The new Property Practitioners Act No. 22 of 2019 replaces The Estate Agency Affairs Act 112 of 1976.
All property practitioners must read both The Property Practitioners Act No. 22 of 2019 and, in particular, Regulations 33 and 34. This summary refers to certain clauses in Regulation 33. Clauses that have not changed from the previous Act are not referred to. The clauses referred to must be read in context with the summarised explanation.
|Estate Agency Affairs Act 112 of 1976||Property Practitioners Act No. 22 of 2019|
|Intern Estate Agent||Candidate Property Practitioner|
|Full Status Agent||Property Practitioner|
|Principal Estate Agent||Principal Property Practitioner|
|Estate Agency Affairs Board||The Board of Authority (which embodies the Property Practitioners Regulatory Authority)|
The Act has repealed the Estate Agency Affairs Act 112 of 1976 (EAA Act). It did so to achieve three primary objectives:
- to address the slow transformation in the property sector
- to integrate and consolidate all role-players within the property sector under one umbrella statute and
- to address the deficiencies of largely ineffective monitoring of estate agency matters and protecting consumers and their trust funds.
The Authority has far-reaching enforcement powers, and among other things, it is required to:
- ensure compliance with the Act
- to regulate the conduct of property practitioners
- to implement measures to transform the property sector
- and to conduct campaigns to educate property practitioners and consumers.
|It must be noted that the PPRA will phase in the various changes communicated to all property practitioners. Clause 188.8.131.52 refers to:
The Authority may, in good faith, conduct consultation with industry representative bodies to establish transitional provisions for the phasing in some or all of the provisions of this regulation 33.We refer to the PPAct in relation to all the questions regarding the educational (and other aspects) that have been published previously in regulations under the ‘old’ Act:
S75(6) states very clearly and in no uncertain terms:
“All regulations made in terms of the Estate Agency Affairs Act remain in full force and effect as if they had been made in terms of or under this Act.”
Chapter 1: Definitions, Applications and Exemptions
Clause 2: Trust Accounts
A practitioner may apply for exemption from holding a Trust Account if they have never received or no longer receive trust monies.
Chapter 2: Transformation and Regularisation
- A Property Sector Transformation Fund will be formed. Please read Schedule 3, Cl 43, which states that the Fidelity Fund will supply the funding for this fund; conditions apply.
- 75% of the bursaries will be distributed to this fund. The Authority will develop the distribution guidelines.
- Regularisation: Note Cl. 3.4.2, which provides that a person who failed to register as an “estate agent” under the previous Act or failed to obtain a Fidelity Fund certificate under the previous Act when they were required to do so shall not be subject to prosecution or any disciplinary action in respect of such failure by the Authority provided that such person registers with the Authority within no more than six months of the effective date and subsequently obtains a Fidelity Fund certificate under the provisions of the Act and these regulations within no more than 12 months following the date upon which such person registers with the Authority.
- Clause 41.42 deals with this in more detail.
- 5% of grants will be spent on Consumer Education.
Chapter 3: Compliance, Enforcement and Dispute Resolution
Procedures are explained.
Chapter 4: Fees and the Fidelity Fund
Fee claims are explained with a maximum pay-out set at R2m. Please take the latest fee schedule from the PPRA website, as they may alter them as required.
- Every property practitioner who is a natural person shall, upon first becoming registered as a property practitioner, pay the Property Practitioners Fidelity Fund (“the Fidelity Fund”) a contribution of R
- Every property practitioner who is a natural person shall, as of the calendar year 2020, pay the Authority a levy of R 2 340 set for three years or, if permitted by the Authority, pay R780 per
- As defined in the Act, a candidate property practitioner shall pay R380 each year of their candidacy The candidacy period has exceeded two years. The candidate property practitioner shall pay the same levy applicable to every property practitioner mentioned in 15.1.1 or 15.1.2.
