENT/MARKETING

6.1.0 INTRODUCTION

6.1.1 Advertising the property for sale, purchase, letting or renting is an

important aspect of the work of an estate agency firm and this aspect
of the work requires essentially that the advertising is done tastefully,
professionally, with no misrepresentation and must not mislead the
public as to the facts of the property.

6.1.2 Estate agents should recognize that the profession needs to maintain its
goodwill with the public and it is imperative not to do harm to the
profession by advertising in an unbecoming manner or without good
taste.

6.2.0 STATEMENTS OF STANDARD

6.2.1 Estate agents must ensure that advertisements and public statements
shall not bring the profession into disrepute and that they are responsible,
accurate and not sensational in content.

6.2.2 An advertisement shall comply with the following conditions:-

6.2.2.1 it shall contain the firm's name, telephone numbers and E-

number;

6.2.2.2 it shall contain no comparative or superlative description of

the practice;

6.2.2.3 The advertiser makes no claim to be an expert in any

specialized field;

6.2.2.4 The published information must be factual.

6.2.3 The firm is permitted to insert any announcements or felicitations in the

mass media, electronic or digital media.

6.2.4 The estate agent shall take all reasonable steps to ensure that
advertisements placed by him are accurate, factual and not
misleading.

6.2.5 The estate agent shall only replace or remove another estate agency
firm's signboard from any property provided always he has the written

Page 20 of 31
 consent of the client and has duly communicated this information to the
other estate agency firm via a letter.

6.2.6 All advertisements made by the firm in promoting the sale, purchase,
letting, leasing or renting of the property should be accurate factual and
not misleading.

6.2.7 The advertisement should be tastefully done.

6.2.8 The advertisement should not be written in glowing terms, which

overstate the virtues of the property.

6.2.9 Advertisements should be placed in proper places as allowed by the

relevant authorities.

6.2.10 Flyers are permitted under the following conditions:-

6.2.10.1 The contents in the flyer shall specify the types of property
for sale/rental/lease or wanted.

6.2.10.2 The flyer shall be produced in a firm's letterhead which

bears the name registration number, the telephone
number, address of the firm and shall carry the signature of
the estate agent.

6.2.10.3 Every flyer must carTy the following statement:- "Persons

responding to this flyer are not required to pay any estate
agency fee whatsoever for properties referred to in this flyer
as this firm is already retained by a particular principal".

6.2.11 A firm teaming up with foreign developers, estate agents or owners to

sell foreign properties must ensure that they comply with Standards
6.2.12 and 6.2.13.

6.2.12 The local firm must obtain written permission from the Board before the
sale or marketing of the foreign property.

6.2.13 The minimum fee chargeable is 1 % of the Sale Price.

6.2.14 The local firm must have adequate knowledge of the property and the
foreign country's framework of the real estate law and practice before
it accepts the assignment.

6.2.15 The local firm must be accorded due prominence in all advertisements
and shall play a major role by actively participating in the transaction.

Page 21 of 31
 6.2.16 The approval number given by the Board shall be prominently
displayed in all advertisements.

6.3.0 EXPLANATIONS TO THE STANDARD

6.3.1 Factual advertisements can have modem marketing aspects.

6.3.2 Should not overstate/oversell the property means basically that the firm
should, with the use of as few words as possible paint a word picture of
the advantages to be gained by owning a particular property.

6.3.3 Immediately means as soon as is reasonably practicable in the

circumstances.

6.3.4 A cardinal principal is the need for care and accuracy on the firm's part,
in what it says and what it writes, not only to be true but not to be
misleading by being incomplete or biased on the particular subject and
if it is in doubt to leave it out.

6.3.5 The firm should consider it worthwhile, as a precaution, sending the draft
particulars to the clients and asking them to advise them urgently if they
have reason to believe that any statement is inaccurate or misleading.

Page 22 of 31
 MALAYSIAN ESTATE AGENCY STANDARDS

STANDARD 7
CO-AGENCY PRACTICE

7.1.0 INTRODUCTION

7.1.1 Co-agency is co-operative agreement between a listing agency firm

and a co-agency firm who introduces a prospective purchaser/tenant
in the sale/rental or leasing of a property.

7.1.2 The terms and conditions of the working relationship between both
parties are specified clearly. Similarly the fees chargeable by each party
are also pre-agreed upon.

7.2.0 STATEMENTS OF STANDARD

7.2.1 Both the co-operating firms have to agree in writing on the terms of the
co-agency arrangement before the commencement of any work.

7.2.2 The co-agency agreement will terminate at the expiry of the co- agency
period or on the expiry of the listing or on mutual agreement between
the co-operating firms.

