1. The previously known Property Practitioners Bill that was initially published on the 3rd of March 2017 by way of Government Gazette 40733 was finally signed into law by the President on the 2nd of October 2019 as the proposed Property Practitioners Act. On the 16th of December 2021 the President signed the Commencement of the Property Practitioners Act, 2019, and noted that it shall come into operation on the 1st of February.
2. The intention of the Act is to provide for the regulation of property practitioners and repealed the Estate Agency Affairs Act 112 of 1976 in its totality and does not intend for the continuation of the Estate Agency Affairs Board but will henceforth be known as the Property Practitioners Regulatory Authority (PPRA) whose functions will include specific Consumer Protection, Consumer Education and the transformation and regulation of the industry, and furthermore provides for the governance of the Regulating Authority to promote a framework for property practitioners.
3. The Act further makes provision for the appointment of a CEO of the Property Practitioners Regulatory Authority (“Authority”) which will be the new statutory body in terms of the Act which will consist of a Board made up by at least 9, but not more than 12 non-executive members, as well as the relevant CEO. The Act further provides that the relevant Authority shall furthermore independently consider and dispose of complaints lodged in terms of the Act in respect of financing, marketing, management, letting, hiring, sale and purchase of property and to provide mechanisms for the resolution of such complaints and to ensure that these complaints are disposed of in a procedurally and substantively fair, informal, economical and expeditious manner.
4. The Act further applies to “property practitioners” who consist by definition of the following : “means any natural or juristic person who or which for the acquisition of gain on his, her or its own account or in partnership, in any manner holds himself, herself or itself out as a person who or which directly or indirectly on the instruction of or on behalf of any other person” –
- By auction, in sale of execution or otherwise sells, purchases, manages or publically exhibits for sale property or offers to canvas a seller or purchase in respect thereof;
- Lets or hires or publically exhibits for hire property or any business undertaking electronically or any other means;
- Collects or receives any monies payable on account of a lease of a property;
- Provides, procures, facilitates, secures or otherwise obtains or markets financing for or in connection of the management, sale or lease of a property including a provider of bridging finance and a bond broker or originator;
- Assesses property to determine the defects;
- Manages property on behalf of another for remuneration, which consequently includes homeowners’ associations;
- Sells, by auction or otherwise, or markets or promotes or advertises any part, unit or section in a property or property development;
- Acts or provides services as intermediary or facilitator with a primary purpose to effect the conclusion of an agreement to sell or purchase but does not include :
- A person who does not do so in the ordinary course of business
- A natural person offering the property for sale in the ordinary course of his business and the property belongs to him
- An attorney or candidate attorney as defined in the Attorney’s Act
- A Sheriff as defined in the Sheriff’s Act
- Any person employed by an attorney to render such services as aforementioned to such attorney
5. From the aforementioned it is clear that the Act broadens the scope of the legislation beyond the traditional “Estate Agent” and will henceforth also cover commercial property brokers, Auctioneers, Mortgage Originators, Property Inspection Services, Property Managers, property developers, Property Facilitators and companies selling timeshare and fractional property, although certain Property Practitioners may further be able to obtain exemption from the provisions of the Act, specifically contained in Section 4 of the Act.
6. Section 28 of the Act provides for the lodging of complaints by any person, in the prescribed form contained in Regulation 5 of the Regulations, same of which must be in writing and contain the full details of the conduct, the Authority may then request further information in the form of an Affidavit or otherwise, and may then carry out an investigation in respect of the
complaint, as it deems necessary. The Authority will upon receipt of such complaint, acknowledge receipt, and provide the respondent with a copy of the complaint in question, request the respondent to furnish the Authority with his or comments in writing, and advise the respondent that any such comments furnished by the respondent shall not be used against him or her in any legal proceedings related to the complaint. The Authority may further request further documentation to be furnished by the complainant in relation to such complaint and :
- May in the prescribed manner deal with the matter himself;
- Refer the matter for mediation in terms of Section 29;
- Should mediation be unsuccessful refer the matter for adjudication in terms of Section 30;
Section 29 provides that the Authority may, if the Authority believes that a complaint may be resolved through mediation, or on application of the person concerned, refer the complaint to mediation. The Authority must thereafter, within seven days of the referral, appoint a suitably qualified person as a mediator, who must within seven days set the matter down within 30 days of referral to mediation, and will assist the parties to resolve the dispute. Should the mediation proceedings be successful the Mediator will issue a certificate stating the outcome of the mediation and serve a copy of the relevant certificate with outcome on each party to the dispute. Should the mediation however not be successful as contemplated in terms of Section 29, the matter must be adjudicated in accordance with the adjudication contained in Section 30.
7. Section 30 provides for the adjudication of a matter that was not able to be resolved by way of mediation or where the serious nature of the complaint and the contravention in question warrants adjudication. The Authority must then appoint an independent legally qualified person as an adjudicator to conduct the adjudication of a complaint. The Authority may further appoint assessors to assist the Adjudicator on any complaint depending on its complexity and application from the adjudicator on grounds which would warrant such assistance. Upon conclusion of the adjudication, the adjudicator must make a determination as to whether the complaint is upheld or not. If the complaint is upheld the adjudicator must make an order which in the circumstances is appropriate, same of which has the status of an order of the Magistrate’s Court and must be executed accordingly. Such order may include a fine which may not exceed the amount determined by the Minister of Justice from time to time determined in the Magistrates Court Act, 1944. Upon finalisation of the adjudication the Adjudicator must provide written reasons for his determination or order. Section 30 further states that any fines payable will accrue to the Property Practitioners Fidelity Fund.
