The Property Practitioners Bill will soon be enforced as the new legislation that will regulate the estate agent profession. Until now, the profession has been regulated by the Estate Agency Affairs Act 112 of 1976.
Considering the changes that have been made to the current Act, the South African government considers the new Act more suited.
There has not been a date put into place as to when the new legislation will be officially implemented. However, a draft titled The Property Practitioners Bill has been published to allow for public comment. The draft has also been given priority as the final outcome of the new legislation is about to impend.
The Property Practitioners Bill will serve to regulate all property practitioners.
Transforming the property market in South Africa to ultimately allow inclusion of previously disadvantaged individuals is the principal purpose of the Property Practitioners Bill.
Property practitioners are people who are involved in any field related to property including but not limited to:
Below are the fundamental changes that the bill will bring into effect should it be signed into the law:
Compliance notices have been introduced by the bill and may be issued by an inspector who has been appointed by the Board of Authority as a notice for contraventions of minor or major significance.
These contraventions will be listed by the Minister and a compliance notice may be in the form of a fine. Prosecution may be a result for those who have refused or failed to comply with the notice issued as this is considered a crime.
A new governing body known as the Board of Authority will replace the current board of Estate Agencies Affairs. The Board of Authority will now regulate the entire profession of property practitioners instead of only the estate agents as it currently stands.
A comprehensive disclosure of property defects is now obligatory under the Property Practitioners Bill. Previously it was simply considered best practice and for the purpose of being thorough for such a document as part of the property transfer.
Without this disclosure document, no mandate may be accepted from a seller which invariably forms part of the sale agreement in question.
If implemented effectively, the newly established Property Practitioners Ombud will serve to relieve some of the courts responsibility. This will effectively improve process related to administration of disputes. The decision of the Ombud is equal to a Magistrates decision and it will be the duty of the Ombud to consider any complaints against property practitioners by members of the public and ultimately dispose of such complaints.
In accordance with the new Bill, it is now required for property practitioners to possess a BEE certificate as well as a valid tax clearance certificate in addition to the current regulations which require a Fidelity Fund Certificate (FFC).
All property practitioners should be in possession of an FFC in order to enforce collection of commission earned on property transactions.
Property practitioners who fail to comply with this requirement will be imposed to refund any commission which has been paid to them by a seller.
Furthermore, an FFC may be withdrawn at any time should the Ombud or Board of Authority deem the withdrawal necessary.
According to the Property Practitioners Bill, without exception, agents may receive commission from the sale of a property when such sale is undergone registration.
The new Bill requires that all records must be kept for a minimum of 10 years. However, the Bill does not make provision for these records to be stored electronically. Electronic records will drastically reduce costs associated with document archives of this nature.
Estate agency franchisors will now be held accountable for any misconduct carried out by any one of their franchisees. The consequences of this new stipulation under the Property Practitioners are far reaching and may cause the franchise model to be revisited.
Contact our attorneys in Cape Town or Johannesburg for more information regarding the Property Practitioners Bill in South Africa.
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