Introducing Criminal Penalties, Fines, and Restrictions for Unauthorized Real Estate Agents in Ukraine

Ukraine Takes Steps to Regulate Real Estate Brokerage

According to Radiotrek — Світ: Ukraine is entering a new phase in regulating real estate agents with a recently submitted bill to the Verkhovna Rada. This legislation proposes imposing criminal liability on individuals conducting unauthorized brokerage activities in the property market. Spearheaded by a group of deputies including Igor Vasilyev, Oleksandr Kachura, Olena Shuliak, Mykhailo Sokolov, Viktoria Reznikova, Pavlo Frolov, and Oleksandr Horobets, the bill aims to formalize the sector and crack down on tax evasion.

Currently, Ukraine lacks a dedicated law governing real estate agents, as well as any formal licensing or legal framework for property sales and rentals. Most real estate professionals operate as sole proprietors, freelancers, or employees of agencies and pay taxes under either the general or simplified tax systems. As expert Valentin Dupak points out,

“While real estate specialists called realtors do exist in Ukraine, they effectively have no legal recognition.”

Amendments Proposed to the Criminal Code

The draft law No. 16192 suggests adding Article 203-3 titled "Illegal Mediation Activities in the Real Estate Sector" to the Criminal Code of Ukraine. This article introduces fines and restrictions for those providing brokerage services without proper status or contractual agreements. Specifically, the penalties under Article 203-3 include:

• Performing brokerage services without being a licensed real estate agent and/or without a written contract may result in fines ranging from 1,000 to 2,000 tax-free minimum incomes and a one-year ban on working in the sector.
• If such activities are carried out in collusion or for profit-driven motives, fines increase to between 2,000 and 4,000 tax-free minimum incomes, along with a three-year prohibition from professional practice.

Key terms like "real estate brokerage services," "real estate agent," "brokerage service agreement," and "client" are defined by Ukraine's Law on Protecting Housing and Other Rights of Individuals and Legal Entities in Receiving Brokerage Services. This new regulation will cover various real estate professionals, including realtors, brokers, intermediaries, independent consultants, and agencies.

The bill has quickly passed the relevant committee in the Verkhovna Rada, highlighting its importance and timeliness for Ukraine's real estate sector. This move is poised to be a significant milestone toward formalizing the market and safeguarding consumer rights in property transactions.

Should bill No. 16192 be enacted, it will fundamentally transform Ukraine’s real estate market by establishing criminal accountability for illegal brokerage activities. This framework is expected to reduce fraud, enhance transparency, and create fairer conditions for all market participants, ultimately benefiting both consumers and legitimate real estate professionals.