8. In terms of Section 24 and 25 a CEO must appoint a suitably qualified person as an inspector, and issue a certificate in the prescribed form stating the appointment as inspector. The inspector may at any reasonable time and without prior notice conduct an inspection to determine whether the provisions of this Act are being complied with and for this purpose, may without a warrant, enter and inspect any business premises, except a private property, of a property practitioner and require the property practitioner, manager, employee or agent to :
- Produce his/her Fidelity Fund Certificate
- Produce any book, record or other document relating to the inspection in possession or under the control of that practitioner, manager, employee or agent
- Furnish him/her with such information in respect of the fidelity fund certificate, book, record or other document n such a manner and place as the inspector may determine
- Examine or make extracts from, or copies, of such records, books, fidelity fund certificates or other documents
9. Section 25 further states that where a property practitioner conducts his/her business at their private residence, the inspector must notify the property practitioner in advance and in writing, before conducting the inspection as envisaged above. The inspector may further, on the strength of a search warrant issued by a judge or a magistrate, and in the event that there are reasonable grounds to believe that there has been a contravention of the Act and that there is an article or record in the private residence that may have bearing on the inspection, enter and search any premises and any other person on those premises.
10. Section 32 contains reference to the funds of the Authority, as the following:
- Monies appropriated by Parliament;
- Fees paid to the Authority by property practitioners;
- All monies derived from investments which the Authority may make;
- All other monies which may accrue to the Authority from any other source.
Section 34 and 35 The current Estate Agents Fidelity Fund established in terms of Section 12 of the Estate Agents Affairs Act 112 of 1976, known immediately before the commencement of this Act as the Estate Agents Fidelity Fund, will continue to operate as if it were established in terms of this Act, under the name Property Practitioners Fidelity Fund. The following money must be deposited into the fund:
- All monies paid as fees in accordance with this Act;
- Income derived from the investment of these monies/fees;
- All monies recovered on behalf of the fund;
- Interest paid to the fund;
- All monies received on behalf of the fund from any insurance company.
The primary purpose of the fund is contained in Section 35 of the Act, and envisaged a purpose to reimburse persons who suffer pecuniary loss by reason of theft of trust money committed by a property practitioner who was in possession of a valid Fidelity Fund Certificate at the time of the theft. Section 35(2) further states that a person will have no claim against the Authority as contemplated in the purpose of the Fund, unless the person has given notice to the Authority within 3 years of the circumstances giving rise to a claim, and furnished the Authority with such proof as they may require, within 3 years of receiving a written request from the Authority to furnish further particulars.
11. Section 40 The Authority may in public interest arrange any group insurance scheme for the provision of insurance to cover property practitioners’ s liability to members of the public on the grounds of malpractice and up to an amount determined by the Board.
12. Section 41 contains the fees payable by a property practitioner and states that a property practitioner must annually pay to the fund a prescribed application fee for a Fidelity Fund Certificate and any further amounts that the Minister may after consultation with the Minister of Finance and the Board determine by notice in the Government Gazette. The Minister must further specify a method or standard to determine the percentage by which the amounts contemplated aforementioned, is determined, and shall be automatically adjusted on the 1st of April of every subsequent year.
13. In terms of Section 47 every property practitioner, excluding a property practitioner referred to in paragraph (g) of the definition, being a person who was a property practitioner at the time when he/she was found guilty of any act or omission which allegedly constitutes sanctionable conduct, must within the prescribed period and in the prescribed manner, apply to the Authority for a Fidelity Fund Certificate, every three years, accompanied by the relevant fees contemplated in Section 34. Same of which will be valid until the 31st of December of the relevant year to which such application relates. The Section further states that a property practitioner may not use or display a lapsed Fidelity Fund Certificate and must upon request produce a Fidelity Fund Certificate or certified copy thereof. In the event that a property practitioner changes their contact details during a period of validity of their Fidelity Fund Certificate, they must within 14 fays of such change taking place, provide the Authority in writing, with his/her new details.
14. Section 48 No person or entity may act as a property practitioner unless he is in possession of a valid Fidelity Fund Certificate (“FFC”) and in the event of such a person being a Company, Close Corporation, Trust or Partnership, every director of such Company, every member of the Close Corporation, every Trustee of such a Trust and every partner of such Partnership together
with the legal entity must be in possession of a valid Fidelity Fund Certificate. Failure to comply with the aforementioned will be an offence in terms of the Act. Section 48(4) further requires a Property Practitioner to repay any commission earned whilst not holding a valid FFC.
