What to Expect! The Property Practitioners Act 22 Of 2019

1. WHEN WILL THE PPA COME INTO OPERATION?

Although the Property Practitioners Act 22 of 2019 (“PPA”) has been signed into law by the President, the date when it will come into operation must still be announced.

2. OBJECTIVES OF THE PPA

• The principal object of the PPA is to repeal the Estate Agency Affairs Act 112 of 1976 (“EAA Act”). This is merely due to the fact that the EAA Act is simply outdated and does not assist the government in achieving effectivity and functionality in the property and property market sector.
• The PPA aims to achieve the following primary objects:
• To establish a healthy property market within South Africa and to encourage ownership of immovable property by restoring historical imbalances especially in the secondary property market;
• To provide the necessary protection and education to all consumers in a professional manner with the assistance of competent property practitioners;
• To promote proper monitoring of property practitioners in order to discourage any sanctioned conduct.

3. WHO WILL BE AFFECTED BY THE PPA?

• The PPA will apply to all property practitioners.
• Who is a “property practitioner” in terms of the Act?
• An individual or a juristic person such as a company or closed corporation; AND
• who is involved in the selling, purchasing, letting, renting; financing, managing or marketing of immovable property; AND
• the aim of being involved in these activities is to obtain financial gain such as commission; AND
• the practitioner acts on the instructions or on behalf of any other person.
• The PPA will not apply to the following persons:
• A person who does not do any of the above listed activities in the ordinary course of his/her business;
• Persons who sell their own property;
• An attorney, candidate attorney, or sheriff.
• The PPA therefore does not limit the scope of its application to estate agents, but further includes business brokers, mortgage bond brokers, anyone who provides bridging finance, property valuers, property managers, auctioneers, franchisees and digital portals that exhibit properties, such as Private Property and Property 24.

4. THE ADMINISTRATION OF THE PPA

• The PPA establishes the Property Practitioners Regulatory Authority (“the Authority”). This body will replace the Estate Agency Affairs Board and the functions of the Authority will include:
• Regulating the conduct of the property practitioners and their compliance with the PPA;
• Ensuring the protection and education of consumers’ rights in terms of the PPA;
• Providing education and training programmes for property practitioners and candidate property practitioners;
• Implementing measures for transformation and property development in the property sector.

5. FIDELITY FUND CERTIFICATE

A property practitioner must obtain a certificate issued by the Property Practitioners Fidelity Fund (“Fidelity Fund”) on an annual basis by paying an annual fee to the Fidelity Fund. A valid Fidelity Fund certificate must be prominently displayed in every place of business from where the property practitioner conducts property transactions. If a property practitioner is not in possession of a valid Fidelity Fund certificate, he/she may not render any services or receive any remuneration. The transferring attorney is not liable to pay a property practitioner his/her commission is he/she is not in possession of a valid Fidelity Fund certificate.

6. THE RESPONSIBILITIES OF A PROPERTY PRACTITIONER

• To open and keep one or more separate trust accounts with a registered bank, which trust accounts must contain a reference to Section 54 of the PPA, and further to keep separate accounting records of all monies deposited with him/her; and
• To maintain indemnity insurance; and
• To comply with the code of conduct as prescribed by the Minister of Human Settlements; and
• To provide certain mandatory disclosures to potential consumers, including the mandatory disclosure form which must be completed and signed before concluding a mandate or making an offer to a purchaser. Failure to do so will be interpreted as if no defects or deficiencies of the property were disclosed to the purchaser and the property practitioner may be held liable by an affected consumer.

7. Compliance with and enforcement of the PPA

• Any person convicted of an offence in terms of the PPA is liable to pay a fine or to be imprisoned for up to 10 years.
• In order to ensure compliance with the PPA, the PPA makes provision for the appointment of inspectors with very wide search and seizure powers without prior notice to the practitioner.
• Any consumer will have the right to lodge a complaint against a property practitioner with the Authority. This complaint can relate to any of the services rendered by the property practitioner, including financing, marketing, management, letting, hiring, selling or property purchases.
• In the case of minor contraventions, the Authority will usually try to resolve the matter by way of mediation, which involves the parties coming together with a mediator to attempt to resolve the matter. For matters of a more serious nature, where a property practitioner fails to comply with a compliance notice, or fails to pay a fine, or where mediation has failed, the matter is referred for adjudication.
• The adjudication procedure is governed by strict time limits. The “judge” for an adjudication will be an independent legally qualified adjudicator. The adjudicator must upon conclusion of the adjudication make a determination as to whether the complaint is upheld or not, and if the complaint is upheld, the adjudicator must make an order which is appropriate in the circumstances. This order has the status of a magistrate’s court order and can be executed accordingly. There is the possibility to appeal the decision of the adjudicator to the Adjudication Appeal Committee.
• Section 62 of the Act provides a list of sanctionable conduct by property practitioners. It is important to contact an attorney to explain the possible sanctions to you and to advise you of the consequences for the contravention of such a sanction.

8. CONCLUSION

The PPA has a wider scope of persons to which it finds application than provided for by the EAA Act and it further lays out stricter regulations with which property practitioners need to comply. The PPA provides the Authority with more powers for the effective monitoring of compliance, which should reduce non-compliance and misappropriation of funds by property practitioners. The PPA seems to meet the dynamic needs of the real estate industry, to encourage development and transformation in the property sector of South Africa.

Lisa Radyn

LLB

Associate

Property and Commercial Law

E-mail: lisar@sstlaw.co.za

Phone: 012 361 9823