Does the Consumer Protection Act apply to Estate Agents? | Legal Articles


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Does the Consumer Protection Act apply to Estate Agents?

The Consumer Protection Act 68 OF 2008 (CPA) came into effect in 2011 with an aim of ensuring fair, competitive and responsible markets that protect South African consumers as well as to promote ethical business practices. It makes a distinction between suppliers of goods and services on one hand, as well as consumers on the other. This article seeks to implore to what extent the CPA is applicable to Estate Agents.

Consumer Protection Act and Real Estate Agents

Definitions in the CPA

A service provider is defined as ‘person (natural or juristic) who promotes, supplies or offers to supply any service.

A supplier is defined as one who markets any goods or services. The underlying factor though must be that such promotion and provision of services and goods be in the ordinary course of their business, meaning that any party who does so on once-off basis will not fall in the ambit of the provisions.

Estate Agents provide, promote and market their services, meaning they fall within the ambit of suppliers and/or service providers as provided for in the CPA.

Intermediary role of Estate Agents

In a property purchase transaction between a property developer and the buyer(s) the Estate Agent takes an intermediary role, to facilitate the purchase transaction between the developers and the purchaser.

In this purview, Estate Agents provide an intermediary service between the purchase transaction parties although their involvement is mainly premised on the mandate role from the developer, for whose interest they seek to maintain the most. The CPA applies in these transactions as the property developer undertakes property development and sale in the ordinary course of their business.

Service Provider role of the Estate Agent

Besides facilitating the transaction between the seller and the buyer, the Estate Agent also provides a mandated service to the seller or landlord. This service entails marketing the property, performing checks on the potential purchaser/tenants as well as administration of the tenancy.

In this capacity the Estate Agent provides a service to the seller/landlord towards the administration of the property lease or sale arrangements. Such mandate agreement falls under the CPA and therefore must comply with provisions of the CPA i.e must be in plain understandable language, not contain unfair or unreasonable terms and conditions.

The mandate agreement further, must adhere to the fixed term provisions of the CPA and may be cancelled by the consumer (seller) upon adequate and sufficient notice of 20 business days.

Van Deventer and Van Deventer Attorneys Cape Town & Johannesburg

The above brief discussion has shown that there are several instances where Estate Agents fall within the ambit of service providers and/or suppliers as envisaged by the Consumer Protection Act, and therefore the services they provide must also conform to and give effect to consumer rights in the CPA.

We assist with Consumer Protection and Property Law matters in their various aspects and forms. Kindly contact us for comprehensive assistance in these and other matters.

Find out more about: Rights of Tenants and Landlords under the Consumer Protection Act

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