On 1 February 2022 the property industry saw a major shift – the Property Practitioners Act (“PPA”) came into effect to replace the old Estate Agents Affairs Act, establishing the Board of Authority which would replace the Estate Agents Affairs Board.
The PPA was written and designed to regulate the property sector with a more modern approach, a broader application and transformation of the industry in mind.
Whilst the PPA was already written, and circulating, in 2019, it could then have been compared to being a vehicle with no engine. With the promulgation on 1 February 2022, an engine was now provided, in the form of regulations of application and formation of penalties for non-compliance.
With any new legislation, there will always be opposition and exceptions in relation to all or some of the regulations, stemming from different sectors within the industry, for whom the particular legislation was intended for. This process is important as many smaller areas of application are then addressed and tweaked to derive at a well-oiled engine, that will run for many miles to come. The property industry is therefore now “test driving” this vehicle with the engine. Various forums and platforms have already been approached with applications for exclusion and amendment of certain sections, and only time will tell how this vehicle may be panelbeated, resprayed, the engine upgraded or whether the conditions it travels in will adapt to the vehicle.
Without delving into the Act in depth, we share below some points we feel the man on the street should be aware of in terms of who is affected, how they will be affected and what to be aware of.
The most important aspects of the PPA is the definition of a “property practitioner”. A “property practitioner” is defined as anyone or any business which markets, sells, lets or manages property or collects money payable in relation to the above. The definition of a “property practitioner”, with some exceptions, could also include developers, homeowners’ associations, bond originators and managing agents. By definition, although separated into different categories, each “property practitioner” is required to register as such with the Board of Authority and acquire a Fidelity Fund Certificate (“FFC”). Again with some exceptions, directors and staff of a business or Trust, that registers as a “property practitioner” will also be required to register and apply for their own FFC, in their personal capacity. An FFC will only be issued by the Board of Authority to business entities on presentation of valid BEE and tax clearance certificates. Fortunately, any owner of property wishing to sell his own property, is not defined as a “property practitioner” for this private sale. The seller or owner does not escape mention in the PPA, nor obligation. A seller is required to complete a mandatory disclosure form in relation to any defects that the property he/she is selling, may have. This form will ultimately be attached to the Offer to Purchase as an annexure. It will be accepted that there are no defects if there is no form attached, and this may open a seller up to potential claims. The disclosure form enables the buyer to be placed in a position to decide whether he/she wishes to proceed with the purchase, now aware of the defects, or enlist the further services of his own inspector. This mechanism is clearly included with the protection of the consumer in mind, but protect both seller and buyer.
For the seller it is key to ensure the Estate Agent he/she mandates to sell his/her property, estate agents being defined as “property practitioners”, is registered with the new Board of Authority. Their Fidelity Fund Certificate (“FFC”) details should be valid at time of mandate and on registration of the transfer. FFC details are to be displayed on all marketing products, fully disclosed in the Mandate and Offer to Purchase and at all branches of the agency’s business.
The Act goes on to make provision for the appointment of inspectors, appointed to attend at businesses to ensure compliance with the PPA. Contraventions are specified in the act, categorized into minor and serious contraventions. Contraventions can take the form of notifications, fines and repayment of any remuneration paid by a client. It is interesting to note that a conveyancing firm are not to pay out any commissions due to property practitioners without the presentation of a certified copy of the FFC, and instead same should be paid to the Board of Authority.
It is encouraging to note that provision is made in the Act for a Transformation Fund and a Research Centre, previous not included. Broadening the spectrum of the members, i.e. considering the “property practitioner” definition, bringing more funds, provision for these forums can easily be accommodated. The Act is forward thinking and designed to be a work-in-progress as the property market constantly changes with technology and communication styles of all role players.
One last important word on the PPA. Please note that the Act regulates the Conduct of Property Practitioners and specifies what is sanctionable conduct, undesirable business practice and specifically mentions certain limitation on relationships between property practitioners and service providers, i.e. with bond originators, conveyancers and the like. A complaints procedure is put in place, with the creation of certain prescribed forms.
The property industry is about to hit the road and it is exciting to be part of the journey. Don’t blink an eye, don’t loose your seat, just hold on for the incredible ride!
Should you require more information on the above or require any form of conveyancing assistance, please feel free to contact Tuckers Incorporated on 011 897 1900, alternatively email us on hayley@tuckers.co.za
By
HAYLEY APPEL
Attorney, Conveyancers and Notary at Tuckers Attorneys