Building a Real Estate Brokerage Startup Legally

Starting a new real estate brokerage startup involves more than just finding the right location or clients. Agreements, licenses, and legal clarity are just as important. Without proper paperwork, even a successful construction company can face disputes and delays.

This case study is about a client from Kanpur who already owned a construction business and wanted to start a real estate brokerage. They reached out to Zolvit for legal help to make sure their brokerage branch operated smoothly and lawfully. This is how our property lawyer guided them through the legal process.

Case Background

Client’s Situation

The client contacted Zolvit with a plan to expand their existing construction business. They wanted to open a brokerage branch that would help sell properties by working with both builders and customers.

However, they weren’t sure how to structure the agreements. They also wanted to make sure that both the builder side and customer side were legally protected. Their main concern was making sure everything was written clearly, so there would be no confusion or legal issues later.

Legal Strategy & Approach

Initial Assessment

A Zolvit property lawyer spoke with the client to understand the full picture. The goal was to clearly separate the brokerage’s role between builders and customers. The lawyer suggested drafting two separate agreements:

• A Builder-Broker Agreement
• A Broker-Customer Agreement
  

This would allow the client to work professionally with both parties without mixing up responsibilities.

Client’s Request

The client asked whether one agreement for all three parties—builder, broker, and customer—would be easier. But the lawyer explained that tripartite agreements often get complicated. If a dispute happens, it becomes hard to figure out who is responsible for what.

Separate agreements make things clear. One agreement defines the broker’s role with the builder. The other explains the broker’s services to the customer. This approach protects the brokerage legally from both ends.

Laws Considered

While discussing the setup, the property lawyer referred to a few important laws that apply to such agreements:

• Indian Contract Act, 1872 – This law governs all contracts in India. It ensures that the agreements between the broker, builder, and customers are valid, enforceable, and include fair terms like scope of work, commission, and confidentiality.
• Real Estate (Regulation and Development) Act, 2016 (RERA) – If the brokerage deals with RERA-registered properties, the broker may need to register under RERA in that state and follow its code of conduct.
• Registration Act, 1908 – While not always needed, if any part of the agreement transfers interest in immovable property, registration under this act might be necessary.

Legal Considerations Explained

Here are the key points the lawyer discussed with the client:

• Scope of Services: Clearly defined what the brokerage will do. This includes property listing, coordinating site visits, or helping with RERA verification.
• Commission Structure: Mentioned how much the brokerage will earn and when. Will the commission be a percentage or fixed? When is it due?
• Exclusivity Clause: Can the builder or customer work with other brokers? If not, this must be written clearly to avoid future disputes.
• Termination Terms: What happens if either party wants to cancel the agreement? What notice must be given?
• Confidentiality Clause: Any private or financial information shared between parties should not be misused or disclosed without permission.
  

All these clauses help protect the client’s brokerage from confusion and legal risks.

Proposed Legal Plan

The lawyer gave the client a simple legal roadmap:

1. Confirm the Business Model
   The client wanted a brokerage that works both ways—getting properties from builders and finding buyers. The lawyer supported this dual role and confirmed that the law permits it as long as each relationship is managed by a separate contract.
2. Draft the Agreements
   Zolvit’s legal team would prepare two separate documents:
   • One agreement for the builder-broker relationship
   • One agreement for the broker-customer relationship
     These agreements would be customised based on the services offered and location-specific needs.
3. Ensure RERA Compliance
   The lawyer advised the client to register as a real estate agent under the Real Estate (Regulation and Development) Act, 2016—commonly known as RERA. This registration is mandatory for real estate agents in most states, including Uttar Pradesh.
4. Next Steps
   After the call, the lawyer shared a formal proposal outlining the next steps. Once the client approved, the legal team would begin drafting the documents. The drafts would be shared for review, with room for minor revisions based on feedback.
   

Outcome

The client appreciated the clear legal explanation and structure. They were confident knowing that the agreements would protect their new brokerage from misunderstandings or future claims. Having separate documents for builders and customers gave them flexibility and clarity.

They now had a legal structure in place, which would also help them build trust with new clients and partners. With the help of Zolvit’s legal team, they could focus on growing their business without worrying about legal blind spots.

Conclusion

This case shows how important legal preparation is when expanding into real estate. Without clear agreements, even an experienced builder can face legal confusion. In this situation, the client avoided risks by taking legal support early on.

With Zolvit’s help, the client received proper documentation, legal advice, and a solid start to their new venture.