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What should you as a Consumer and/or Prospective Purchaser know about the new Property Practitioner Act 22 of 2019? The Act came into effect 1 February 2022 and made more affective through the PPRA or Property Practitioners Regulatory Authority as from February 2023.
1. WHAT IS THE PROPERTY PRACTITIONER ACT?
- This Act repealed the Estate Agency Affairs Act , Act 112 of 1976. It applied solely to Estate Agents. The PPA now defines Property Practitioner.
- The PPA allows for transformation in the property sector, better protection for consumers and to regulate the property sector and Property Practitioners by integrating, including, and consolidating all role-players within the sector under the PPRA.
2. WHAT IS A PROPERTY PRACTITIONER?
a) Terminology wise the Act now uses Property Practitioner opposed to “Estate Agent.” That being said the Act now uses a broader definition of who is considered a “Property Practitioner” whether a natural or a juristic person. For a consumer/buyer/seller/representative the stipulations below are of utmost importance: A PROPERTY PRACTITIONER IS SOMEONE WHO:
- By auction, in sale of execution or otherwise sells, purchases, manages, or publicly exhibits for sale property or offers to canvas a seller or purchase in respect thereof;
- Lets or hires or publicly exhibits for hire property or any business undertaking electronically or any other means;
- Collects or receives any monies payable on account of a lease of a property;
- Provides, procures, facilitates, secures, or otherwise obtains or markets financing for or in connection of the management, sale or lease of a property including a provider of bridging finance and a bond broker or originator;
- Assesses property to determine the defects;
- Manages property on behalf of another for remuneration, which consequently includes homeowners’ associations;
- Sells, by auction or otherwise, or markets or promotes or advertises any part, unit or section in a property or property development;
- Acts or provides services as intermediary or facilitator with a primary purpose to affect the conclusion of an agreement to sell or purchase but does not include:
- A person who does not do so in the ordinary course of business;
- A natural person offering the property for sale in the ordinary course of his business and the property belongs to him;
- An attorney or candidate attorney; [Who are obligated to have a FFC under the Legal Practitioners Act]
- A Sheriff; and
Any person employed by an attorney to render such services as aforementioned to such attorney. [Legal Practitioner Act].
3. COMPLIANCE OF A FFC – FIDELITY FUND CERTIFICATE
- All Property Practitioners shall be required to be in possession of a valid Fidelity Fund certificate (“FFC”), and shall be required to, on request, produce the certificate or a certified copy thereof.
- If the Property Practitioner is a company, close corporation [CC], trust or partnership, then every director of such company (excluding non-executive directors who are not directly concerned with the management and oversight of individual property practitioners who may be exempted), every member of such a close corporation, every trustee of such a trust and every partner of such a partnership, as the case may be, must have been issued with a FFC.
- Should a Property Practitioner not possess a valid FFC, the practitioner may not trade or charge commission or in the event of commission having already been charged and received, it must thereafter be refunded.
4. WHEN CAN A FIDELITY FUND CERTIFICATE [FFC] BE REFUSED? ANY PERSON WHO:
- is not a South African Citizen or does not lawfully reside in the Republic;
- has been found guilty of contravention of this Act, the Estate Agency Affairs Act, or any similar legislation in the preceding 5 years;
- has been found guilty in any civil or criminal proceeding in a Court of Law in terms of which his/her/its actions were fraudulent, dishonest, unprofessional, dishonourable or in beach of a fiduciary duty, or found guilty of any other offence which the person has been sentenced to imprisonment without the option of a fine;
- is an un-rehabilitated insolvent or of unsound mind;
- has been dismissed from a position of trust due to improper conduct;
- is not in possession of a valid Tax Clearance Certificate;
- is not in possession of a BEE certificate (in terms of the new BEE codes issued in June 2017 the threshold for estate agencies have been reduced to R2, 5 million rand , per annum);
- does not comply with the prescribed standard of training; and
- does not have the practical experience determined by the Authority.
5. FINER DETAIL YOU AS CONSUMER/BUYER/SELLER/REPRESENTATIVE SHOULD KNOW!
- Property Practitioners are required to open trust accounts with registered banks, and to appoint and auditor to have those accounts audited, which audit report will have to be submitted to the Property Practitioners Regulatory Authority [PPRA]. Property Practitioners must then deposit all trust money received into the trust account until they are either lawfully entitled to that money or are lawfully instructed in writing to transfer it.
- Property Practitioners are prohibited from obliging consumers under a property transaction from using any particular service provider for any ancillary services relating to such property transaction (such as a conveyancer or finance house). NB: You as PP may not recommend a conveyancer to a Purchaser or any specific Bridging financial house. SELLERS choose their own means whom to use.
- NB: An agreement to sell and purchase, or let and hire property, or the mandatory disclosure form, must be drafted by the developer or seller at their own cost. As a CONSUMER/SELLER you need to disclose ALL defects to a Property Practitioner regarding a property. A Property Practitioner must not accept a mandate unless the seller and/or lessor has provided a fully completed and signed mandatory disclosure, which has been set out in the prescribed form. The disclosure must disclose any defects or deficiencies that have been noted on the property. Failure to attach the disclosure will result in the interpretation that there are no defects or deficiencies, which renders the Property Practitioner liable to affected consumers.
- The Act makes provision for the appointment of inspectors, who may at any reasonable time, and without prior notice, conduct an inspection at the business premises of a property practitioner to ascertain whether the provisions of the Act have been complied with.
Should you have a query or questions pertaining the PPA feel free to make contact or engage via e-mail: heinz@cilliersauctioneers.co.za
Heinz Kruger
Cilliers Auctioneers
Head Of Operations Insolvent Estates
Qualified Auctioneer
“Take note that the content above is merely set out as the opinion of the author and his interpretation of the relevant legislation. It will not be regarded as a legal opinion and nor does the writer intend it to be. It is imperative that any reader obtain his own legal opinion relating to any of the content above and will the writer hereof or his employer not be held responsible for any of the content of this article.”
