Most estate agents by now know that the new Property Practitioners Act has come into effect. Yet surprisingly, there is still a lot of confusion about how the Act will affect Estate Agencies and their agents. To help, we have unpacked some of the key points to be considered by any estate agency and property practitioner.
The Property Practitioners Act 22 of 2019 (“Act”) commenced operation on 01 February 2022 and aims to among other things, regulate property practitioners, transform the property market and provide for greater consumer protection.
The first question that generally comes up, is what constitutes a property practitioner, as the Act places a number of obligations on them. Here the Act includes the following:
Sale and rental estate agents;
Auctioneers, but excluding sheriffs;
Trusts rendering certain services listed in the Act.
The Fund established by section 12 of the Estate Agents Affairs Act, 1976, known immediately before the commencement of this Act as the Estate Agents Fidelity Fund, continues to operate as if it were established in terms of the Property Practitioners Act, under the name the Property Practitioners Fidelity Fund.. The primary purpose of this Fund is to reimburse persons who suffered financial loss because of theft of trust money by a property practitioner in possession of a fidelity fund certificate at the time of the theft, or for a failure by a property practitioner to comply with its obligations in respect of trust accounts as contemplated in section 54 of the Act.
Property practitioners, except practitioners excluded in terms of the Act, must now every three years apply for a fidelity fund certificate from the Property Practitioners Regulatory Authority. The fidelity fund certificate must be issued by the Property Practitioners Regulatory Authority once the Authority determines that the applicant meets or has met all requirements the Act provides for and is not disqualified from being issued with a fidelity fund certificate in terms of section 48 of the Act.
Section 48 of the Act prohibits any person from acting as a property practitioner unless he or she has been issued with a fidelity fund certificate. Section 53 further dictates that a holder of a fidelity fund certificate must prominently display their fidelity fund certificates in every place of business where they conduct property transactions, to allow for the inspection of the certificate and to also –
- provide confirmation of the holding of such a certificate in legible lettering on any letterhead or marketing material relating to the property practitioner; and to
- include a prescribed clause that guarantees the validity of the practitioner’s fidelity fund certificate in any agreement relating to a property transaction entered into by the practitioner.
Failing to comply with the above-mentioned obligation will constitute an offence by the property practitioner.
To increase consumer protection, the Act also prescribes a mandatory disclosure form that a seller or a lessor must complete. Section 67 of the Act provides that a property practitioner must not accept a mandate unless the seller or lessor of the property has provided the property practitioner with a completed and signed mandatory disclosure in the prescribed form. The completed and signed mandatory disclosure form must form part of any agreement of sale or lease. If there is no mandatory disclosure form completed, the Act prescribes that it must be interpreted that no defects were disclosed to the purchaser. Also note that this does not prohibit the Property Practitioners Regulatory Authority referred to above, from taking further action against a property practitioner or imposing an appropriate sanction.
The above are just a few noteworthy implications of the Act, as the Act is comprehensive and introduces a range of developments regarding the governance of the property sector. It is beyond the scope of this overview to unpack each aspect of these changes and developments, which is why it is recommended that each estate agency or property practitioner take steps to ensure that it is up to date with the Act. If necessary, consider obtaining guidance from an attorney or property specialist to help you unpack the Act and ensure full compliance with its provisions.