Act 242 After 2018: The Law Updated the Players—But Not the Playbook
When Parliament passed the Valuers, Appraisers, Estate Agents and Property Managers (Amendment) Act 2017 [Act A1550], it was the most significant update in decades. Coming into force on 2 January 2018, it expanded Act 242 to include Property Managers and updated the Board’s scope.
Seven years later, practice has sprinted ahead; the statue is still jogging in 1981 shoes.
While the 2018 amendments broadened who the law regulates, they didn’t fundamentally update how the law regulates. Today’s industry operates as a network of collaborative, independent contractors who co-broke deals digitally, yet the legal framework remains optimised for traditional hierarchies and single-agency deals.
Malaysia doesn’t just need broader coverage—we need a Co-operation Code that recognises role-based work, digital proof, partnership structures, and higher professionalism.
A Note of Intent
This article is a constructive discussion paper to advance the Malaysian real estate profession. It acknowledges the vital work of BOVAEP (the Board) and offers this analysis to support a legal environment that fosters fairness, innovation, professionalism, and sustainable growth for all stakeholders. Any proposed statutory language is model wording to invite critique—not a final draft.
1) What the 2018 Amendments Fixed—and Missed
What 2018 Fixed
- Brought Property Managers explicitly under Act 242.
- Updated the Act’s title and the Board’s scope accordingly.
What 2018 Missed (the Core Gap)
The amendments did not update how agent relationships and deals are structured. The law still assumes:
- Salaried negotiators under direct supervision,
- Single-agency deal ownership,
- Paper-era processes.
But the market now runs on:
- Recruitment-based networks of independent contractors,
- Role-based collaboration (referrer, verifier, first-viewing agent, closer, transaction/finance liaison),
- Digital ERPs that record the proof of contribution that actually earns commission.
Bottom line: the law guards titles and supervision, but not the verified co-operation that gets modern deals done.
2) Did the 2018 Reform Rewrite the Law? Mostly, It Carried 1981 Forward.
Act A1550 was important—but it largely preserved the 1981 architecture. The backbone remains licence-centric and supervision-first.
Carried forward (with tweaks):
- Licence-and-discipline architecture (registers, eligibility, renewals, offences, inquiries).
- Principal–REN supervision model (RENs tethered to a principal’s oversight).
- Practice/advertising controls framed for a paper-era workflow.
Missing (the modern gap):
- Statutory recognition of co-broking layers (external, internal, recruitment).
- Independent-contractor model in primary law (today acknowledged mainly via circulars).
- Role-based commission defaults (weights, proof, override clarity).
- Digital evidence standards (presumptive legal weight for ERP audit trails).
- Fast split-dispute resolution (a specialised co-broking tribunal with 14–30 day decisions).
Hence the clash: practice modernised; structure stayed pre-digital.
3) Regulatory Adaptation—Helpful Policy, Not Statute
After 2018, the Board issued Circular No. 5/2018, recognising Contract-for-Service arrangements for RENs. That was crucial regulatory leadership—but a circular is policy, not law.
Result: the dominant operating model—commission-only independent contractors collaborating across roles—still lacks statutory protection for overrides, role-based shares, and digital proof.
4) Years of Accelerated Change, Little Legal Evolution
Since 2018:
- Co-broking evolved from occasional to fundamental.
- ACN-style models (splits by verified contribution) emerged as the fairness standard.
- Digital verification and audit trails became routine.
- Pandemic pressures forced industry-wide digital adoption.
Practice keeps evolving; the scaffolding hasn’t.
5) The Growing Protection Gaps
| Area | Today’s Reality | Covered Today (Act 242) | Still Missing | Impact |
|---|---|---|---|---|
| Recruitment Layer Co-broking | Contractor networks with overrides | Licensing, supervision, discipline | Statutory recognition of contractor / override structures in collaboration contexts | Disputes; delayed payouts; retention issues |
| Role-Based Commissioning | Splits by verified contribution (referrer, verifier, closer) | “Negotiator under supervision” | Legal basis for multi-role splits + recognised proof standards | Costly negotiations; team fallout |
| Co-broking Disputes | Frequent, multi-party | Misconduct discipline | Fast commercial split adjudication (specialised tribunal) | Months lost; cash-flow strain |
| Digital Evidence | ERP logs, timestamps, verified uploads | Silent on evidentiary status | Presumptive legal weight for ERP audit trails | “He said she said”; forum shopping |
| Independent Contractor Rights | Contract for Service is widespread | Addressed by circulars | Statutory clarity on rights, obligations, allowable overrides | Compliance ambiguity; uneven enforcement |
The cost of inaction shows up as time and money burned in avoidable disputes.