7.2.3 The co-agency firm is not permitted to solicit for the same agency
appointment that is the subject of the co-agency agreement during the
period of the co-agency agreement.

7.2.4 After the expiry of a co-agency agreement the co-agent shall be at

liberty to accept the listing directly from the vendor/landlord or
approach the vendor/landlord without having to inform or share his fees
with the listing agent.

7.2.5 In a co-agency arrangement, the earnest deposit paid by the purchaser

to the co-operating agent may be held by either the listing agent or the
co-operating agent.

7.2.6 The standard fee sharing between the listing firm and the co- agency
firm shall be in the ratio of 50:50 percent unless otherwise agreed
between both the co-operating agencies.

7.2.7 Where there is a variation from the standard fee sharing aggregate then
that variation should be agreed upon in writing. Similarly, where a
transaction is aborted, a 50:50 percent split of the abortive fee or
forfeited amount applies i.e 50% to the vendor/landlord, 25% to the listing
agent and 25% to the co-operating agent.

Page 23 of 31
 7.2.8 All co-agency agreement can be initiated by either party and shall be
signed by the respective firms.

7.2.9 All details pertaining to the property, the fees and the mode of payment
by the client shall be disclosed to the co-agency firm upon entering into
a co-agency arrangement.

7.3.0 EXPLANATION TO THE STANDARDS

7.3.1 The listing firm shall:-

7.3.1.1ensure that any viewings, correspondences or dealing with the

property has to be through the listing firm;

7.3.1.2 ensure that the co-ageny firm is paid the agreed fees promptly
when due;

7.3.1.3 not contact the prospective purchaser/tenant without the co-

agent's consent and knowledge;

7.3.1.4 keep the co-agency firm informed of the progress of the

negotiation/transaction; and

7.3.1.5 endeavour to take all necessary steps to collect outstanding

fees as soon as possible.

7.3.2 The co-agency firm shall;

7.3.2.1 ensure that any viewings, correspondences or dealings on

the property shall go through the listing agent;

7.3.2.2 keep the listing firm informed on the progress of the

transaction;

7.3.2.3 not advertise or promote the property under the co-

agency agreement unless otherwise agreed upon by the
listing firm;

7.3.2.4 not contact the vendor/landlord directly whilst the co-

agency arrangement is still in force;

7.3.2.5 not put up its own signboard on the property which is under
the co- agency agreement unless otherwise agreed upon
by the listing firm; and

7.3.2.6 if the listing firm has already shown the property to the

Page 24 of 31
 spouse, employee, proxy, nominee or any representative of
the prospective buyer/tenant, procured by the co-agency
firm, the co-agency firm shall not be entitled to the agreed
fee, unless the identity or name of the spouse, employee,
proxy, nominee or any representative of the
prospect has been disclosed to the listing firm in the first
instance.

7.3.3 For the purposes of the treatment of the earnest deposit under clause
7.2.5 the following shall apply:-

7.3.3.1 the earnest deposit shall be transmitted to the vendor or

shall be treated as part of the professional fee payable to
the estate agent upon the successful conclusion of the
transaction;

7.3.3.2 the letter of offer shall clearly identify the agent who shall
hold the earnest deposit i.e. either the listing agent or the
co-operating agent.

Page 25 of 31
 MALAYSIAN ESTATE AGENCY STANDARDS

STANDARD 8
VIEWING/INSPECTIONS

8.1.0 INTRODUCTION

8.1.1 Viewing refers to the inspection of the property by the prospective

parties before buying or renting a property.

8.1.2 Under the law of agency the agent must promote the interests of the
client. The Board additionally requires that this promotion of the client's
interest is to be applied in fairness to all parties.

8.2.0 STATEMENTS OF STANDARD

8.2.1 Upon commencing an instruction the firm should entertain queries

regarding the property by any prospective party.

8.2.2 The estate agent shall not, without first obtaining approval of the Client
place at a property any signboard advertising the property "For Sale",
"To Let" or "For Lease".

8.2.3 The estate agent is encouraged to document every viewing

engagement by using a Viewing Form, preferably the Board's Standard
Viewing Form, and have it signed by the prospective parties.

8.2.4 The estate agent shall be fair and just to all parties in negotiations and in
drafting or assisting in drafting of all letters, forms and agreements.

8.2.5 In cases of co-agency, the viewings and due documentation of the

property must at all times be with the knowledge and under the overall
supervision of the listing agent.

8.2.6 An estate agent, unless he is a registered valuer, shall not communicate

in writing, to any person, an opinion of value of a property, as it may be
construed as a formal valuation within the meaning of the provisions of
the Act and Rules.

