Effective from February 2022, the Property Practitioners Act is the successor to the Estate Agency Affairs Act 1976 which has been repealed. The Estate Agency Affairs Board has been replaced by the Property Practitioners Regulatory Authority.
What are the effects and applications?
It applies to immovable property generally, i.e. to both residential and commercial property and includes rights therein such as timeshare and fractional ownership. No distinction is drawn between new developments and pre-owned property.
It affects anybody involved in the selling, letting, financing, purchase, promotion, and management of property This includes natural persons, companies, close corporations, associations and trusts and anyone employed by or connected to such entities.
Exceptions to this are:
- Attorneys
- Persons who do not partake in these activities in the normal course of business.
- Anyone doing so in his personal capacity.
The Act has in it a number of provisions affecting property practitioners’ business activities which are not dissimilar to those contained in the old Act.
Some examples :
Every practitioner is obliged to have a fidelity fund certificate which is to be displayed wherever he conducts his business. Every agreement brokered by a practitioner must have in it a clause guaranteeing the validity of his certificate. The certificate must be applied for every three years.
Trust accounts are compulsory. The Minister may in certain circumstances exempt a practitioner from complying with this provision
All documents relating to any transaction in which a practitioner was involved must be retained for no less than 5 years. This includes communications with the regulatory authority.
Candidate property practitioners (formerly interns) may not complete a document or a clause in a document conferring a mandate on a practitioner or relating to the sale or lease of a property. Contravention of this provision may cause a practitioner to forfeit his right to the payment of the selling commission.
A conveyancer may not pay a selling commission to a practitioner unless he has first been given a certified copy of the practitioner’s fidelity fund certificate. A consumer may not be debited with the cost of the preparation of an offer to purchase or an offer to let a property.
There are three important provisions in the Act relating to consumer protection :
A seller or lessor is obliged to sign a full disclosure regarding defects in the property being sold or let. A practitioner may not accept a mandate to sell or let a property unless he has been provided with the signed disclosure form. The practitioner must furthermore put the proposed purchaser or tenant in possession of the signed form before an offer to buy or rent is made.
If a seller accepts an Offer To Purchase (OTP) without the signed disclosure being attached to it as an annexure, the seller is regarded as not having disclosed any defects to the purchaser.
This means that the seller cannot rely on the voetstoots clause in the offer and he would have to make good any defects found to be in the property.
The converse is that if the offer has a voetstoots clause in it and a signed disclosure is attached, the normal voetstoots rules apply.
A purchaser or tenant is fully entitled to commission their own inspection of the property.
A practitioner’s failure to comply with this requirement may expose him to legal action by the buyer.
A practitioner may not encourage or oblige a consumer to use the services of a particular service provider. This includes an attorney.
This raises some interesting, potentially problematic questions, such as :
When is a recommendation an encouragement?
How will the current practice that a seller gets to choose the transfer attorney be affected?
A practitioner may not provide an incentive for a particular service provider to be used for the issue of compliance certificates.
The Minister is obliged to prescribe a code of conduct that every practitioner must comply with. The Minister may also from time to time, by notice in the Gazette, classify certain conduct as an undesirable practice.
Any transgression of the Act amounting to an offence can expose a practitioner to either a fine or imprisonment for up to 10 years.
If you are unsure of anything in this article then please feel free to contact us for any legal queries you may have.
Contact Loftus Law today
Our Team:
Russell Loftus (Attorney and Conveyancer)
Tel 082 651 5548
Email: russell@loftuslaw.co.za
Jan Watson (Paralegal)
Tel 011 447 1534 | Mobile 082 560 8843
Email: jan@loftuslaw.co.za