What you should know about the new Property Practitioners Act
The long-awaited Property Practitioners Act finally came into effect this year and brings with it significant changes to the real estate industry. The Act takes a more consumer-focused approach and is premised on the need for transformation in the property sector. Property practitioners The Act has widened its scope of application by consolidating all role players in the real estate industry under the same Act. The concept of a property practitioner is therefore not confined to real estate agents only but includes property developers, property managers and bridging financiers among others. The limitation on the relationship between property practitioners and other real estate service providers As aforementioned, the Act takes a more consumer-focused approach and is primarily aimed at protecting the consumer. This is evident in section 58 of the Act, which states, inter alia, that a property practitioner may not enter into an agreement that obligates or encourages a consumer to use a particular real estate service provider, including an attorney, to render a service in respect of a transaction of which that property practitioner was the effective cause. The Act then further provides that any person who renders services in contravention of this section is not entitled to remuneration. All property practitioners must be in possession of a Fidelity Fund Certificate In addition to the above, the Act also makes it mandatory for all property practitioners to be holders of a Fidelity Fund Certificate issued by the newly established Property Practitioners Regulatory Authority. Furthermore, the practitioner must also be in possession of a Tax Clearance Certificate, as well as a BEE certificate. In terms of section 56 of the Act, a practitioner shall not be entitled to remuneration or payment if at the time of the performance of their duties the practitioner was not in possession of a Fidelity Fund Certificate. The Act makes it mandatory for a conveyancer to first request this certificate from the property practitioner before making any payment to the practitioner. This provision will ensure that sellers and buyers deal with properly qualified practitioners. Mandatory disclosure of defects Lastly, one of the most significant changes that the Act brings forth is the obligation of sellers to now disclose any defects on the property that they are aware of. The Act compels sellers to make a written disclosure to potential buyers of all the defects on the property. The written disclosure must be signed by all parties and must be attached to the offer to purchase. In terms of section 67 of the Act, the property practitioner cannot accept a mandate if this written disclosure is not produced. Conclusion In light of the aforementioned, it is clear that the new Act primarily aims to protect the interests of the consumer. Consumers should therefore make use of the protection afforded to them in terms of the Act and before signing any offer to purchase, make sure that there is a written disclosure by the seller setting out all the defects on the property. They should also ensure that the property practitioner is in possession of a Fidelity Fund Certificate that has been issued by the Property Practitioners Regulatory Authority before mandating the practitioner to render his or her services. Reference list: The Property Practitioners Act 22 of 2019 The Property Practitioners Act and its impact on the property sector (Lethabo Mashishi) This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)
Are estate agents ready for the change to come?
Property Practitioners who now need to hold a Fidelity Fund Certificate, unless excluded, to practice in terms of the Property Practitioners Act, 22 of 2019, may have certain questions regarding the application process to obtain the Certificate, its issuing from the Authority and any disqualifications from issuing, its amendment, withdrawal, and lapse thereof. A Property Practitioner needs to apply for a Fidelity Fund certificate every three years to the Authority within the prescribed period and accompanied with the prescribed fee. The ‘Authority’ relates to the Property Practitioners Regulatory Authority, established in section 5 of the Property Practitioners Act, 22 of 2019 (hereafter the “Act”) and a juristic person accountable to the Minister. When the Authority receives the application together with the prescribed fees, the Authority will issue the Fidelity Fund Certificate if the Property Practitioner meets all the requirements as specified by the Act or is not disqualified from being issued a Fidelity Fund Certificate. The Certificate will be issued in the prescribed form and valid until the 31st of December of each year. Some of the parties who are disqualified from receiving issued Fidelity Fund Certificates are the following: Any person who is not a South African citizen and does not reside within the Republic. Any person who has been found guilty of the Property Practitioners Act, the repealed Estate Agency Affairs Act, or any legislation similar within five years at any time. Any person who is of unsound mind. Any person who has been dismissed from a position of trust at any time preceding five years. When holding a Fidelity Fund Certificate, there could be times when the Authority may need to amend it. In writing, the Authority may inform the holder of the Fidelity Fund Certificate of its intention to amend the Certificate or any part thereof. The proposed amendment needs to be accompanied by reasons from the Authority, and the holder of the Certificate may respond to the proposed amendment(s) within a prescribed period. When an amended Fidelity Fund Certificate is issued to the Property Practitioner, the Authority needs to accompany the amended Certificate any reasons for the amendment; supply any replies to the holder of the Certificate’s responses, and request the return of the original Fidelity Fund Certificate immediately. The date on which the Authority serves the amended Fidelity Fund Certificate on the Property Practitioner is the date which it comes into operation. If the Property Practitioner delays or prevents the Authority in any way to deliver or serve the amended Fidelity Fund Certificate, the amended Certificate will come into operation on the date which the Authority attempted to serve the Certificate on the Property Practitioner. Any holder of a Certificate in terms of the Act is mandated to display the Fidelity Fund Certificate at all times; it is prominently featured in the place of business where property transactions are conducted so that consumers can inspect it without effort. Holders of the Certificate also need to ensure that any communication through marketing material and letterheads must be clear and legible. Lastly, a holder of the Certificate needs to ensure that the necessary clause is inserted in all relevant documents, ensuring that the Certificate is valid. Any relevant person who contravenes the above-mentioned rules will be guilty of an offence as per section 52(2) of the Act. Holders of the Certificate should note that it can be withdrawn or lapse in certain circumstances. In terms of withdrawal of the Certificate, if the Authority is instructed by a court of law or any adjudicator, or by its initiative decide to withdraw a Fidelity Fund Certificate – it is allowed to do so in terms of certain provisions laid out in section 52(1) of the Act. Section 52(4) of the Act stipulates circumstances when the Certificate will lapse, such as the date of death of the certificate holder. When the Fidelity Fund Certificate is withdrawn or lapses in terms of section 52, the person who has the Certificate in their possession needs to return the Certificate to the Authority. If it is not possible, the relevant person will need to make a declaration under oath to state why the Certificate will not be returned. Reference: Property Practitioners Act, 22 of 2019. This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)