15. Section 50 There are many disqualifications listed in this section disqualifying a person from
being issued a FFC such as:
- A person who is not a South African Citizen or does not lawfully reside in the Republic;
- A person who has been found guilty of contravention of this Act, the Estate Agency Affairs Act or any similar legislation in the preceding 5 years;
- A person being found guilty in any civil or criminal proceeding in a Court of Law in terms of which his actions were fraudulent, dishonest, unprofessionally, dishonourably or in beach of a fiduciary duty, or found guilty of any other offence which the person has been sentenced to imprisonment without the option of a fine;
- The person is an un-rehabilitated insolvent or of unsound mind;
- Been dismissed from a position of trust due to improper conduct;
- Is not in possession of a valid Tax Clearance Certificate;
- Is not in possession of a BEE certificate (in terms of the new BEE codes issued in June 2017 the threshold for estate agencies have been reduced to R2,5 million rand turnover per annum)
- Does not comply with the prescribed standard of training.
- Does not have the practical experience determined by the Authority to name but a few.
16. Section 51 & 52 The Authority may at any time and on its own initiative or pursuant to an instruction issued by Court or an Adjudicator amend or withdraw an issued FFC and may order such a person to immediately refrain from using and displaying their FFC and must return the FFC to the Authority.
17. In terms of Section 53 a holder of a FFC must prominently display such certificate in every place of business where he/she/it conducts property transactions to enable the consumer to inspect the FFC. Section 53(c) lists a further requirement that in any agreement relating to property transactions entered into by him/her or his/her company, close corporation or partnership, trust or other entity, they must include a prescribed clause which ensures that he, she or it guarantees the validity of the certificate, with the wording “who hereby warrants the validity of his/her/its Fidelity Fund Certificate as at the date of signature of this Agreement”, wherein failure to do so will constitute an offence.
18. Section 54 requires that every property practitioner must open and keep one or more separate trust accounts and must provide the Authority of the particulars of such account as well as the auditor appointed to audit such trust account, same of which must be appointed immediately after opening the relevant trust account(s), and must deposit all trust money received or held on behalf of clients. The property practitioner may invest, in a separate savings or other interest-bearing account, his/her or its trust monies which are not immediately required for any particular purpose. The property practitioner must retain all trust monies deposited or invested in terms of Section 54, until he/she/it is lawfully entitled to such money or is lawfully instructed in writing to make payment therefrom to any person. Such person is further required to keep accounting records of all such monies deposited and must balance his/her/its books and records monthly, and within 6 months after the final date of the financial year have the trust account audited and provide the Authority with an audit report.
19. Section 55 Despite any other law, a property practitioner must keep accounting records for a period of 5 years, as well as other documents in respect of:
- Documents exchanged with the Authority;
- Correspondence with his employer or franchisor;
- Any agreement incidental to his carrying on the business of a property practitioner;
- Any agreement, mandate, mandatory disclosure form or any other document relating to the financing, sale, purchase or lease of a property;
- any advertising or marketing material related to his/her/its carrying on the business of a property practitioner;
- any other document prescribed by the Minister.
These documents may be stored electronically if such storage meets the requirements of the Electronic Communications and Transactions Act, 2002, failure of which will constitute an offence. A property practitioner must also, in addition to the documents contained above, keep records of the accounting records that are necessary to fairly reflect and explain the state of affairs.
20. Section 56 refers to instances where property practitioners are not entitled to any remuneration arising from his/her/its performance unless at the time of the performance he/she/it is a property practitioner or in the event that it is a company, such directors or members are property practitioners as defined in Section 1 of the Act. In the event that such person does indeed receive remuneration despite not being entitled to such, the remuneration received must immediately be paid to the Fidelity Fund and such an affected seller, purchaser, lessor or lessee will have 3 years of that money having been paid to the Fund to submit a written claim in respect of such monies, together with the necessary proof, whereafter the Fund may pay that amount or a portion thereof to the applicant. The abovementioned Section, specifically Section 56(5) further places emphasis on the fact that a conveyancer may not pay any remuneration or other monies to a property practitioner unless the property practitioner has provided the conveyancer with a copy of his/her/its valid Fidelity Fund Certificate, during the period or on the date of the transaction to which such payment relates, provided that where all relevant conditions have been met, the conveyancer must pay the remuneration and other monies to the property practitioner.
21. Section 57 contains reference to mandatory indemnity insurance wherein the Minister may, for the purpose of providing redress in respect of the contravention of a code of conduct contemplated in Section 61, or any sanctionable conduct contemplated in Section 62, prescribe indemnity insurance which a property practitioner must take out and maintain. Upon determination of the application of the indemnity insurance the Minister may on reasonable grounds differentiate between the following:
- Categories of property practitioners to whom the regulation applies;
- The minimum insured amount in respect of which the insurance must be taken out and maintained;
- The extent to which the conduct in contravention of the code of conduct and sanctionable conduct qualified for redness under such insurance; and
- The maximum amount payable in terms of such insurance.
22. Section 58 relates to the limitation on relationships with other property market service providers and states that a property practitioner may not practice in association with any other person which or who is prohibited by law, professional code of conduct, any code of ethics or protocol, report or charter on corporate governance, from doing so and may not enter into any agreement, formally or informally, whereby a consumer is obliged or encourages to use a particular service provider including an attorney to render any service or ancillary services in respect of any transaction of which that property practitioner was the effective cause. Section 58(3) specifically provides that if any person renders a service as contemplated above, such person will not be entitled to any remuneration, payment or consideration in respect of such services rendered. In the event that such person has received the remuneration, the monies together with the interest must be repaid to the affected party.
