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A brief overview of the Property Practitioners Act

The Property Practitioners Bill was signed into law by the President on the 2 October 2019, however an official commencement date has not yet been decided. The Act is set to repeal the Estate Agency Affairs Act that has regulated the profession since 1976 (Act 112 of 1976).

The Estate Agency Affairs Act is limited to estate agents, as defined therein; whereas the new act is more comprehensive and extends the definition of a Property Practitioner to other parties.

Property Practitioners Act - Property conveyancing Cape Town

A property practitioner defined:

The Property Practitioners Act provides for a wider definition of the word Property Practitioner, which will no longer only be qualified as a person who works for “gain or reward”, but now rather comprises of various other parties, including:

 (a) any natural or juristic person who or which for the acquisition of gain on his, her or its own account or in partnership, in any manner holds himself, herself or itself out as a person who or which, directly or indirectly, on the instructions of or on behalf of any other person—

(i) by auction or otherwise sells, purchases, manages or publicly exhibits for sale property or any business undertaking or negotiates in connection therewith or canvasses or undertakes or offers to canvas a seller or purchaser in respect thereof;

(ii) lets or hires or publicly exhibits for hire property or any business undertaking by electronic or any other means or negotiates in connection therewith or canvasses or undertakes or offers to canvass a lessee or lessor in respect thereof;

(iii) Collects or receives any monies payable on account of a lease of a property or a business undertaking;

(iv) provides, procures, facilitates, secures or otherwise obtains or markets financing for or in connection with the management, sale or lease of a property or a business undertaking, including a provider of bridging finance and a bond broker, but excluding any person contemplated in the definition of ‘‘financial institution’’ in section 1 of the Financial Services Board Act, 1990 (Act No. 97 of 1990);

(v) in any other way acts or provides services as intermediary or facilitator with the primary purpose to, or to attempt to effect the conclusion of an agreement to sell and purchase, or hire or let, as the case may be, a property or business undertaking, including, if performing the acts mentioned in this subparagraph, a home ownership association, but does not include —

(aa) a person who does not do so in the ordinary course of business;

(bb) where the person is a natural person and that person in the ordinary course of business offers a property for sale which belongs to him or her in his or her personal capacity;

(cc) an attorney or candidate attorney as defined in section 1 of the Attorneys Act, 1979 (Act No. 53 of 1979); or

 (dd) a sheriff as defined in section 1 of the Sheriffs Act, 1986 (Act No. 90 of 1986), when he or she performs any functions contemplated in paragraph (a) of this definition, irrespective of whether or not he or she has been ordered by a court of law to do so; or

(vi) renders any other service specified by the Minister on the recommendation of the Board from time to time by notice in the Gazette;

(b) Includes any person who sells, by auction or otherwise, or markets, promotes or advertises any part, unit or section of, or rights or shares, including time share and fractional ownership, in a property or property development;

(c) includes any person who for remuneration manages a property on behalf of another;

(d) includes a trust in respect of which the trustee, for the acquisition of gain on the account of the trust, directly or indirectly in any manner holds out that it is a business which, on the instruction of or on behalf of any other person, performs any act referred to in paragraph (a);

(e) For the purposes of sections 34, 46, 48, 59, 60, 61 and 65 includes—

(i) Any director of a company or a member of a close corporation who is a property practitioner as defined in paragraph (a);

(ii) any person who is employed by a property practitioner as envisaged in paragraph (a) and performs on his, her or its behalf any act referred to in subparagraph (i), (ii), (iv), (v) or (vi) of that paragraph;

(iii) Any trustee of a trust which is a property practitioner as envisaged in paragraph (d);

(iv) any person who is employed by a property practitioner as envisaged in paragraph (b) and performs on its behalf any act referred to in subparagraph (i), (ii), (iv), (v) or (vi) of paragraph (a); and

(v) Any person who is employed by a property practitioner contemplated in paragraph (a) or (b) to manage, supervise or control the day-to-day operations of the business of that property practitioner;

