Real Estate Board takes aim at non-compliant banks
The Real Estate Board of Jamaica is developing penalties as a way to incentivise the banking sector to report the withdrawals from escrow accounts that developers are required to establish to safeguard client funds.
Chief Executive Officer Sandra Watson Garrick said none of the regulated financial institutions were compliant with the requirement to report activity on the accounts. It contravenes the intent of the measure, which, she said, is to keep developers honest and protect the purchasers of property.
"When it burns you in your pocket or in your reputation we will have compliance," Watson Garrick told the bankers at the annual Anti-Money Laundering/Counter-Financing of Terrorism Conference hosted jointly by the Jamaica Bankers Association and the Jamaica Institute of Financial Services.
Penalties would soon be introduced to reverse the era of non-compliance, she said, but did not specify what they would be.
The Real Estate Board as a monitor of developments requires developers to lodge the deposits made by purchasers on their units ahead of delivery.
"Each purchaser's deposit must be lodged in an interest-bearing or escrow account. The developer is required to invest some money in the development then get a surveyor to value that work," said Watson.
The institution hosting the escrow account must see the actual quantity surveyor's certificate. And the developer can only withdraw up to 90 per cent of that certificate.
"At the time the withdrawal is done, a notice of the withdrawal should be sent to the Real Estate Board," Watson Garrick said.
In its last published report for fiscal year 2015-16, the Real Estate Board said it oversaw the restitution of 1,167 purchasers' deposits in the amount of US$59.95 million and $7.3 billion. Depositors are repaid in the currency used for the down payment on property.
"Without the board's charge, those purchasers would have lost 100 per cent of their deposits," the agency said in its annual report.