23. In terms of Section 59 a property practitioner who commits an act of insolvency, is insolvent or is placed under liquidation whether provisionally or final, is immediately disqualified to be a holder of a FFC and must inform the Authority accordingly within 30 days, and must cease to perform the functions of a property practitioner and must inform his/her/its auditors, clients, employees or employers or any other affected person. The person must further hand over the administration of their trust account, together with all relevant information, to the Authority. The Section further states that any monies kept in trust by a property practitioner under insolvency or liquidation do not form part of the insolvent estate.
24. Section 60 & 61 provides for chapters 9 & 10 (Conduct of Property Practitioners and Consumer Protection) to apply to both registered and unregistered persons providing a Property Practitioner service as contemplated in the definition of “property practitioner” in Section 1 of the Act, thus allowing the Authority to act against agents who do not comply with the rules, regulations and code of conduct. Section 61 states that the Minister must, after consultation with the Authority prescribe a Code of Conduct which every property practitioner must comply with and that a property practitioner must on request from a consumer provide him/her with a copy of the code of conduct.
25. In terms of Section 62 A property practitioner is guilty of sanctionable conduct if he/she :
- Acts in the same transaction on behalf of two or more persons whose interests are not in all material aspects identical in respect of the transaction and receives remuneration from all parties concerned, unless the persons agree thereto in writing;
- Fails in respect of any act performed by him as a property practitioner to give full explanation in writing, being called upon by the Authority to do so to any person having a material interest in the performance;
- Fails to pay any monies due to the Authority or in respect of the Fund after one month of such monies being due;
- Fails to furnish any information, in writing, that the Authority may have requested and reasonably requires;
- Contravenes the Code of Conduct;
- Carries on an undesirable practice as prohibited in Section 63 and prescribed by the Minister from time to time;
- Commits an offence involving an element of dishonesty;
- Failure to inform the Authority within 14 days, of a change in his/her/its contact details;
- Excludes customers directly or indirectly on the grounds of race, gender, sex, pregnancy, age, disability, religion, language…;
- Fails to comply with or contravenes any provision of this Act. Should the Authority investigate the alleged sanctionable conduct and find the property practitioner guilty, they may:
- Withdraw his/her/its FFC;
- Impose a fine not exceeding the maximum amount determined by the Minister of Justice and Correctional Services; or
- Reprimand such property practitioner and note his/her/its transgression on its website.
26. Section 64 refers to the supervision of a Candidate Property Practitioner and determines that he/she/it may not draft or complete any document or clause in a document relating to the sale or lease of a property. It further states that a person who contravenes the aforementioned is not entitled to any payment, remuneration, consideration or damages in respect of or by reason of any document contemplated above. Section 64(4) further states that a principal property practitioner who conducts business from more than one business premises must supervise and control the property practitioners and candidate property practitioners in his/her/its employ.
27. Section 65 contains reference to franchising and states that a Property Practitioner may not operate under a franchise name unless the franchisee property practitioner holds a FFC indicating that he operates as a franchise, disclosing clearly and unambiguously in all his/her/its written communication, advertising and marketing material that he/she/it operates in terms of a franchise agreement, as well as the name of the franchisor/ and the franchisor. The Authority may withdraw any Fidelity Fund Certificate of a franchise property practitioner who carries on business in contravention of the aforementioned.
28. Section 66 determines the prohibition on conduct to influence the issue of certain certificates and states that a property practitioner may not in any way offer or receive a financial or other incentive to, or otherwise influence a person who at the request of a seller or lessor issues a certificate required by Law, based on his/her/its expert opinion, in respect of the condition or defects of electrical wiring, the presence of vermin, the presence of water or damp or any other condition provided for in Law and will be guilty of an offence if doing so.
29. In terms of Section 67 a mandatory disclosure form of defects now becomes law and a property practitioner may not accept a mandate to sell or let a property without first receiving a signed mandatory disclosure form from the seller/lessor and such form must then be handed to every prospective purchaser/lessee wanting to make an offer in respect of the purchase or lease of property. The signed mandatory disclosure form must be attached to any agreement and forms an integral part of that agreement between the parties. The Section further states that if such disclosure is not completed, signed or attached to the agreement, the agreement must be interpreted as if no defects or deficiencies of the property were disclosed to the purchaser, and a property practitioner who fails to comply with this requirement may be held liable by an affected consumer. The Section lastly states that there is nothing preventing a consumer, for his/her own account, from undertaking a property inspection to confirm the state of the property before finalisation of the transaction.
30. Section 71 A person convicted of an offence in terms of this Act is liable to a fine or to imprisonment for a period not exceeding 10 years. Important Aspects Contained in the Property Practitioners Regulations, 2022.
31. Regulation 15: Fees and the Fidelity Fund The aforementioned Regulations determines the fees payable by every property practitioner who is a natural person and determines that as of the calendar year 2020, a property practitioner must pay to the Authority:
- A levy of R2 340.00 set for a period of 3 years; or
- In the alternative, if so permitted by the Authority, R780.00 per annum. The Regulation further states that a candidate property practitioner as defined in the Act shall pay:
- R380 in each year of his/her candidacy period;
- Or where the candidacy period exceeds two years, the candidate property practitioner shall pay the same levy applicable to every other candidate property practitioner. Every practitioner who is a natural person, upon first becoming registered as a property practitioner pay to the Fidelity Fund, a contribution of R400.00.