(f) includes any person who is employed by or renders services to an attorney or a professional company as defined in section 1 of the Attorneys Act, 1979, other than an attorney or candidate attorney, and whose duties consist wholly or primarily of the performance of any act referred to in subparagraph (i), (ii), (iii), (iv), (v) or (vi) of paragraph (a), on behalf of such attorney or professional company whose actions will be specifically covered by the Attorneys’ Fidelity Fund and not the Property Practitioners Fidelity Fund;

(g) For the purposes of section 61 and any regulation made under section 70, includes any person who was a property practitioner at the time when he or she was guilty of any act or omission which allegedly constitutes sanctionable conduct referred to in section 62, but does not include an attorney who, on his own account or as a partner in a firm of attorneys or as a member of a professional company, as defined in section 1 of the Attorneys Act, 1979, or a candidate attorney as defined in that section, who performs any act referred to in paragraph (a), in the course of and in the name of.

Application of the Act:

Section 2 of the Act provides that the Act applies to the promotion, managing, sale, letting, financing and purchase of immoveable property and to any rights, obligations, interests, duties or powers associated with or relevant to such property.

The Property Practitioner’s Regulatory Authority (formerly the Estate Agencies Affairs Board:

The Property Practitioner’s Regulatory Authority will be the new regulatory body of Property Practitioners. The Board of authority will be responsible for governance.

The board of authority must ensure that there are regulatory mechanisms in place in respect of the financing, marketing, managing, letting, hiring, sale, property consumer education and purchasing of property and must ensure that the necessary is done in order to achieve the objectives of the Act.

Fidelity Fund Certificates:

The Estate Agents Fidelity Fund, as established by Section 12 of the Estate Agents Affairs Act of 1976, continues to operate in terms of this act under the name Property Practitioner’s Fidelity Fund in terms of the new Act.

In terms of the Act, a Property Practitioner who is not in possession of a valid Fidelity Fund Certificate, will not be entitled to any commission or remuneration and will not be allowed to practice as a Property Practitioner.

Any remuneration earned by a Property Practitioner who is not in possession of a valid Fidelity Fund Certificate, must be refunded to the person who provided the remuneration on demand.

The Fidelity Fund Certificate must be displayed in every place of business where a Property Practitioner operates. In addition, all marketing materials and letter heads of the Property Practitioner must include the prescribed sentence confirming their possession of the certificate and the validity thereof.

The act specifies that a conveyancer may not pay over commission to the Property Practitioner if the conveyancer does not have a copy of the Property Practitioner’s Fidelity Fund Certificate on their file.

Furthermore, the Property Practitioners Act provides for a broad list of categories of which Fidelity Fund Certificates will be issued, such as where a Property Practitioner is not is possession of a valid BEE certificate or tax clearance certificate. Failure to comply with the requirements of the Act constitutes an offence.

Correspondence, legal agreements, copies of advertising and marketing materials are to be retained:

All records must be kept by the Property Practitioner for a period of five years, however the Property Practitioner’s Act does make provision for records to be stored electronically if such storage meets the requirements of the Electronic Communications and Transactions Act, 2002 (Act No. 25 of 2002).

Mandatory Disclosure Form:

In terms of both residential and commercial properties, a Property Practitioner cannot accept a mandate to sell or lease a property without a mandatory disclosure from either the seller or lessor.

The signed mandatory disclosure form must be signed by all parties and forms part of the sale or lease agreement. If a written mandatory disclosure form is not included, then it will be presumed that no property defects or deficiencies were disclosed to the purchaser or lessee.

Candidate Property Practitioners (Formerly Intern Agents):

The Act also stipulates that Candidate Property Practitioners may not draft or complete a mandate or any other document relating to the sale or lease of property. Anyone who contravenes this, is not entitled to payment of commission or remuneration.

Contraventions of the Act:

If anyone who is subject to the provisions of the Act is found guilty of contravening the Act, there are various sanctions that may be imposed, for example, the Authority may withdraw the Property Practitioners Fidelity Fund Certificate, may demand that the Property Practitioner pay the commission to the seller/lessor, pay a fine or imprisonment for a period not exceeding 10 years, depending on the nature and severity of the act or omission of the Practitioner.

Velile Tinto Cape Inc. - Property law and Conveyancing in Cape Town

Velile Tinto Cape Inc. provides specialist services in Property law and Conveyancing. For more information, please contact one of our Conveyancing Attorneys.

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