Facilitating a sale or lease of property: A guide to the Property Practitioners Bill 2017

Property Practitioners Bill
31 May 2017

The Department of Human Settlements has published the Property Practitioners Bill designed to regulate property practitioners, repeal the Estate Agency Affairs Act and provide for the continuation of the Estate Agency Affairs Board to be known as the Property Practitioners Regulatory Authority.

The Bill provides for a wide definition of “Property Practitioner” which would include the likes of estate agents, letting agents, bond originators, managing agents, paid trustees and anyone who acts as an intermediary or facilitator in concluding a sale agreement or lease agreement of immovable property. Attorneys and candidate attorneys are excluded from the operation of the Bill.

The Bill seeks to establish a Property Practitioners Regulatory Authority whose functions are to regulate the way property practitioners deal with consumers, and market, manage, finance, let, sell and purchase property. They are also tasked with the education of consumers and to protect consumers from undesirable practices. The Authority may appoint inspectors to act on its behalf who have the power to enter and inspect business premises and seize documents, in some instances even without a warrant.

The Bill also seeks to establish a Property Practitioners Ombuds Office to consider and resolve complaints. Complaints are to be handled in a procedurally and substantively fair, informal, economical and expeditious manner.

In terms of the Bill the current Estate Agents Fidelity Fund will continue to operate as if it had been established in terms of the Bill, but will be referred to as the Property Practitioners Fidelity Fund. The purpose of the fund will be to reimburse persons who suffer loss due to theft of trust monies by a property practitioner or a property practitioner who operates without a current fidelity fund certificate.

Property practitioners will be required to pay an annual application fee for the issue of their fidelity fund certificate and will not be entitled to receive any remuneration if they are not in possession of a current fidelity fund certificate. The Bill seeks to place an obligation on conveyancers to obtain a certified copy of the property practitioner’s fidelity fund certificate before paying any remuneration to the property practitioner. Certain persons are prohibited from obtaining a fidelity fund certificate, including persons not in possession of a valid tax clearance certificate, persons not in possession of a BEE certificate and anyone found guilty of contravening the proposed Act within the preceding 5 years.

In terms of the Bill, a property practitioner must prominently display their fidelity fund certificate in every place of business where they operate. In addition, they must include the prescribed sentence confirming their possession of such certificate in legible lettering on any of their letterheads or marketing material. Any property transaction agreement concluded by the property practitioner must include the prescribed clause where they guarantee the validity of such certificate. Failure to comply with any of these is an offence.

When it comes to property defects, the Bill introduces a mandatory disclosure form to be completed by the seller/lessor and attached to all sale or lease agreements. In the absence of such form, the agreement must be interpreted that no defects of the property were disclosed. Purchasers may still conduct their own due diligence investigations of a property.

The Property Practitioners Bill empowers the Minister to prescribe a code of conduct, norms and standards for marketing and determine undesirable practices of property practitioners. In particular, the Bill refers to the following offences:

– In a property purchase transaction, a property practitioner is not entitled to any remuneration prior to registration of transfer

– A property practitioner may not offer any incentives or influence any person who issues compliance certificates, such as electrical, woodborer, plumbing etc.

– A property practitioner may not enter any arrangement, whether formal or informal, where a consumer is obliged or encouraged to use a particular service provider to render any ancillary services to the transaction concluded

Sanctions may include a reprimand of the property practitioner and “name and shame” on the Authority’s website, withdrawal of fidelity fund certificate, a fine of up to R200 000, imprisonment of up to 10 years or a sanction suspended for a maximum of 3 years.

Heather Marsden
Heather Marsden

Heather is a Senior Associate at Eversheds Sutherland's conveyancing practice. She is an admitted Conveyancer and Notary and has experience in a variety of conveyancing transactions, including: Drafting & Registration of Conventional & Sectional Title Transfers, Consents, Mortgage Bonds, Notarial Bonds & Servitudes; Drafting Lease Agreements, Sale Agreements & Addendums; Providing general property advice including advice on Sectional Titles.

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