32. Regulation 18: Claims from Fidelity Fund The aforementioned Regulation determines claims that may be entertained by the Fund, and includes:
- Claims lodged within 3 years of the incident giving rise thereto;
- Claims relating to pecuniary loss arising from the theft of trust monies, the failure to open a trust account or the failure to retain money in a trust account until lawfully entitled to it or instructed to pay such money to a third party;
- The theft or failures mentioned above having been committed by a property practitioner;
- Recommendation for the rejection or approval of the claim to the board of the Authority; or
- The Authority furnishes reasons for the rejection or approval of the claim. Regulation 20: Maximum Pay-Outs from the Fidelity Fund This Regulation determines that the maximum amount that the Fidelity Fund may pay a claimant in respect of each cause of action is R2 000 000.00 (two million rand). 33. Regulation 23: Penalty for Late Fidelity Fund Certificate Application The aforementioned determines that should a property practitioner fail to apply for a fidelity fund certificate when such a person is obliged to do so under the provisions of the Act, such person shall pay a penalty in addition to the amount prescribed under Section 32(2) of the Act, of R125.00 in respect of each month or part of a month which has expired between the date upon which such person is obliged to apply for a FFC and the date upon which they applied for the certificate.
34. Regulation 27: Information about Trust Account This regulation lists the information which is to be provided to the Authority in respect of the trust account(s) opened by a property practitioner and determines that such person must provide the Authority with the following, in writing:
- Name of the financial institution;
- Branch at which the account is held, as well as the branch code;
- Name of the accountholder;
- Account number; and
- The type of account. The regulation further determines that immediately after appointing an auditor in terms of the Act, the property practitioner must provide the authority with the following information:
- Full name of the auditor;
- Independent Regulatory Board of Auditors certificate number;
- Business, postal and email address; and
- The office and mobile telephone number.
35. Regulation 33: Training, Conduct and Consumer Protection: Standard of Training Regulation 33.2.3 The aforementioned Regulation states that no person shall be entitled to practice as a property practitioner unless such person has first completed a practical training course in respect non-principal property practitioners, which practical training course will constitute a minimum of 6 modules, to be completed over a maximum period of 6 months. Regulation 33.2.6 This Regulation determines that it shall not be a prerequisite that a person be registered with the Authority as a candidate property practitioner prior to such person being entitled to study for and write he exams as envisages in the Act and regulations. Regulation 33.2.8 The aforementioned contains that if any person ceases to practice as a property practitioner for a period of in excess of five years calculated from the date upon which his/her professional examination was passed. Such person shall not be entitled to practice as a property practitioner in the industry in question, unless such a person has again first achieved the qualification in question, although the Authority may establish a less onerous standard for the purpose of such requalification.
36. Regulation 184.108.40.206 This regulation determines that notwithstanding anything to the contrary contained in the abovementioned regulations a property practitioner who on the effective date, is already registered as either a non-principal or principal property practitioner, will be exempted from the requirements of the provisions of Regulation 33.
Regulation 220.127.116.11 This Regulation enables the Authority to establish transitional provisions for the phasing in of some or all of the provisions contained in Regulation 33, which shall be done in good faith and in consultation with industry representative bodies.
37. Regulation 33.3 This Regulation importantly places emphasis on further restrictions relating to the training of property practitioners insofar as it states that for a period of six months following the date upon which the person first becomes qualified and registered as a non-principal property practitioner, such person shall not in their capacity as a property practitioner: Enter into any mandate or the sale or purchase of my property or the letting or hiring of any property with any member of the public; or
Conclude or cause to be concluded any agreement for the sale or purchase of any property or the letting or hiring of any property, unless such mandate or agreement has first been reviewed and co-signed by another qualified property practitioner (other than a candidate), operating in the same industry and registered with the Authority who holds a Fidelity fund Certificate issued by the Authority.
38. Regulation 33.4.2 A candidate estate agent may not perform any act as a property practitioner unless the candidate estate agent has duly disclosed as far as practically possible in relation to the candidate estate agent’s activities, that he/she is a candidate estate agent; and is acting under the supervision and control of a property practitioner qualified in terms of the Regulations and who is no longer subject to restrictions; or is a practicing attorney with at least 3 years’ experience.
Regulation 33.4.5 This regulation states that no person may without the consent of the Authority act as a candidate estate agent for a period in excess of 180 days in aggregate. After the expiry of such 180-day period the candidate estate agent shall be obliged to sit for his/her professional examinations as a non-principal property practitioner, considering that if such person fails to pass the professional examinations they may apply to the Authority on good cause, to be permitted to register as a candidate estate agent for a further period of 180 days.
39. Regulation 33.5.2, 33.5.3 and 33.5.5 The aforementioned regulation determines that all property practitioners are required to undergo continuing professional development as prescribed by the authority and that all such continuing professional development requirements must be completed over a rolling three-year cycle, and every property practitioner must complete at least 12 modules on the basis that a minimum of four modules must be completed during each year of such cycle. The Regulations further state that the continuing professional development will be charged for by the Authority at a rate of R1500 per annum in respect of each property practitioner.
