A local property agent noted, “in terms of Section 1 of the Bill a “property practitioner” will now include a bond broker, home inspector, facilitator of an agreement of sale or lease (including a Homeowners’ Association), a seller of timeshare or fractional title, a property manager, and a property developer.
Exclusions from this definition are attorneys and candidate attorneys, sheriffs of the court, a person offering property practitioner services but not in the normal course of his business, and a person selling his own property (but excluding a property developer).”
The requirement that the person earns some sort of gain for their services has been omitted from the definition. Even persons performing the above functions without reward may be deemed to be property practitioners hence subject to the regulatory requirements.
He also noted that Section 20 of the Bill brings Real Estate in line with other service industries like insurance and banking, as it establishes the Property Practitioners Ombud. This takes the responsibility for consumer complaints away from the regulatory authority.
The Ombud will deal with complaints from the public against property practitioners and follow a process to handle these complaints, a mediation process will be utilised. The Ombud’s authority may also hear disputes between property practitioners, but only if both parties agree to this.
The new Bill seeks to imbue inspectors of the regulatory authority with the power to enter any premises (other than the private home) of a property practitioner and to seize certain articles, without a warrant.
This is a potentially dangerous power to put into the hands of persons who may not be conversant with constitutional rights and, if this provision passes into law, it is likely to generate litigation against the authority.
The existing Act prohibits a person from offering estate agency services whilst not in possession of a Fidelity Fund Certificate (FFC). The act goes on to state that a person who is not in possession of a current FFC is not entitled to a commission.
The new Bill preserves the spirit of the existing Act in this regard and goes one step further in requiring that any remuneration earned by a property practitioner whilst not in possession of an FFC must be refunded to the person who provided the remuneration upon demand.
The local property agent mentioned that three new additions to section 49 which deals which deal with instances in which a property practitioner has disqualified automatically from being issued an FFC from the authority and thereby prohibited from trading lawfully.
“The first is the requirement to be in possession of a tax clearance certificate. It is highly unfair and probably not legally sustainable to disqualify a person from being issued with an FFC where they have a genuine dispute with SARS, and therefore cannot obtain a tax clearance.
Secondly, being on the Treasury tender defaulters list as a provider (even as a director, member, trustee, partner, or shareholder) is now an instance for disqualification. The practicality of this provision is questioned as it will be very difficult for the authority to determine who the shareholders of public companies on that list are.
Thirdly, a property practitioner who is not is possession of a BEE certificate is automatically disqualified. This provision is unlikely to remain in its current form as the new schedules to the BBB-EE Act deem an enterprise with an annual turnover of less than R10 million to be an “exempt micro-enterprise” (“EME”). Such EME is not permitted to be issued with a BEE certificate, even if it required one.”
Property practitioners may not accept a mandate to sell or let a property without a mandatory disclosure from the seller or landlord. This applies to both commercial and residential properties.
The signed mandatory disclosure will form part of the sale or lease agreement. If a written mandatory disclosure is not included, then the agreement will be interpreted as if no defects or deficiencies were disclosed.”
He concluded by stating “We await an additional revision of the Bill in due course as the property sector is still contributing more commentary and input.”.