What estate agents need to know about the Property Practitioners Act
The Property Practitioners Act ("the New Act") was assented to by the President of South Africa on 19 September 2019, but the exact date of the New Act coming into force is uncertain at this time.
The New Act replaces the Estate Agency Affairs Act ("the Old Act"), offering a wider scope with further-reaching consequences.
This article does not attempt to deal with all the new requirements under the New Act. Instead, it highlights a number of key issues that will dramatically and substantially change the landscape of the industry.
"Estate Agents", as defined in the Old Act, are now called "Property Practitioners". This definition includes a range of new role players, like business brokers, bridging finance brokers, bond brokers, property developers and marketers. Even house sitters will be regarded as Property Practitioners and be affected by the full might of the New Act.
The definition also includes the so-called Attorney Agent or employees of attorneys who perform the functions of an estate agent. Under the Old Act, attorney agents were only required to register with the Estate Agency Affairs Board and only a few sections of the Old Act applied to these agents.
This is no longer the position under the New Act. Attorney Agents will now be affected by the entire New Act and will be required not only to register with the Property Practitioners Regulating Authority, which replaces the Estate Agency Affairs Board, but they will also have to be formally qualified and be subjected to continued professional education and development.
Although it is the current practice of most Estate Agents to compile a comprehensive property defect list, it was not a requirement under the Old Act.
The New Act now requires a comprehensive property defect report without which a mandate may not be accepted. Under the New Act, all records of property transactions must now be kept for 10 years, adding to the Estate Agent's already excessive administrative duty. Fortunately, the Act does make provision for records to be stored electronically.
Furthermore, the New Act stipulates that an Estate Agent may only receive his commission upon the registration of the property.
The New Act also places substantial and extended responsibility on Estate Agents through the Consumer Protection Act ("the CPA").
Property Practitioners (Estate Agents) in future, will therefore not only have to satisfy already demanding sellers and purchasers, but they will also have to tread very carefully to ensure total compliance of both the New Act and the CPA.
A major concern is that the Estate Agency Affairs Board is currently battling to comply with a multitude of administrative tasks, most importantly issuing correct Fidelity Fund Certificates timeously.
The New Act, because it includes more role players than only Estate Agents, will place a massive additional burden on the already strained Estate Agency Affairs Board.
One can only hope that once the New Act comes into force, the new regulating authority (The Property Practitioners Regulating Authority) will be fully established and operational so as to guarantee proper and timeous compliance with the many requirements of the New Act.
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)
Author: 3%.Com Properties