6) The Human Cost: How a Modern Dispute Drags On Under an Outdated Law
Scenario
Agent A (Firm X) refers to the buyer; Agent B (Firm X) verifies and conducts first viewing; Agent C (Firm Y) negotiates and closes. After completion, a 40/30/30 split is contested—Firm Y demands 50/50.
Evidence (ERP)
- Referral timestamp + buyer linkage (A)
- Verified viewing + key-access log (B)
- Signed offer, counter-offers, acceptance trail (C)
Under current law
Parties argue for months; evidence weight is unclear; outcomes reflect leverage, not contribution.
Time drag: ~3–5 months.
Cash drag (illustrative): RM30k–RM50k trapped; ~30–50 staff hours lost. Deals sour, teams fracture, clients wait.
Under a Co-operation Code
- ERP logs carry presumptive evidentiary value.
- Default role weights apply unless a written (digital) override exists.
- A specialised Co-broking Tribunal issues a binding award within 14–30 days, avoiding months in civil court.
7) Raise the Professionalism Bar—Seven Pillars
- Pillar 1: Verified Listing Standard (VLS)
Mandatory docs (title/authorisation), ownership checks, key-custody logs, photo/VR standards, price-change audit trail. Non-VLS listings cannot be publicly marketed or co-broked. - Pillar 2: Role-Based Competency & Micro-Certification
Defined competencies for Referrer, Verifier, First-Viewing Agent, Closer, and Transaction/Finance Liaison. Micro-certs tied to CPD; higher-risk roles require enhanced CPD. - Pillar 3: Embedded Compliance—Ethics, AMLA & PDPA
Built-in KYC prompts, consent capture, and data-sharing logs. Non-compliance triggers system warnings and potential disciplinary flags. - Pillar 4: Transparent, Auditable Processes
ERPs meeting standards (identity binding, timestamps, tamper-evidence, retention) receive presumptive evidentiary status. Publish anonymised tribunal summaries quarterly. - Pillar 5: Client Money & Escrow Hygiene
No personal handling of client monies by RENs. Use approved trust/escrow with digital receipts mapped to deal IDs. - Pillar 6: Proportionate, Digital-Era Sanctions
Graduated penalties by risk/recurrence: listing takedown → fines → suspension/blacklist. Aggravating factors: false ads, misrepresented authority, data abuse, harassment. - Pillar 7: Public Transparency & Confidence Measures
Public Professional Register showing firm/REN status, active micro-certs, anonymised tribunal outcomes. Consumer-facing badges (verified listing, role-certs).
8) The Path Forward: Completing the 2018 Vision
- A. Recognise co-broking layers in statute (external, internal, recruitment) with written/digital split terms—and defaults when absent.
- B. Legalise role-based frameworks (roles, default weights, proof standards), customisable by agreement.
- C. Codify Contract-for-Service rights/obligations/allowable overrides—without deeming employment.
- D. Create a Co-broking Tribunal with limited jurisdiction, ERP evidence acceptance, and ≤30-day decisions; publish anonymised precedents. Illustrative jurisdiction: inter-agency commission-split disputes ≤ RM200,000; filing-to-award ≤ 30 days; ERP audit trails admissible with presumptive weight unless rebutted.
- E. Recognise digital evidence & professionalism standards via approved ERPs enforcing VLS + micro-certs.
Default Split Template (illustrative)
- Listing side 50% / Buyer side 50%.
Within each side, role weights by default:
- Listing side: Input 15% · Maintainer 10% · Verifier 10% · Docs 5% · Key Holder 10%
- Buyer side: Referrer 15% · First-Viewing 15% · Closer 20%
Unused roles auto-redistribute pro-rata. Parties may override by written digital agreement.
9) Objections—Answered
- “Won’t this add red tape?”
Defaults, verified listings, and a fast tribunal reduce conflict and wasted time; professionalism becomes clicks, not paperwork. - “Does this weaken principal control?”
No—licensing, supervision, and liability remain. The Code clarifies relationships and sets measurable standards. - “What about illegal agents?”
Verified listings, identity-bound actions, and audit trails raise enforcement power, making non-compliance easier to detect and punish. - “Won’t a tribunal undermine civil courts?”
No—the tribunal resolves narrow commercial split disputes quickly; courts retain jurisdiction for everything else.
10) Conclusion—The Unfinished Work
The 2018 reforms were necessary, but incomplete. They updated who can play; the next reform must update how the game is scored. It’s time to move beyond who we regulate to how we work—recognising co-operation and professionalism in a connected ecosystem.