Chapter 5: Fidelity Fund Certificates
Procedures, penalties and deadlines are explained:
- Renewals to be affected by no later than 31 October of that year, the practitioner must apply to the Authority for the issue of a fidelity fund
Clause 25.2: “Subject to any express provision to the contrary in the Act or these regulations, no person who does not directly carry out to any material degree any activity or function of a “property practitioner” as defined in section 1 of the Act is required to register with the Authority or hold a Fidelity Fund certificate, even though such person may be employed by or in any way be engaged with any property practitioner.”
An easy example could be an administrator or an accountant in a property management team or providing support services within a brokerage. Also, a technical manager in a property management team. Such roles are essential to the success of the property management or brokerage business. Still, those individuals do not, to a material degree, perform the functions contemplated in the definition of a property practitioner.
Conversely, the property manager who is responsible for all the roles/functions within the property management team materially performs the role defined in the definition of a property practitioner and will definitely require an FFC.
Similarly, the agents/brokers who negotiate and facilitate transactions will require an FFC, but their support admin staff will not.
Clause 26 states that FFCs will display the category of real estate in which you are competent. The Authority will determine the different categories. FFCs will be industry specific.
Pursuant to section 47 (3) of the Act, it is prescribed that the form of a Fidelity Fund certificate will be as follows –
|FIDELITY FUND CERTIFICATE
issued under the provisions of the Property Practitioners Act 22 of 2019
[Insert logo of the authority]
Property Practitioners Regulatory Authority Valid from date of issue to 31 December of the
Holder: [insert the year at the end of which the fidelity fund certificate will expire]
[Insert the full name of the holder of the fidelity fund certificate]
[Insert the geographical address of the holder ofDate of issue:
the fidelity fund certificate] [insert the date of issue]
(Insert the number of the certificate) ______________________________
The Property Practitioners Regulatory Authority
(Insert e.g. “estate agency industry”, “business broking industry”, “bond broking industry” or similar)
Chapter 6: Trust Account
Requirements, declaration of interest, and winding up are discussed.
Chapter 7: Training, conduct and consumer protection measures.
Clause 33.2: PDE – The Authority is mandated to establish an exam after consulting with representative bodies.
Clause 33.2.3 – No person can write this PDE exam unless they have completed the set practical training course, which will contain a minimum of 6 modules over a minimum of 6 months (NQF).
Read this with the provisions of Cl. 33.1.2, 33.1.33 and Cl.41 (exemptions).
Clause 33.2.8: If you leave the industry for more than five years, you must take the required qualification on your return.
Clause 184.108.40.206: The Authority may, in good faith, conduct consultation with industry representative bodies to establish transitional provisions for the phasing in of some or all of the provisions of this regulation 33.
Clause 33.3: Further restrictions – Once qualified, a principal must oversee your documents for a further six months.
Clause 33.4: Candidate Estate Agent – On registration, you are a candidate estate agent and must act under the supervision of a fully qualified agent or principal. Candidate practitioners have 180 days (6 months) to become fully qualified.
Clause 33.5: CPD – 12 modules over a three-year rolling cycle, completing four per annum.
Clause 34: Code of Conduct – The Authority will implement a new code. We note here what we believe to be changed to the existing Code of Conduct.
Clause 220.127.116.11: A practitioner may not accept a mandate if the performance of the mandate requires specialised skill or knowledge for which they are not qualified.
Clause 35.1: Franchisee must adhere to the franchisor’ contractual requirements.
Clause 18.104.22.168: Property developers, including their Homeowners Associations or body Corporates, may not restrict access to certain property practitioners.
Mandatory Disclosure – Defects must be fully disclosed to the purchaser by the agent on the owner’s behalf.
Provision of additional information – the owner, must complete the disclosure form, and should he respond with a “yes”, he must explain the status of that defect.
A document, “Statements in connection with Property,” is supplied, which must be adapted and attached to the contract. Other documents include a form that the owner signs certifying that the information supplied is correct and that the third person supplying the information completes, certifying that they are duly authorised. Finally, a buyer’s acknowledgement must be completed and signed.
Wording on letterheads agreements, letterheads and marketing documents must include “Registered with the PPRA”. A candidate is using or referring to the document; it must be stated that they are a candidate.