40. Regulation 34: Code of Conduct The aforementioned regulation contains the essential Code of Conduct applicable to all property practitioners in Regulation 34 of the Regulations, and aims to regulate the conduct of such practitioners by way of highlighting their duties to members of the public and other persons or bodies. The Code of Conduct differentiates between “all property practitioners and “estate agents” and their duties in terms of the profession. Duties Applicable to All Property Practitioners In terms of a property practitioner’s general duty to members of the public and other persons or bodies, a property practitioner –
- shall not in or pursuant to the conduct of his business do or omit to do any act which is or may be contrary to the integrity of property practitioners in general;
- shall protect the interests of his client at all times to the best of his ability, with due regard to the interests of all other parties concerned;
- shall not accept a mandate if the performance of the mandate requires specialised skill or knowledge falling outside his field of competence, or he has not completed the required qualifications, unless he will in the performance of the mandate be assisted by a person who has the required skill or knowledge and this fact is disclosed in writing to the client;
- shall not in his capacity as a property practitioner willfully or negligently fail to perform any work or duties with such degree of care and skill as might reasonably be expected of a property practitioner;
- shall comply with both the Act, these regulations and all applicable bylaws; and
- shall not through the medium of a company, close corporation or third party, or by using such company, close corporation or third party as a front or nominee do anything which would not be permissible for him to do if he were operating as a property practitioner.
41. A property practitioner –
- shall not solicit or influence any person entitled to trust funds under his control to make over or pay to the property practitioner directly or indirectly any interest on moneys deposited or invested in terms of section 54 (1) or 54 (2) of the Act;
- shall, before he receives any money in trust in respect of a contract of sale or lease, disclose to the parties concerned that unless they agree in writing to whom interest earned on such money must be paid, the interest may accrue to the Property Practitioners Fidelity Fund; and
- shall, if any money is invested by him pursuant to section 54 (2) of the Act or pursuant to an instruction by the party entitled to the interest on money held in trust by the property practitioner
- invest such money at the best interest rate available in the circumstances at the bank or building society where he normally keeps his trust account or accounts; and
- pay the full amount of the interest which accrued on the investment to the party entitled to such interest.
- No property practitioner shall, without just cause, divulge to any third party any confidential information obtained by him concerning the business affairs, trade secrets or technical methods or processes of a client or any party to a transaction in respect of which he acted as a property practitioner.
42. Regulation 34.3: Duties applicable to Estate Agents Mandates No estate agent shall –
- offer, purport or attempt to offer any immovable property for sale or to let or negotiate in connection therewith or canvass or undertake or offer to canvass a purchaser or lessee therefor, unless he has been given a mandate to do so by the seller or lessor of the property, or his duly authorised agent;
- on behalf of a prospective purchaser or lessee, offer, purport or attempt to offer to purchase or lease any immovable property or negotiate in connection therewith or canvass, or undertake or offer to canvass a seller or lessor therefor, unless he has been given a mandate to do so by such prospective purchaser or lessee, as the case may be, or his duly authorised agent;
- Accept a sole mandate or the extension of the period of an existing sole mandate, unless –
- all the terms of such mandate (or extension, as the case may be), are in writing and signed by the client in a manner acceptable in law, including by way of an electronic signature as permitted under the Electronic Transactions and Communications Act, 2002; and
- the expiry date of the mandate (or extension, as the case may be), which shall be expressed as a calendar date, is specifically recorded in the written sole mandate (or extension, as the case may be)
- Accept a sole mandate which contains a provision conferring upon him –
- an option to extend the sole mandate for a certain period after expiry of the sole mandate; or
- a mandate to continue to render the same service referred to in the sole mandate, after expiry of the sole mandate.
- accept a sole mandate which also confers upon him a power of attorney to act on behalf of the person conferring the mandate, unless the intention and effect of such power of attorney is fully explained in the document embodying the sole mandate;
- include, or cause to be included, or accept the benefit of, any clause in a contract of sale or lease of immovable property negotiated by him, whereby a sole mandate is directly or indirectly conferred upon him to sell or let the said immovable property at any time after the conclusion of the said contract;
- accept any mandate or instructions for work in respect of immovable property if his interest therein would compete with his obligations towards an existing client in respect of the same immovable property without first disclosing such interest in writing to such client;
- knowingly or negligently make a material misrepresentation concerning the likely market value or rental income of immovable property to a seller or lessor thereof, in order to obtain a mandate in respect of such property;
- accept a mandate in respect of any immovable property if the performance of the mandate requires specialised skill or knowledge falling outside his field of competence, unless he will in the performance of the mandate be assisted by a person who has the required skill or knowledge and this fact is disclosed in writing to the client; or
- the legal implications should the client during the currency of the sole mandate or thereafter sell or let the property without the assistance of the estate agent, or through the intervention of another estate agent; and
- what specific obligations in respect of the marketing of the property will be assumed by the estate agent in his endeavour to perform the mandate, provided that such explanations, if contained in a standard pre-printed or typed sole mandate document, shall be in lettering not smaller than that generally used in the remainder of the document.
