- To date, the Estate Agency Affairs Act, No. 112 of 1976 (the “Estate Agency Affairs Act”) has regulated persons who qualified as estate agents. However, the new Property Practitioners Act, No. 22 of 2019 (the “Act”) seeks to regulate all role players in the property industry by repealing the Estate Agency Affairs Act and by bringing property practitioners (of whatever nature) under the ambit of the Act. Although the Act has not yet commenced and therefore compliance with it is not yet required, persons operating within the property industry should be cognisant of their obligations under the Act.
- The Property Practitioners Act seeks, amongst other things, to provide for the regulation of property practitioners, the continuation of the Estate Agency Affairs Board as the Property Practitioners Regulatory Authority, and for transformation of the property practitioners’ sector.
- The definition of a property practitioner in the Act is broader than the definition of an estate agent in the Estate Agency Affairs Act. Broadly speaking, a property practitioner is a person who or which, for the acquisition of gain, holds himself, herself, or itself out as a person who or which, directly or indirectly, on the instructions of or on behalf of another –
- sells, purchases, manages or publicly exhibits property or business undertakings or negotiates or canvasses for offers in respect thereof;
- leases or hires or publicly exhibits for hire property or business undertakings or negotiates or canvasses for offers in respect of the lease or hire thereof;
- collects or receives any monies in respect of the lease of a property or business undertaking;
- provides, procures, facilitates, secures or otherwise obtains or markets financing for or in connection with the management, sale or lease of a property or a business undertaking; or
- in any other way acts or provides services as intermediary or facilitator with the primary purpose of, or to attempt to effect the conclusion of an agreement to sell and purchase, or hire or let, as the case may be, a property or business undertaking.
- It should be noted that there are persons who/which are specifically excluded from being regarded as property practitioners, namely where such persons are not acting in the ordinary course of business, natural persons offering property for sale in their personal capacity, attorneys and candidate attorneys and sheriffs of the court. An important consequence of these exclusions for individuals is that, if you are letting or selling your property and it is not in the ordinary course of business, then you will not be regarded as a property practitioner. However, one should be alive to the fact that, under the Act, persons such as property managers, property developers, bond brokers, and bridging finance providers (save for those falling within the definition of a financial institution under the Financial Services Board Act, 1990) will be regarded as property practitioners.
- The main requirements of the Act (which are similar to those under the Estate Agency Affairs Act), are that (i) every property practitioner must apply annually to the Property Practitioners Regulatory Authority for a fidelity fund certificate and (ii) a property practitioner is also required to open a separate trust account. If a property practitioner is a company (or other juristic person), then every director (or similar) of the company must be in possession of a fidelity fund certificate. It should be noted that, if one is found guilty of an offence under the Act, which includes the failure to have a valid fidelity fund certificate, this could lead to a fine or imprisonment.
- One would expect that the above requirements could place an additional administrative burden on property practitioners, not to mention the ongoing costs of obtaining a fidelity fund certificate and operating a separate trust account.
- In addition to the obligations of holding a fidelity fund certificate and opening a trust account, a new feature of the Act (which aims to protect consumers) is that property practitioners (for the most part, agents who are letting and/or selling properties), before accepting a mandate to sell or lease a property, are required to obtain a disclosure form from the seller or landlord and to provide that disclosure form to the buyer or tenant. If the disclosure form is not signed, completed or attached to the agreement, then the property will be regarded as having been sold or let on the basis that no defects were disclosed to the buyer or tenant and that party may have a claim against the property practitioner.
- In conclusion, all role players in the property sector (particularly those who were not previously governed by the Estate Agency Affairs Act) should be careful to check whether they fall within the ambit of the Act and, if there is any doubt, they should obtain legal advice or contact the Property Practitioners Regulatory Authority for clarification.
Ashleigh has a BSocSci LLB (both summa cum laude) from UKZN and an HDip Tax from Wits, and was admitted as an attorney in 2009. She spent time at Fasken in its dispute resolution department and then at Glyn Marais specialising in corporate, commercial, M&A and property work. Ashleigh joined Caveat in 2021 focusing on commercial and M&A work.