The Property Practitioners Act: no changes for estate agents yet!

The long awaited Property Practitioners Act has been signed by President Ramaphosa, but what immediate changes need to be made by a property practitioner to make sure that you are compliant? The simple answer is that at this stage, there is no change.

In the same way that the Rental Housing Amendment Act was signed by the President in 2014 but is not yet operational, the Property Practitioners Act is required to have regulations published and for an effective date to be published in the Government Gazette. There is no prediction at present of when this Act will become effective.

One important aspect to note is that at the time of writing we have not yet had sight of the version of the Act that has been signed by the President. Any changes that we are predicting come from the latest available version of the Property Practitioners Bill which was subject to change prior to the Bill being signed.

On the assumption that the previous bill was unchanged when it was signed, here are some of the proposed changes from the current Estate Agents Affairs Act:

1. The Estate Agents Affairs Board will be replaced

The Estate Agents Affairs Board will cease to be and it will instead be replaced by the Property Practitioners Regulatory Authority. The Authority will be very similar to the EAAB in that they will be responsible for ensuring compliance across the industry and will have the right to perform checks and audits on Property Practitioners.

2. Establishment of the Property Practitioners Ombud

The Property Practitioners Ombud will be established to enable any person to lodge a complaint with the Ombud against a property practitioner in respect of complaints relating to financing, marketing, management, letting, hiring, sale or purchase of property.

The Ombud will have the ability to hear and adjudicate disputes between individuals and Property Practitioners, evaluate the evidence provided and make an appropriate finding.

3. Ability to send compliance notices

The Authority or inspectors authorised by the Authority will be empowered to issue Property Practitioners compliance notices for minor infractions committed by Practitioners. A compliance notice could include the imposition of a fine and refusal to comply with a compliance notice will constitute a criminal offence

4. Fidelity Fund Certificates

In addition to the current regulations and requirements for Fidelity Fund Certificates, an additional requirement has been introduced that requires Property Practitioners to be in possession of a valid tax clearance certificate and a BEE certificate. The requirement still remains that no Property Practitioner may be entitled to legally claim commission unless they possess a valid Fidelity Fund Certificate.

5. Mandatory Disclosure of Defects

Under the new Act it will become a requirement for a Property Practitioner to obtain a comprehensive list of property defects from a seller as part of a sale of property. A Property Practitioner may not accept a mandate without being in possession of this document.

6. Record keeping

Slightly contrary to the provisions of FICA, Property Practitioners will be required to keep records for a period of 10 years, however these documents may be kept electronically provided that processes are in place to ensure that these documents are suitably backed up.

7. Liability for the conduct of Franchisees

The franchisor may now be held responsible for prohibited or sanctionable conduct of the franchisee. This could drastically effect the current franchise model and may lead to stricter regulations on franchisees by franchisors

It is still early in the process of this Act becoming effective law and, as always we will be at the forefront of providing training and advice on what changes your agency needs to make to ensure that you are fully compliant.