Kiyaam Bekko | SchoemanLaw Inc

Category: Contract   

Introduction

At some point, many of us will contemplate acquiring property to enhance our economic stature, given that property is a means to achieving financial independence.  

This process is usually facilitated by an estate agent or, as they are known, Property Practitioners. The Property Practitioners Act 22 of 2019 (the Act) was promulgated and brought into existence to ensure a professionally concluded sales process; where assistance does not meet the threshold of professionalism as envisaged. Accordingly, the regulators have implemented mechanisms to ensure that the rendered aid will meet the desired point.  

The underlying rationale in this approach was to provide a meaningful transformation of the property market that would benefit individuals who were historically disadvantaged and excluded from the economic benefits historically linked with property investment. So, how many of us are aware of the obligations placed on Property Practitioners? The Act sets out to achieve this in the following ways.  

The Act has placed several new obligations on property practitioners not contained in the previous Act, namely the Estate Agency Affairs Act 112 of 1976 ("the EAA ACT"). The principal commitments the new Act places on Property Practitioners are as follows: 

• The mandatory display of a Fidelity Fund Certificate ("FFC"); 
• in certain circumstances, the property practitioner is not entitled to remuneration; 
• maintaining compulsory indemnity insurance; 
• complying with a prescribed code of conduct; 
• complying with the Property Sector Transformation Charter Code; 
• providing certain mandatory disclosures as regards the property in all agreements relating to a property transaction; 
• providing a warranty as regards the validity of the property 'practitioner's Fidelity Fund Certificate " in any agreement relating to property transactions;
• the inclusion of certain prescribed minimum information on all written communication and marketing material, as well as
• certain additional information in respect of franchisees; and 
• certain limitations on relationships with other property market service providers. 

Non-compliance with the provisions of the Act bears the risk of incurring significant penalties, which could include repaying any fees received for a property transaction and the risk of practitioners being penalized. It does not stop there either; any person convicted of an offence in terms of the Act may be liable to pay a fine or imprisonment for a period up to 10 years if they have contravened the provisions of the Act. 

Conclusion   

As the new Act is more comprehensive and significantly stricter on property practitioners, the Act is more far-reaching than the previous EAA Act. In light of the severe consequences of non-compliance with the Act, any person or corporation engaging in property transactions which may fall under the broad definition of "property practitioner" would be well advised to consult with a legal practitioner to ensure you don't fall foul of compliance with the provisions of the Act. 

Kiyaam Bekko | SchoemanLaw Inc.
Attorney
https://schoemanlaw.co.za/our-services/conveyancing-and-property-law/