With the Saeima approving amendments to the Law on the Activities of Real Estate Brokers in the final reading, the requirements for activities of real estate brokers in Latvia have been clarified, ensuring more efficient supervision of the professional activities of these persons, as well as promoting the provision of stable, safe and reliable brokerage services. Amendments to the Law are yet to be announced by the President of Latvia.
The provisions of the law in force so far require real estate brokers to be included in the register of real estate brokers and participate annually in upskilling activities. If a real estate broker has not upskilled, the existing regulation requires the exclusion of the real estate broker from the register of real estate brokers. At the same time, the regulation did not include the requirement for upskilling if, after exclusion, the real estate broker wishes to re-register. Consequently, there was a situation where real estate brokers often deliberately failed to comply with the statutory requirement to attend upskilling activities.
The amendments to the Law provide for an additional mechanism for restricting the activities of real estate brokers who have not upskilled during a calendar year. The Law contains a provision that if a real estate broker has not fulfilled the requirements for upskilling, the real estate broker will have the possibility to be reinstated in the register after exclusion from the register of real estate brokers if the requirements regarding the upskilling activity are met. In addition, the Law has been supplemented by a provision, which obliges the real estate broker to upskill if the exclusion from the register of real estate brokers was on the basis of an application by the real estate broker, providing that the upskilling activity is to be attended if the real estate broker wishes to re-register with the register of real estate brokers.
According to the State Revenue Service, there are approximately 1450 real estate brokers – performers of economic activity – in Latvia, but as of 10 May 2023 781 real estate brokers were registered in the register maintained by the Ministry of Economics, thus approximately half of the real estate brokers in Latvia are not included in the register of real estate brokers, but provide brokerage services, and no penalties are imposed on these service providers. In addition, the State Revenue Service has detected cases in inspections where natural persons provide brokerage services without registration of economic activity with the State Revenue Service, thus it is difficult to supervise the services provided by such persons.
The amendments to the Law also provide that a natural person may register in the register of real estate brokers only if the person has registered his or her economic activity with the State Revenue Service.
The imposition of an administrative penalty (warning or fine) on those real estate brokers who provide brokerage services without registration in the register of real estate brokers has also been defined.
Finally, the amendments to the Law also reduce the administrative burden on merchants in this sector. Currently, the Law provides that by January 31 each year real estate brokers must submit information to the Ministry of Economics regarding brokerage service agreements entered into in the previous calendar year, indicating their number and the amounts of transactions. Given that real estate brokers, as performers of economic activities, are required to provide different reports to the State Revenue Service, this requirement has been removed from the Law.
Detailed amendments the Law on the Activities of Real Estate Brokers approved by the Saeima may be viewed on the website of the Saeima.
As it is known, on 1 August 2020, the Law on the Activities of Real Estate Brokers entered into force, which regulates the legal bases for the professional activities of real estate brokers and ensures the supervision of their professional activities in order to prevent money laundering, the financing of terrorism and proliferation and to promote the provision of stable, secure and reliable brokerage services. The Law provides that a real estate brokers must insure the civil liability for their professional activity. Regulations of the Cabinet of Ministers No. 602 of 29 September 2020 “Rules of Insurance of Civil Liability of Real Estate Brokers for Professional Activity” provide for the minimum annual liability limit for the insurance agreement and the minimum risks to be insured by the real estate broker. At the same time, the Law provides that as of 1 July 2021, only persons included in the Register of Real Estate Brokers will be allowed to provide brokerage services. The register is publicly available on the website of the Ministry of Economics.