The Property Practitioners Act came into effect on 1 February 2022. The Act provides, amongst other things, for the regulation of property practitioners, transformation of the property sector and continuation of the Estate Agents Fidelity Fund as the Property Practitioners Fidelity Fund. It aims to protect consumers in the property industry and to strengthen the regulatory aspect of the human settlements sector.
It entails these elements:
- Capacitation
and enterprise support for historically disadvantaged property
practitioners.
- Support
of existing SMME’s owned by historically disadvantaged property
practitioners.
- Promotion
of the standard of training and development of historically disadvantaged
property practitioners.
- Supporting
existing historically disadvantaged property practitioners to become
principal property practitioners and owners of business property practitioners.
- Facilitation
of ownership of and participation in property investment enterprises.
- Enabling
the transformation of property ownership in South Africa by providing
grant support (through the Transformation Fund) to historically
disadvantaged property practitioners who are in the business of developing
residential properties in the affordable and secondary housing
markets.
The Act Is far stricter and more far-reaching than
its predecessor, the Estate Agency Affairs Act 112 of 1976. The definition of
"property practitioners" includes persons previously known as estate
agents, a person who directly or indirectly sells or
leases properties including sales and rental agents, auctioneers, business
brokers that deal with the sale and letting of immovable property, managing
agents who receive remuneration for managing property on behalf of another, and
trusts that do the work of a property practitioner).
Their obligations, among other things, are as
follows:
- Property Practitioners must display
their Fidelity Fund Certificate (FFC) unless their turnover is below R2,5
million.
- No property practitioner may operate
a trust account unless the account fully complies with the Act.
- They must provide a warranty
concerning the validity of the property practitioner’s FFC in any
agreement relating to property transactions.
- Property practitioners would
forfeit remuneration if they received compensation without having a
valid FFC.
- They must ensure that all the parties to a sale or lease
transaction sign a disclosure form attached to the relevant agreement, dealing with any defects or deficiencies in the property.
- They may not oblige or encourage a consumer to use a particular
service provider, including an attorney or conveyancer, to render any
service or ancillary services regarding any transaction of which that
property practitioner was the effective cause.
- They must maintain mandatory
indemnity insurance.
- They must comply with a prescribed
code of conduct and the Property Sector Transformation Charter Code.
- They must include certain
prescribed minimum information on all written communication and marketing
material and certain additional information in respect of the franchisee.
- No property practitioner may use any
marketing technique or method "harmful or misleading".
Practitioners may not use any underhanded way to persuade a property owner
to give them the mandate to sell or lease out their property.
- No property practitioner can show a
client any property they have already seen with another real estate agent.
This is to avoid competing commission claims.
- No mandate or contract may include
any clause stating that the seller or lessor must directly pay a property
practitioner any remuneration or commission related to the sale or rental
of any property. Similarly, there may be no clause in any contract of sale
or lease that entitles a property practitioner to deduct any amount from
monies entrusted to them during the selling or leasing of a property.
- The seller, the purchaser and the
property practitioner must all sign every contract of sale of immovable
property.
