The South African government aims to replace the current Estate Agency Affairs Act with one that is deemed more suitable. Although it is uncertain as to when this new legislation will be signed into law, a draft has been published for public comment under the title of The Property Practitioners Bill and has been given priority suggesting a final outcome is imminent.
While the current Act regulates the business of only estate agents and agencies, the proposed Property Practitioners Bill extends regulations to all property practitioners, including estate agents, business (property) brokers and providers of bridging finance, as well as bond brokers and marketers.
With one of the primary purposes of the Property Practitioners Bill being the transformation of the property market, allowing for the inclusion of historically disadvantaged individuals through the provision of grants for several purposes, the following are key changes that will come into effect should this Bill be signed into law:
- Board of Authority: The current Estate Agencies Affairs Board will be replaced by a new governing body known as the Board of Authority. This new board will govern the profession of property practitioners as defined in the Property Practitioners Bill rather than only estate agents as is currently the case.
- Property Practitioners Ombud: Unlike the current Act, the Property Practitioners Bill will establish a Property Practitioners Ombud which, if implemented effectively, should lighten the burden on the courts and improve administration when it comes to disputes. The Ombud, whose decision is equivalent to that of a Magistrate, will primarily consider and dispose of complaints by members of the public against property practitioners.
- Compliance Notices: The Property Practitioners Bill introduces compliance notices for minor or substantial contraventions which can be issued by an inspector appointed by the Board of Authority. A notice could include the imposition of a fine, and these contraventions will be listed by the Minister. Refusing to comply with a compliance notice issued constitutes a crime and as such, may result in prosecution.
- Fidelity Fund Certificates: In addition to the current regulations regarding Fidelity Fund Certificates, an additional requirement for property practitioners to be in possession of a valid tax clearance certificate and a BEE certificate has been included in the Property Practitioners Bill. In order for a property practitioner to enforce the collection of remuneration (commission), a valid Fidelity Fund Certificate must be held for all property practitioners within the agency or business. Failure to comply with this will result in being required to refund any commission paid by a seller. Should the Board of Authority or Property Practitioners Ombud see fit, a Fidelity Fund Certificate may be withdrawn.
- Property Defects Disclosure: While it has been best practice for sellers to provide a comprehensive property defects disclosure document as part of a property transfer, this now becomes mandatory under the Property Practitioners Bill. No mandate may be accepted from a seller without this document, which will also then form part of the sale agreement.
- Record Storage: All records will need to be kept for 10 years, however, the Property Practitioners Bill does make provision for records to be stored electronically, reducing the costs typically associated with these document archives.
- Remuneration Date: The Property Practitioners Bill dictates that agents may only receive commission from a property sale upon registration, and this undertaking can seemingly not be contracted out of.
- Franchisor Liability: Under the new Property Practitioners Bill, estate agency franchisors will be held liable for the misconduct of their franchisees. This can have far reaching consequences, and understandably, the franchise model may be revisited as a result.
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