Mumbai real estate pros miffed over withheld brokerage fees, boycott imminent

On July 23, RERA member, Mahesh Pathak passed an order dismissing a complaint filed by broker Santosh Gawade seeking redressal for non-payment of brokerage fees

Popular real estate influencer-cum-consultant Rafiq Merchant took to Instagram on July 9, 2024, blaming actress and Bigg Boss contestant Divya Agarwal for allegedly withholding his one per cent brokerage fee of ₹2.39 lakh due to him for the sale of her apartment worth ₹2.39 crore in Lodha Bel Air, Jogeshwari West.

Brokers’ fees have been denied by clients that include large listed companies.(ShutterStock)

Merchant’s is not a singular case. Like him, scores of brokers’ fees have been denied by clients that include large listed companies. The matter intensified with a recent order by the Maharashtra Real Estate Regulatory Authority (MahaRERA).

On July 23, RERA member, Mahesh Pathak passed an order dismissing a complaint filed by broker Santosh Gawade seeking redressal for non-payment of brokerage fees on grounds that it was “non maintainable”. The order underscored that MahaRERA has no jurisdiction to try such disputes, as there is no provision for it under the RERA Act.

Gawade, in his complaint filed before MahaRERA last year had alleged that developer Glider Buildcon Realtors Pvt Ltd had not “paid him his brokerage fees amounting to ₹14.8 lakh for sale of two flats”. The registered MahaRERA agent sold two 3BHKs valued at ₹7.41 crore each in South Tower, in Mahalaxmi, in March, 2022, but he received the two per cent commission for only one unit. For the second sale, he alleged, the company tagged someone known to the management as the ‘official broker’ for the deal and therefore, refused to pay him.

The RERA order dismissed his plea stating “there is no explicit provision under RERA under which such brokerage fees along with interest as sought for by the complainant can be granted by the MahaRERA”.

When HT reached out to the developer, a spokesperson said, “Santosh Gawade has approached multiple forums where he failed to get any relief. His plea was also dismissed by MahaRERA on the issue of maintainability of the complaint.”

“Where do we go? We are saddled with all kinds of responsibilities including mandatory registration under the RERA Act but we have no safeguards or protection. Non-payment of brokerage to agents is rampant in our industry,” said Merchant. “RERA does not protect brokers, which compelled me to turn to social media to present my case. Thousands of brokers reached out after I posted on X and Instagram, saying they were going through similar ordeals themselves.”

Agent Saket Rane has met with a similar fate. He is fighting for his commission from Guardians, the agency appointed by Sheth Realty to sell its luxury apartments in Marina One, Marine Lines. Rane alleged he sold two flats for Guardians for which he has not been paid the “2.5 per cent commission amounting to ₹40 lakh promised by the agency on behalf of Sheth Realty”. Jayesh Rathod, co-founder, Guardians, however denied Rane’s claims, calling them “untrue”.

Given the drawbacks, a backlash was waiting in the wings. Real estate agents in Mira-Bhayandar region have decided to boycott an agency as several brokers were not paid their dues. “The response was phenomenal,” said Dr Ajay L Dubey, president of the Foundation of Mira-Bhayandar Property Dealers Association, a local body of over 3500 brokers and stakeholders.

Meanwhile, a delegation of SMART, an agency fighting for the rights of brokers in South Mumbai is scheduled to meet chief minister Eknath Shinde and RERA chief Ajoy Mehta soon urging steps be taken to protect brokers’ interests. “They are an important link in the builder-customer chain,” said SMART secretary Jimmy Yezdi Panthaki.

Both Rane and Gawade have approached SMART to intervene on their behalf. Panthaki has promised “representation on behalf of the two brokers to the respective developers, requesting redressal”.

Prakash Nichhani, vice president, SMART, said, “MahaRERA must ensure that rights of brokers are protected. The tagging period of agents must be extended from 60 days to six months. This will ensure that when a broker brings a client, no other person is roped in after the 60 day period is over nor does the company enter into a direct sale with the said customer.”

Shirish Deshpande, chairman, Mumbai Grahak Panchayat, said, “Under the RERA Act, the regulatory authority has the power to intervene and settle any dispute that may arise among any of the players – the consumer, developer and broker. They cannot reject such pleas.” He added, Santosh Gawade has the option of “challenging this order in MahaRERA’s Appellate Tribunal itself, as also filing a civil suit”.

Bombay high court advocate Dr Harshul Savla said, “Like any other entrepreneur, brokers too should have a legal counsel who can draw up legally binding contracts which should be pre-signed by all the parties before any transactions are made.” He added, “The role of MahaRERA is also critical, as RERA is mandated to bring about regulation and development in the real estate sector. MahaRERA should draw up SOPs and guidelines in this regard.”