43. Duty to disclose An estate agent shall –
- convey to a purchaser or lessee or a prospective purchaser or lessee of immovable property in respect of which a mandate has been given to him to sell, let, buy or hire, all facts concerning such property as are, or should reasonably in the circumstances be, within his personal knowledge and which are or could be material to a prospective purchaser or lessee thereof;
- if he conducts his business under a trade name or style other than his own name, clearly disclose his full name in all correspondence, circulars and other written documentation; and
- not perform or attempt to perform any mandate in respect of a particular property if a current prior mandate, which conflicts with the aforesaid mandate, has been accepted by him, unless he has disclosed to the person who has given the later mandate the existence of such prior mandate, and the fact that he will not be the estate agent’s only client in respect of that property No estate agent shall purchase directly or indirectly for himself, or acquire any interest in, or conclude a lease in respect of, any immovable property in respect of which he has a mandate, without the full knowledge and consent of the person who conferred the mandate, or sell or let his own immovable property or any immovable property in which he has any direct or indirect interest, to any prospective purchaser or lessee who has retained his services, without that purchaser or lessee having full knowledge of his ownership of, or interest in, such immovable property.
44. Duty not to make misrepresentations or false statements or to use harmful marketing techniques No estate agent shall –
- in his capacity as an estate agent publish or cause to be published any advertisement which could create the impression that it was published by the owner, seller or lessor of immovable property, or by a prospective purchaser or lessee of immovable property;
- willfully or negligently, in relation to his activities as an estate agent, prepare, make or assist any other person to prepare or make any false statement, whether orally or in writing, or sign any false statement in relation thereto knowing it to be false, or
- knowingly or recklessly prepare or maintain any false books of account or other records;
- claim to be an expert or to have specialised knowledge in respect of any service if, in fact, he is not such an expert or does not have such special knowledge;
- advertise or otherwise market immovable property in respect of which he has been given a mandate to sell or let, at a price or rental other than that agreed upon with the seller or lessor of the property;
- without derogating from the generality of the aforegoing –
- willfully or negligently mislead or misrepresent in regard to any matter pertaining to the immovable property in respect of which he has a mandate; or
- use any harmful or misleading marketing technique or method or undesirable practice as declared in terms of section 63 of the Act to influence any person to confer upon him a mandate to render any service or to sell, purchase, let or hire immovable property, having regard to the general experience which such person has concerning property transactions and the circumstances surrounding the transaction or proposed transaction;
- use any firm or trading name in respect of his business if such name may give rise to confusion on the part of the public in respect of the nature of the business carried on by him;
- inform a seller or purchaser, or prospective seller or purchaser, of immovable property in respect of which he has been given a mandate to sell or purchase, that he has obtained an offer in respect of the property from a purchaser or seller (as the case may be), unless such offer – is in writing;
- has been signed by the offeror in manuscript, albeit that the offer was subsequently electronically transmitted to the estate agent; and
- is, to the knowledge of the estate agent concerned, a bona fide offer; or
- affix any board or notice to immovable property indicating that such property is for sale or hire or has been sold or let, unless – the seller or lessor has given his consent to do so; and
- the estate agent concerned in fact has a mandate to sell or let the property, or in fact has sold or let the property; or
- affix or erect any advertising board or notice to solicit business – on local authority property, without express written approval by the local authority; or
- which is in contravention of the regulations of the advertising by-laws of the applicable local authority.
45. Duties in respect of offers and contracts. No estate agent –
- who has a mandate to sell or purchase immovable property shall willfully fail to present or cause to be presented to the seller or purchaser concerned, any offer to purchase or sell such property, received prior to the conclusion of a legally valid contract of sale in respect of such property, unless the seller or purchaser (as the case may be) has instructed him expressly not to present such offer;
- who has a mandate to sell immovable property, may present competing offers to purchase the property in such a manner as to unduly influence the seller to accept any particular offer without regard to the advantages and/or disadvantages of each offer for the seller;
- shall amend any provision of a signed offer, prior to rejection thereof, or a written mandate or any contract of sale or lease, without the knowledge and express consent of the offeror or the parties to the contract, as the case may be.
An estate agent shall –
- explain to every prospective party to any written offer or contract negotiated or procured by him in his capacity as an estate agent, prior to signature thereof by such party, the meaning and consequences of the material provisions of such offer or contract,
- or, if he is unable to do so, refer such party to a person who can do so;
- if he knows that an offer submitted by him as an estate agent to any party has been accepted, or has not been accepted forthwith notify the offeror of such fact; and
- without undue delay furnish every contracting party with a copy of an agreement of sale, lease, option or mandate with which he is concerned as an estate agent, provided that the aforegoing shall also apply in respect of an offer to purchase or lease if the offeror specifically requests a copy thereof.
