Property Practitioner’s Act: Image: Adobe stock
What is the Property Practitioner’s Act all about?
Property Practitioner’s Act: Image: Adobe stock
1.What is the Property Practitioner’s Act?
The Act is a new legislation which has repealed the Estate Agency Affairs Act, Act 112 of 1976 (which only applied to “Estate Agents”), in its entirety.
The Act came into effect as of 1 February 2022.
It aims to allow for transformation in the property sector, to provide for consumer protection and to regulate the property sector by integrating and consolidating all role-players within the sector under one umbrella statute.
It has no doubt, brought about significant changes.
2. Who is a “Property Practitioner” (see section 1):
The Act uses the terminology “property practitioner” as opposed to simply referring to an “estate agent”.
It thus has a broader scope of application and extends the definition of who is considered to be a “property practitioner” to mean any natural or juristic person, who, for the acquisition of gain, directly or indirectly, on the instructions or on behalf of another:
3. The Property Practitioner’s Regulatory Authority (“the Authority”)(see chapter 1):
The Act has replaced the Estate Agency Affairs Board with a new regulatory Authority.
The Authority is tasked with ensuring compliance with the Act, regulating the conduct of property practitioners and with the implementation of measures to achieve the objects of the Act (such as transformation and consumer protection).
4. Mandatory Fidelity Fund Certificate (see sections 47 & 48):
All property practitioners shall be required to be in possession of a valid Fidelity Fund certificate (“FFC”), and shall be required to, on request, produce the certificate or a certified copy thereof.
If property practitioner is a company, close corporation, trust or partnership, then every director of such company (excluding non-executive directors who are not directly concerned with the management and oversight of individual property practitioners who may be exempted), every member of such a close corporation, every trustee of such a trust and every partner of such a partnership, as the case may be, must have been issued with a FFC.
Should a property practitioner not possess a valid FFC, the practitioner may not trade or charge commission or in the event of commission having already been charged and received, it must thereafter be refunded.
5. Disqualification from the issue of a Fidelity Fund Certificate (see section 50):
The Act prescribes that the Authority may refuse to issue a FFC to any person who:
6. The Display of Fidelity Fund Certificates (“FFC’s”) (see section 53):
The Act provides that a property practitioner must prominently display the FFC in every place of business where he/she/it conducts property transactions to enable the consumer to inspect the FFC.
The Act further requires that any agreement relating to a property transaction must include a prescribed clause in which the validity of the FFC is guaranteed, with the wording:
“who hereby warrants the validity of his/her/its Fidelity Fund Certificate as at the date of signature of this Agreement”.
A property practitioner who contravenes this obligation may be penalized.
7. Trust Accounts (see section 54):
Property practitioners are required to open trust accounts with registered banks, and to appoint and auditor to have those accounts audited, which audit report will have to be submitted to the Property Practitioners Regulatory Authority. Property practitioners must then deposit all trust money received into the trust account until they are either lawfully entitled to that money, or are lawfully instructed in writing to transfer it
8. Prohibition on Obligation or Encouragement to use Specific Attorney or Conveyancer (see section 58):
Property practitioners are prohibited from obliging consumers under a property transaction from using any particular service provider for any ancillary services relating to such property transaction (such as a conveyancer or finance house). If a property practitioner breaches this section, it/he is not entitled to any remuneration in respect of such services, and if he/it will be guilty of an offence if he/it does receive such remuneration and does not repay it to the consumer within one month of being requested to do so.
9. Agreement for Sale or Hire Must be drafted by the Developer or Seller at its own Cost (see section 68):
An agreement to sell and purchase, or let and hire property, or the mandatory disclosure form, must be drafted by the developer or seller at their own cost. The Property Practitioners Regulatory Authority is obliged to draft updated versions of guideline agreements on its website.
10. Penalties (see section 71):
Any person convicted of an offence in terms of the Act is liable for a fine or to imprisonment for a period not exceeding 10 years.
Property practitioners are thus cautioned and advised to ensure they understand the Act, what is required of them and that they further consult the Property Practitioners Regulations, 2022, in this regard.
Written by Tamsin Maasdorp (Conveyancer, family law, wills, trusts and deceased estate specialist)
This article originally published by Reynolds Attorneys