PROPERTY PRACTITIONERS ACT

The Property Practitioners Act (22 of 2019) came into operation on 1 February 2022. The Act repeals the Estate Agency Affairs Act (112 of 1976), and aims to regulate all property practitioners (not just estate agents), including estate agents and agencies, property brokers, home inspectors, providers of bridging finance, bond brokers, marketers, auctioneers, property managers, sellers of time share, developers, rental agents, home owner associations (where a service is provided as intermediary primarily to sell/lease property in that home owner’s association), digital portals that publicly exhibit properties, and employees of attorneys who act as estate agents. The Act specifically excludes a person who does not carry out any of these functions in the ordinary course of business, and a natural person who sells their own property (even if it is in the ordinary course of business), as well as attorneys, candidate attorneys and the Sheriffs of the Court. The Act applies to the marketing, promotion, managing, sale, letting, financing and purchase of immovable property. Some of the key changes it introduces are as follows:

• The Property Practitioners Regulatory Authority (PPRA)

  • ​The Estate Agency Affairs Board (EAAB) has been replaced by the PPRA, known as the Board of Authority, which governs the property practitioners profession (not just estate agents. It is also required to conduct campaigns to educate and inform the general public of their rights and the obligations of property practitioners.

• Transformation of Property Sector

  • When procuring property related goods and services, all organs of state must utilise the services of property practitioners who comply with the broad‑based black economic empowerment and employment equity legislation and policies.
  • The PPRA must, within 6 months of its establishment, open a Property Sector Transformation Fund, into which grants are paid- with the aim of benefiting previously disadvantaged individuals (small black-owned property practitioners).
  • The Board must also consult with the services SETA to develop special dispensation for training and development of the historically disadvantaged.
  • The Minister may prescribe measures to promote economic transformation by facilitating the accessibility of finance for property ownership, development and investment in order to enable meaningful participation of historically disadvantaged individuals including women, youth and the disabled.
  • A purchaser/seller/tenant/lessor can request the agreement to be in any of South Africa’s official languages, and this must be supplied by the seller.

• Exemptions in respect of accounting records and trust accounts

  • ​These exemptions are introduced to assist transformation within the industry.
  • Section 23 provides that a property practitioner, whose turnover is below R2.5 million, may not require an audit, but must cause his, her or its accounting records to be subjected to an independent review by a registered accountant, subject to the provisions of section 54(1)-(7) applied with the necessary changes. All property practitioners whose turnover is above R2.5 million must cause their accounting records to be audited within 6 months of their financial year end.
  • The Minister may by notice in the Government Gazette, determine circumstances where a property practitioner may be exempted from keeping trust accounts, and determine a different dispensation for the review of the accounting records for those property practitioners. The final Regulations, which were published on 14 January 2022, state that a property practitioner is exempted from keeping a trust account if he has never received any trust monies, or no longer receives the same, and he submits an affidavit to this effect to the Board of Authority.
  • A managing agent shall not be required to operate a trust account in respect of a body corporate where the funds of that body corporate are held in a bank account opened in the name of the body corporate in terms of Section 21(4)(a) of the Sectional Title’s Schemes Management Act (8 of 2011).

• Property Practitioners Fidelity Fund and Fidelity Fund Certificates

  • ​The Estate Agents Fidelity Fund is now known as the Property Practitioners Fidelity Fund (PPFF). It has the purpose of reimbursing consumers who suffer financial loss by reason of theft of trust money committed by a property practitioner.
  • Every property practitioner must have a valid Fidelity Fund Certificate, and is prohibited from rendering services without it. He will not only be required to possess a valid Fidelity Fund Certificate, but also a Tax Clearance Certificate, and a valid BEE Certificate.
  • The property practitioner must apply to the Board of Authority for a Fidelity Fund Certificate every 3 years, and must display the Certificate in every place of business from where he conducts property transactions, to enable consumers to easily inspect it. The Board must issue the Certificate within 30 days. Failure to do so will result in the application being deemed to have been approved and the Board must upon written request by the applicant, produce the Certificate within 10 days.
  • A valid Fidelity Fund Certificate must be held for all property practitioners within the agency or business. If an entity is a company, close corporation, trust or partnership, then every director, member, trustee and partner in that business must be issued with a Fidelity Fund Certificate, and failure to do so constitutes an offence.
  • The Regulations provide that a property practitioner, who, on 1 February 2022 holds a Fidelity Fund Certificate issued under the previous Act shall be entitled to continue acting as a Property Practitioner under the Act, using such existing Fidelity Fund Certificate, until the end of the year during which the effective date falls.
• Consumer protection – Property Defects Disclosure
  •  It is mandatory for sellers or lessors to provide a comprehensive property defects disclosure document as part of a property transfer or lease, which will form part of the sale or lease agreement, and no mandate may be accepted by a property practitioner from a seller or lessor without this document, and a copy thereof must be provided to a prospective purchaser or lessee of the property.

• Inspectors, Compliance Notices and Record Storage

  •  Inspectors may be appointed by the CEO of the Board of Authority. They may, at any reasonable time, and without prior notice, warning or a warrant, conduct an inspection at the business premises of any property practitioner in order to determine whether the provisions of the Act have been complied with. If the property practitioner conducts his business at his private residence, the inspector must notify the property practitioner in advance and in writing. The inspector may issue compliance notices- which could include the imposition of a fine. The property practitioner is required to keep records, including correspondence, legal agreements, copies of advertising and marketing materials, for 5 years. These can be stored electronically.

• Mediation, Adjudication and Appeal

  • The Board of Authority may consider complaints by members of the public against property practitioners in respect of financing, marketing, managing, letting, hirin and the sale and purchase of property, and may refer the complaint for mediation.
    Should a property practitioner have been served with a compliance notice and has failed to comply, or to pay the fine stated therein timeously, or mediation has failed, the Board of Authority may cause a notice of adjudication to be served on that person. Any person aggrieved by the decision of adjudicator may appeal against such a decision to the Adjudication Appeal Committee.

• Remuneration

  • ​In order for a property practitioner to enforce the collection of remuneration (commission), a valid Fidelity Fund Certificate must be held for all property practitioners within the agency or business – and failure to have it may require the property practitioner to refund any commission paid by the seller. Agents may only receive commission from a property sale on registration (and this requirement cannot be amended by agreement). A conveyancer may not pay any remuneration or other monies to a property practitioner unless that property practitioner has provided the conveyancer with a certified copy of his, her or its Fidelity Fund Certificate, valid during the period, or on the date of the transaction to which the payment relates.