No estate agent shall –
- stipulate for, demand or receive directly or indirectly any remuneration, commission, benefit or gain arising from or connected with any completed, pending or proposed contract of sale or lease which is subject to –
- a suspensive condition, until such time as that condition has been fulfilled; or
- a resolutive condition, during the time that the transaction may fall away as a result of the operation of the said resolutive condition;
- convey to his client or any other party to a completed or proposed transaction in which he acted or acts as an estate agent, that he is precluded by law from charging less than a particular commission or fee, or that such commission or fee is prescribed by law, the Authority or any institute or association of estate agents or any other body;
- introduce a prospective purchaser or lessee to any immovable property or to the seller or lessor thereof, if he knows, or has reason to believe, that o Such person has already been introduced to such property or the seller or lessor thereof by another estate agent; and
- that there is a likelihood that his client may have to pay commission to such other estate agent, or to more than one estate agent, should the sale or lease be concluded through his intervention;
- include, or cause to be included, or accept the benefit of, any clause in a mandate or in a contract of sale or lease of immovable property, providing for payment to him by the seller or lessor of immovable property, of any remuneration, commission, benefit or gain arising from or connected with a contract of sale or lease, regardless of whether the purchaser or lessee is financially able to fulfill his obligations in terms of the said contract;
- include, or cause to be included, or accept the benefit of, any clause in a contract of sale or lease of immovable property negotiated by him, entitling him to deduct from any money entrusted to him in terms of the contract, any remuneration, commission, benefit or gain arising from or connected with such contract, provided that the aforegoing shall not be construed so as to prohibit an estate agent from making such deduction when such money is actually paid over by him to the party entitled thereto and such party is in terms of the said contract liable for the payment of such remuneration, commission, benefit or gain; or
- include, or cause to be included, or accept the benefit of, any clause in a contract of sale of immovable property negotiated by him, providing for payment to the seller, prior to registration of transfer of the property in the purchaser’s name, of any portion of the purchase price entrusted to the estate agent by the purchaser; provided that the aforegoing shall not apply if –
- good cause exists; and
- the purchaser has prior to his signature of the contract in question, consented in writing in a document executed independently of the said contract, to such payment; and
- such document contains an explanation of the implications and financial risks of such payment for the purchaser; and
- shall not operate a trust account, other than in compliance with the Act and these regulations.
- such document is signed by both the seller and the purchaser and the estate agent in question; and
47. Regulation 35: Undesirable Business Practices
The aforementioned Regulation contains reference to certain business practices that are prohibited in the profession subject to Section 63(1) of the Act, which includes –
- any arrangement in terms of which any party or person that directly or indirectly controls or manages any franchised business, requires that any franchise operation or outlet of such franchised business may only be marketed, promoted or disposed of through the agency of the franchisor or a property practitioner designated by the franchisor or which imposes any form of penalty in respect of a failure to do so; and
- any arrangement in terms of which any party or person that directly or indirectly controls or manages any residential property development, including any body corporate or homeowners’ association (the “managing organisation”) – receives money or any other reward in exchange for a benefit, advantage or other form of preferential treatment in respect of the marketing of properties in such property development;
- requires that any property in such property development may only be disposed of through the agency of the managing organisation or a property practitioner designated by the managing organisation or which imposes any form of penalty in respect of a failure to do so;
- requires that any property in such property development may only be disposed of to the managing organisation or a person or entity designated by the managing organisation;
- effectively provides an advantage to any one property practitioner or group of property practitioners over and above any other property practitioners, in providing services in relation to properties in such property development; or
- practitioners from being able to provide services in relation to properties in such property development.
48. Regulation 36: Mandatory Disclosure
As in accordance with section 67 of the Act there is to be a mandatory disclosure form to disclose defects in the property prior to a possible purchaser making an offer or letting the property, which will form an integral part of the main agreement. The Regulations provide for a specific format and certain phrases which are to be included in the disclosure form, same of which is contained in Regulation 36.1 and includes a disclaimer which states:
“This report does not constitute a guarantee or warranty of any kind by the owner of the Property or by the property practitioners representing that owner in any transaction. This report should, therefore, not be regarded as a substitute for any inspections or warranties that prospective purchasers may wish to obtain prior to concluding an agreement of sale in respect of the Property.”
49. Regulation 37: Wording on Letterheads and in Agreements The aforementioned Regulation contains a new requirement that certain wording is to appear on all letterheads or marketing material pertaining to a property practitioner, being: “Registered with the PPRA” And where a candidate estate agent is making use of such letterhead reference should be made to reveal that such an individual is a candidate estate agent. The Regulation furthermore imposes an obligation to include a phrase to warrant the validity of the property practitioner’s fidelity fund certificate, which should read: “[name of property practitioner as defined in agreement] hereby warrants the validity of his/her/its Fidelity Fund Certificate as at the date of signature of his Agreement.”
50. Regulation 40: Document Retention
In terms of Section 55(1)(f) of the Act, together with this regulation, it is prescribed that the following documents must be retained in accordance with the aforementioned provisions –
- copies of all electronic communications sent or received by the property practitioner to and from members of the public in the course of carrying out its activities as a property practitioner, other than in circumstances where a property practitioner is acting in the course and scope of his or her employment by a person or entity that is a registered property practitioner in terms of the Act; and
- where a property practitioner employs any other property practitioner, copies of all electronic communications sent or received by such employee property practitioner to or from members of the public in the course and scope of carrying out his or her employment duties, provided that such obligation shall not extend to electronic communications on social media which are generally accessible by member of the public.
51. The aforementioned Act and Regulations clearly created a regulatory framework to guide all property practitioners in South Africa, and ensures that there is no misconduct, lack of regulation of the profession or abuse of the actions enshroud upon the property practitioners and the duties engrained therein. The Act and Regulations will form a perfect guide to current registered property practitioners as well as candidate estate agents and consequently provides the perfect transformation objectives.