Surety Bond For Real Estate Brokers In The Philippines
Real estate brokers play a crucial role in the buying and selling of properties in the Philippines. They act as intermediaries between buyers and sellers, and help facilitate the transaction process. However, being a real estate broker also comes with a great responsibility. To ensure that they are able to carry out their duties ethically and professionally, the Philippine government requires real estate brokers to obtain a surety bond.
What is a Surety Bond?
A surety bond is a type of insurance contract between three parties: the principal (real estate broker), the surety (insurance company), and the obligee (government or client). It acts as a guarantee that the principal will fulfill their obligations and responsibilities in a professional and ethical manner. If the principal fails to do so, the surety will pay damages or losses incurred by the obligee.
Why Do Real Estate Brokers Need a Surety Bond?
Real estate brokers are entrusted with sensitive information and are expected to act in the best interest of their clients. They are responsible for ensuring that all transactions are legal, ethical, and transparent. A surety bond helps protect the public from any misconduct or negligence on the part of the real estate broker. It also helps ensure that the broker will fulfill their financial obligations, such as paying taxes and fees.
How to Obtain a Surety Bond?
Real estate brokers can obtain a surety bond from any reputable insurance company in the Philippines. The bond amount varies depending on the type of real estate broker license:
- Real Estate Broker - Php 120,000
- Real Estate Appraiser - Php 100,000
- Real Estate Consultant - Php 50,000
The premium for the surety bond is usually 1-2% of the bond amount and is paid annually. The insurance company will require the real estate broker to submit certain documents, such as their license, financial statements, and background information, before issuing the bond. Once the bond is issued, the real estate broker can then renew their license with the Professional Regulation Commission (PRC).
What Happens if a Real Estate Broker Violates Their Obligations?
If a real estate broker violates their obligations, the obligee can file a claim against the surety bond. The surety will then investigate the claim and determine if it is valid. If the claim is found to be valid, the surety will pay the obligee the amount of damages or losses incurred. However, the real estate broker will be required to reimburse the surety for the amount paid out, plus any legal fees and expenses incurred.
Conclusion
A surety bond is an important requirement for real estate brokers in the Philippines. It helps ensure that they carry out their duties ethically and professionally, and protects the public from any misconduct or negligence. Real estate brokers should obtain a surety bond from a reputable insurance company and make sure to fulfill their obligations to avoid any penalties or legal consequences.