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.