HOW THE NEW PROPERTY ACT AFFECTS AGENTS & CONSUMERS
From 01 February 2022, the new Property Practitioners Act officially comes into effect. While this should not affect consumers too drastically, there are a few items of which to be aware before conducting any real estate transactions. Real estate agents will also need to pay close attention to this new act as it will have an impact on how they operate.
“There is a lot in this act that just formalizes best practices. This is a positive thing as it should enforce higher standards from the property sector as a whole,” states Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
Changes for consumers
• Property Defects Disclosure Document
It is now compulsory to include a comprehensive property defects disclosure document completed by the landlord or the seller. A mandate cannot be accepted without receipt of the disclosure document. This document must be signed by all parties and attached to the sale or lease agreement.
• New Regulatory Body
The Estate Agency Affairs Board will be replaced by the Property Practitioners Regulatory Authority (“PPRA”). According to the Property Practitioners Act, any person who feels aggrieved by any act or omission of a property practitioner may lodge a complaint with the new Authority. The process works much the same as before. The complaint needs to be in writing and must contain the name and address of the complainant and of the respondent, as well as the details of the issue at hand, and needs to be signed by the complainant. Upon receiving the complaint, the Authority may investigate the matter further and proceed to act if it has reason to believe that the conduct of a property practitioner may constitute conduct deserving of sanction. Disputes may be attempted to be resolved through professional mediation at the discretion of the Authority. Complaints can be filed through the Authority’s web portal or “otherwise sent by post or delivered by hand to the following address of the Authority:
Property Practitioners Regulatory Authority
63 Wierda Road East (Cnr Johan)
Sandton Johannesburg 2196
Changes for real estate agents
Any business earning a commission or brokerage from the sale or lease of a property must hold a valid Fidelity Fund Certificate (FFC), tax clearance and BBE certificates as well.
• Trust Accounts
Only property practitioners who are actually handling trust monies are required to have a Trust Account.
Candidate property practitioners (formerly known as “interns”) can write their Professional Designation Examination (PDE) before joining an agency. Businesses are now also allowed to develop and run their own CPD training for a dramatically reduced CPD fee, on condition that the PPRA has approved the course content.
• Property Sector Transformation Fund
The Transformation Fund will be run by an independent body appointed by the PPRA to promote transformation within the Property Sector.
Property Practitioners are not entitled to any remuneration or other payment in respect of or arising from the performance of any property purchase transaction prior to the transfer of the property and registration in the name of the purchaser. In the event of a cancelled sale, the property practitioner is only entitled after all suspensive conditions have been met.
• FFC Display
It is mandatory to display the Fidelity Fund Certificate (“FFC”) in every office where business is conducted to enable consumers to easily inspect it. The FFC number must be included in any agreement relating to property transactions, including a clause guaranteeing the validity of the certificate. The FFC number must also be included on letterheads and marketing material.
• Security Estates and Developers
Security estates and other developments may no longer charge “Accreditation Fees” in return for exclusive rights to property transactions within a development. Sellers and landlords within estates will no longer be limited to their development’s approved agents. Developers will also no longer be able to sell their own properties without registering as a property practitioner, providing more opportunities for real estate agencies to provide this service.
The above serves as a summary of the main changes this new act introduces. To learn more about what is covered by the Property Practitioners Act, download a free copy of it by visiting the government website.