The Property Practitioners Bill has officially been signed by the President on 2 October 2019, however, the commencement date has not yet been decided.
The Act will replace the 43-year-old Estate Agency Affairs Act and provide for the continuation of the Estate Agency Affairs Board, to be known as the Property Practitioners Regulatory Authority (“the Authority”).
The objective of the Authority is to regulate the way Property Practitioners deal with consumers, market, manage, finance, let, and the sale and purchase of property.
Furthermore, the Authority is tasked with the education and protection of consumers from undesirable practices. Should the need arise, the Authority may appoint inspectors with powers to enter and inspect business premises and seize documents, in some instances, even without a warrant.
The Act provides for a wide definition of the word “Property Practitioner” and apart from those listed in the Estate Agency Affairs Act, now includes many other role players such as:
- Commercial brokers who sell businesses;
- Mortgage bond brokers;
- Providers of bridging finance (unless they work for registered financial institutions);
- Property valuers;
- Persons doing home inspections for purchasers before a sale;
- Property managers;
- Agents involved in the selling of timeshare and fractional ownership;
- Anyone else who facilitates or acts as intermediary with the primary purpose of bringing about a sale of a property or a business;
- Employees of attorneys who act as estate agents, even though they are also covered under the Attorneys Fidelity Fund;
- Persons who were Property Practitioners at the time when they committed an offence under the Act (the purpose of this is to ensure that a person is sanctioned under the Act, even after the person has left the industry).
- Digital portals that publicly exhibit properties (or businesses) for sale or for rent using electronic means;
- Companies that receive rentals on behalf of others.
The only exclusions from this definition are attorneys and candidate attorneys, sheriffs of the court, a person offering property practitioner services, but not in the normal course of his business, and a person selling his own property (but excluding a property developer).
In terms of the Act, a Property Practitioners Ombud will be established to consider and resolve complaints and disputes.
Complaints are to be handled in a procedurally and substantively fair, informal, economical and expeditious manner.
The current Estate Agents Fidelity Fund will continue to operate, but will now be referred to as the Property Practitioners Fidelity Fund.
In terms of the Act, a Property Practitioner who is not in possession of a valid Fidelity Fund Certificate, will not be entitled to any remuneration.
Any remuneration earned by a Property Practitioner whilst not in possession of a valid Fidelity Fund Certificate, must be returned to the person who provided the remuneration, on demand. The Fidelity Fund Certificate must be displayed in every place of business where a Property Practitioner operates. In addition, the letterheads and marketing materials of the Property Practitioner must include the prescribed sentence confirming their possession and the validity of the certificate.
The Act stipulates that a conveyancer may not pay over commission to a Property Practitioner if the conveyancer does not have a copy of the Property Practitioner’s valid Fidelity Fund Certificate on their file.
Should an agent practice without this certificate, any commission payable to such agent flowing from the conclusion of a sale agreement, must be refunded to the seller.
A further new requirement for the issue of the abovementioned certificate, is the requirement to provide a BBBEE certificate.
Apart from the costs related to procuring these certificates, there are other concerns relating to the provisions of the BBBEE Act that deem an enterprise with an annual turnover of less than R10 million to be an exempt micro-enterprise. Many smaller estate agencies fall within this category and won’t be obliged to furnish such a certificate.
All Property Practitioners must have one or more trust accounts into which their client’s money must be deposited.
Details of these accounts must be provided to the Authority as well as the details of the auditor to the accounts, if account audits are applicable.
The Act also requires that correspondence, legal agreements, copies of advertising and marketing materials must be retained for 10 years.
Fortunately, these documents may be stored electronically.
With regard to defects, a mandatory disclosure form will have to be completed by the seller/lessor and attached to all sale or lease agreements.
This applies to both commercial and residential properties. If a written mandatory disclosure form is not included, the agreement will be interpreted as if no defects or deficiencies were disclosed. Failure to comply with this requirement will result in liability towards an effected consumer and possibly a sanction by the Authority.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)