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Article by Durban Lawyer - Fawzia Khan

The Property Practitioners Act (“the PPA”) is about to fundamentally change the manner in which the estate agency industry currently operates. The PPA will come into effect in the very foreseeable future and will kick in when the President signs it into law. It was anticipated that it would be done after the May 2019 elections was done and dusted.

The PPA will replace the Estate Agency Act. The Estate Agency Affairs Board (“EAAB”) will be replaced with the Property Practitioners Regulatory Authority and will be known as the Board of Authority. This Board will have a far greater range of influence than the old EAAB. The Board of Authority will govern the profession of property practitioners. Apart from providing training and education, one of the key roles of the PPA is to ensure transformation in the property sector to those who were historically disadvantaged.

The PPA extends its reach to almost every person who is linked to the property market. The list of role players in the property industry who are included in the Act, (apart off course from estate agents), are managing agents, commercial property brokers, bridging finance companies, bond originators, home inspectors, home owners’ associations, timeshare and fractional title operators, property developers, property managers and any person who acts as an intermediary in a property transaction. It also includes digital portals such as who sell or exhibit property via electronic means such as Private Property and Property 24.

Those who are excluded from this definition is a person who does not carry out any of these functions “in the ordinary course of business”, as well as a natural person who sells their own property, attorneys, candidate attorneys and the sheriff of the court.

In order for a property practitioner to be able to claim commission whether for a sale or lease, he or she must be hold a valid Fidelity Fund Certificate. If not, any commission paid over will have to be refunded. Payment of commission is only allowed after registration of property. It’s worth noting that parties cannot contract out of this requirement. Estate agency franchisors will be held liable for the misconduct of their franchisees. This clearly is very onerous on the franchisors. Estate agents must ensure that there is a defect disclosure form included in every sale or lease agreement.

The Act defines a managing agent as anyone who collects or receives any money payable in respect of a leased property or business undertaking or who provides, procures, facilitates, secures or otherwise obtains or markets financing for or in connection with the management of leased properties. A managing agent must be in possession of a Fidelity Fund Certificate. Since the managing agent collects rental from tenants on behalf of the landlord, the managing agents needs to operate a trust account similar to the way attorneys operate trust account. Without a valid Fidelity Fund Certificate, a managing agent will not be allowed to claim commission for any lease including renewal of leases.

A property practitioner will also be required to have a tax clearance certificate and the requisite BEE certificate. There will be an independent Property Practitioners Ombud who will deal with any complaints against property practitioners. The Ombud, whose decision will have the same weight as that of a magistrate, will deal with complaints by members of the public against property practitioners. In the event of any dispute, the Act allows for alternative dispute resolution, such as mediation, to take place.

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