8.2.7 An estate agent shall not make any factually unsupportable statement
of the property listed for sale, purchase, letting or renting.

Page 26 of 31
8.3.0 EXPLANATIONS TO THE STANDARD
8.3.1 Standard 8.2.2 should rid of the profession of "poster wars" that is the
bane of the profession at present.

8.3.2 Standard 8.2.3 ensure that in every property inspection a record of

details of viewing by prospective parties is available.

8.3.3. An example of a factually unsupportable statement would be where

the estate agent represents that the adjacent land is for open space
whereas this statement was made without adequate knowledge or
without checking with the relevant authorities.

Page 27 of 31
 MALAYSIAN ESTATE AGENCY STANDARDS

STANDARD 9
CLIENT'S ACCOUNTS

9.1.0 INTRODUCTION

9.1.1 All estate agents by the very nature of their practice hold money belonging to
other people. It is therefore mandatory that there should be Standards dealing
with the estate agents' accounts and the handling of client's money. The
purpose of maintaining a client's account is to ensure that monies entrusted to
registered persons are properly recorded in the accounts maintained and
monitored by the firm.

9.1.2 The fiduciary duties of the estate agent are matters the Board views very
seriously. Accordingly, breach of the Act, Rules and Standards in respect of
fiduciary obligations will be dealt with severely by the Board.

9.2.0 STATEMENT OF STANDARD

9.2.1 The estate agent shall keep at least one client's account.

9.2.2 Every estate agent who receives client's money shall without delay pay
such money into the client's account.

9.2.3 The firm shall not be obliged to pay into a client's account monies held
or received by them:-

9.2.3.1 in the form of cash and is without delay paid in cash in the
ordinary course of business to the client or a third party.

9.2.3.2 which is received in the form of a cheque or draft in the

ordinary course of business payable to the client or third
party.

9.2.4 The estate agent shall only withdraw monies from the client's account in the
circumstances as laid down in Rule 53.

9.2.5 Every estate agent who maintains an interest bearing client's account, shall
account to such client for the interest earned by such an account.

9.2.6 Every estate agent shall have an insurance cover for the client's money.

9.2.7 The estate agent shall once in each period of 12 months deliver to the Board

Page 28 of 31
 an auditor's report issued by a firm of registered professional auditors.

9.2.8 The estate agent must be able to account for all monies held on behalf of a
client.

9.2.9 The estate agent shall not deduct any cost or charges from any client's
money unless the client has given written consent to do so.

9.2.10 No monies shall be drawn from a client's account except by a cheque drawn
in favour of the vendor, purchaser, landlord or tenant or any other party as
duly authorized by the client.

9.2.11 Any firm having two or more places of business (i.e. branches or subsidiary
companies) shall produce:-

9.2.11.1 Separate certificates for separate accounting periods and the

auditor's report may be adopted in respect of each place of
business; and

9.2.11.2 The auditor's report(s) for each year shall cover all clients' money
held or received by the estate agency firms.

9.2.12 No sum shall be transferred from the account of a client to that of another
except in circumstances in which it would have been permissible under the
Rules to have withdrawn from a client's account the sum transferred from the
first client and to have paid into a client's account the sum transferred to the
second client.

9.2.13 Every signatory to a client's account must be one or more of the following:-

9.2.13.1 An estate agent in the case of a sole-proprietorship;

9.2.13.2 A partner in a case of a partnership; or

9.2.13.3 A director in the case of a body corporate.

9.2.14 The Board may appoint any registered estate agent to operate the client's
account of a deceased estate agent who had operated as a sole
proprietor.

Page 29 of 31
9.3.0 EXPLANATIONS TO THE STANDARD

9.3.1 It is absolutely necessary that the client's money and the operating
account should be kept separate.

9.3.2 Without delay means within a short period as is reasonably practicable

in the circumstances from the moment from what is to be done can
reasonable be done.

9.3.3 A register of all clients' accounts must be maintained. These accounts

and records must be such as to show in any particular case:-

9.3.3.1 the amount received;

9.3.3.2 the name and address of the payer;

9.3.3.3 whether the sum received is a contract or a pre¬contract

deposit and in any case, whether it includes any sum in
respect of a connected contract;

9.3.3.4 the capacity in which the sum is received;

9.3.3.5 where different from 9.3.3.4 above, the identity of the

person for whom the sum is being received;

9.3.3.6 date of receipt

9.3.4 Adequacy of cover means if a claim is made against the firm the insurance
must be sufficient to meet the said claim.

Page 30 of 31