Legal Articles

The Property Practitioners Bill Gazetted

On 31 March, the Property Practitioners Bill was gazetted for comment and is intended to cancel out entirely the dated Estate Agency Affairs Act 112 of 1976. 

There will be a wide-range of changes introduced to the real estate industry if the current form of the Bill is passed into law. The Bill also hopes to better improve consumer protection.

While some of them will have positive effects, others will most likely stir-up contention. However, let’s take a look at some of the biggest changes to the regulatory framework thus far.

In the soon to be abolished Act, the definition of “estate agent” can be understood in a few different ways, although it mainly refers to an individual or group that markets, sells or lets immovable property in the owners behalf and makes a profit in doing so. 

Property Practitioner Definition

This definition is expanded upon in section 1 of the Bill with the term “property practitioner” also including bond brokers, home inspectors, facilitators of an agreement of sale or lease, a seller of timeshare or fractional title, property managers and property developers.
 
This definition excludes attorneys and candidate attorneys, as well as, sheriffs of the court, individuals offering property practitioner services not in in the normal course of business, and individuals who aren’t property developers and who sell their own property.

It is no longer a requirement for a person to earn a profit or gain for any of the above mentioned services which are now included in the definition. Such persons will be deemed to be property practitioners thus subjecting them to the regulatory requirements. 

Property Practitioners Ombud

With the establishment of the Property Practitioners Ombud in section 20 of the Bill, the real estate industry will have a new means of dealing with consumer complaints. The responsibility will be taken away from the regulatory authority and instead be given to the Ombud. 

Any complaints from the public against property practitioners will be dealt with by the Ombud who will make use of the prescribed process to resolve them. 

There will be both a mediation procedure which will quickly deal with less serious complaints and an adjudication procedure where mediation is unable to resolve the issue. 

This service could also be used when there is a dispute between property practitioners although both parties need to consent to this. 

The new Act will grant inspectors of the regulatory authority with the power to enter any premises of a property practitioner that isn’t a private home and seize certain articles without the need of a warrant. 

However, were this provision to be passed into law, it may likely end in litigation against the authority especially if the power is given to individuals who are not familiar with constitutional rights. 

The Bill systemised the three-year period for the prescription of claims that the Prescription Act 68 of 1969 made provision for. From the date of rejection of the initial claim, a person will have three years to proceed with the litigation process so as not to lose their right to claim. 

Fidelity Fund Certificate

According to the Estate Agent Affairs Act property practitioners who don’t possess a Fidelity Fund Certificate are not allowed to earn commission from any estate agency services. 

The new Bill takes this a step further stating that commission earned by a property practitioner who doesn’t possess this certificate will have to refund the person who paid them if demanded.

The Act dealt with instances wherein a property practitioner is disqualified from the authority issuing him or her a Fidelity Fund Certificate. Section 49 makes a few amendments and additions to the instances listed in the Act which is certain to be met with mixed feelings by those affected. 

While all the instances that are mentioned in the current Act will stay the same, there will be some beneficial amendments and additions. One of these being the five-year time frame which has been placed on infringements of the Act and dismissals from positions of trust as a result of misconduct. 

Any individuals who apply for a FFC 5 years after such an instance occurs will no longer be subject to disqualification in terms of practising as an estate agent. 

Also, regarding disqualification as a result of dishonesty, the phrase, “for which such person has been sentences to imprisonment without the option of a fine” has been added. 

This will remove any minor transgressions of dishonesty from the criteria for automatic disqualification. However, there are three new additions which will leave many practitioners unhappy: 

• Firstly, it will be a requirement for a practitioner to be in possession of a tax clearance certificate. 
• Secondly, you can now be disqualified from being issued an FCC for being on the Treasury tender defaulters list as a provider, director, member, trustee, partner or shareholder. 
• Thirdly, if a property practitioner is not in possession of a BEE certificate then he or she is automatically disqualified, although this is likely to change as a result of the new schedules to the BBBEE Act which exempt companies with a turnover of less than R10 million. Such companies are not permitted to be issued with a BEE certificate, even if one is required. 

Section 54 of the Bill requires that correspondence, legal agreements, copies of advertising and marketing materials must be retained for 10 years which could lead to logistical problems down the line. However, electronic means can be used to store these documents.

Before being able to accept a mandate to sell or let a commercial or residential property, a property practitioner will need to be given a mandatory disclosure form by the owner. 

This in turn will form part of the sale or lease agreement. Without this form, the agreement will be interpreted as if no defects or deficiencies were disclosed. 

Van Deventer & van Deventer Incorporated - Conveyancers Sandton

As we wait for the revised version of the Bill we can be certain that some of the provisions won’t escape scrutiny from the industry. 

Contact us for expert legal assistance with all your property related matters.