Implications of the new Property Practitioner's Act for sellers and landlords
Category News
The Property Practitioner's Act, replacing the 43-year old Estate Agency Affairs Act, was recently signed into law by President Cyril Ramaphosa. The new Act brings considerable reform of the property industry as a whole and implications for sellers and landlords.
The Act aims to improve the functioning of the property sector across a broader spectrum of participants and introducing better monitoring systems and improved professional standards in the industry.
Some key aspects include:
Estate agents - the Act broadens the scope of legislation beyond traditional estate agents to cover commercial property brokers, bond originators, home inspectors, homeowners' associations, companies selling timeshare and fractional title, property developers and property managers. The Act considerably tightens the requirements insofar as Fidelity Fund Certificates are concerned as well as how and when a commission or brokerage fee on sales or leases can be earned.
Fidelity Fund Certificates - in addition to current regulations, an additional requirement is introduced, and property practitioners must now also be in possession of a valid tax clearance certificate and a BEE certificate. To earn a commission or brokerage fee, the property practitioner as well as the agency/business and all of its property practitioners must be fully compliant. The Board of Authority or Property Practitioners Ombud can, when they see fit, withdraw a Fidelity Fund Certificate.
Property Defects Disclosure - this is an important element that sellers and landlords need to be aware of. While it has for some time been best practice to include a comprehensive property defects disclosure document as part of a property transfer, it is now mandatory for all property sale and lease agreement. No mandate may be accepted from a seller or landlord without this document, which will then also form part of the sale and lease agreement.
Language - a buyer or tenant may now also request the sale or lease agreement in a whichever official language that they prefer and the seller, landlord or managing agent will have to comply. To assist with this, the new Board Authority will provide sample contracts in all languages on its website.
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 property profession across the board, not just estate agents as is currently the case.
Property Practitioners Ombud - a new Property Practitioners Ombud will be put in place to lighten the burden on the courts and improve dispute administration. The Ombud will have primarily consider and decide on complaints by the public against property practitioners and the decision of the Ombud will be equivalent to that of a Magistrate. Rental disputes between tenants and landlords must, however, still need to be taken to the Rental Tribunal.
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Author: Gina Meintjes