All contracts must contain the wording: “I, (name of agent), hereby warrant the validity of my FFC as at the date of signature on this agreement”.
Chapter 8: Administrative and other matters
Clause 38: The distinction between major and minor contraventions is detailed.
Clause 39.1.1: Identifies a Property Practitioner by the following services:
- the sale, by auction or otherwise, by any person as part of the activities of operating a property development business, of any property or any interest, right or title in or to a property or a property development, provided that the foregoing shall not apply in circumstances where such sale, auction or other activity is conducted solely through the auspices of a property practitioner falling within subsection (a) (i) of the definition of “property practitioner” who is the holder of a current fidelity fund certificate issued under the provisions of the Act; and
- An activity falling within subparagraphs (i), (ii), (iii) of paragraph (a) of the definition of “property practitioner” in the Act insofar as it pertains to business undertakings shall include any activity that relates to small, micro and medium enterprises, franchised businesses or new start-up ventures or newly created franchise concepts, whether such enterprise is sold as a whole as a going concern or as part of a business or through transferring the beneficial ownership in such
Any person facilitating or providing a service in the sale or lease of property in any way and does not use the services of a property practitioner must hold an FFC. Business undertakings shall include any activity, whether sold as a whole or going concern, or as part of a business, or by means of transferring the beneficial ownership.
|Additional Property Practitioner information supplied by PropAcademy:
“A property practitioner is any person who, for the acquisition of gain, directly or indirectly, on the instructions or on behalf of another:
Thus, the definition extends well beyond estate agents. It includes
Anyone who falls within the ambit of the definition of a “property practitioner” is required under the Act to register as a property practitioner and obtain a certificate issued by the Fidelity Fund on an annual basis. Refer to Section 47(1) of the Act. Conveyancers are prohibited from paying any money to a property practitioner without receiving a copy of that property practitioner’s valid Fidelity Fund certificate.
Note: The PPA will not apply to the following persons who do not do any of the above-listed activities in the ordinary course of their business;
Persons who sell their property;
An attorney, candidate attorney, or sheriff.”
Taking the above into account, the following persons DO NOT need to register with the PPRA or hold a FFC:
- The Sheriff of the Court
- An Attorney or a Candidate Attorney can perform estate agent activities without registering with the Authority if he operates in the name of his law firm, from the premises of his law firm only and in the course of his law business. As soon as he operates a separate estate agency, advertises under another name, has employees who advertise under another name, and operates from a different address, he must register as an estate agent and comply with all aspects of the Act. His employees are also liable for compliance with the education requirements of the Act. An example of an exclusion would be if the attorney sells a property from an Estate he is winding up.
- A natural person selling his residence as long as it is his primary home.
The following persons MUST register with the PPRA and hold a valid current FFC:
- Sales & Rental Agents. The only change envisioned in the new Act will be that mandatory disclosure forms must be included in the sale and rental agreements. If not, the agreement will be interpreted as no defects or deficiencies were disclosed.
- Again, the only change will include the mandatory disclosure forms for Auctioneers, like for Sales and Rental Agents.
- Business Brokers must comply with the Property Practitioners Act. This refers to the marketing, promotion, managing, sale, letting, financing and purchase of immovable property, and any rights, obligations, interests, duties or powers associated with or relevant to such property.
- Managing Agents are anyone who “collects or receives any monies payable on account of a lease of a property or a business undertaking; (and who) provides, procures, facilitates, secures or otherwise obtains or markets financing for or in connection with the management (of a property)”. Managing agents must comply with all the provisions of the new Act.
- Bridging Financiers must comply with the Act and its provisions.
- Bond Originators must comply with the Act unless they fall under the Financial Sector Regulation
- Timeshare and Fractional Any type of sale of property or property shares must comply with the Act.
- All Property Developers must comply with the Act.
- The new Act also includes those Trusts that do the work of a Property Practitioner – that is, market, buy, sell, let or auction a property.
Document Retentions – Section 55 (1) (f) of the Act states all electronic communications sent and received by the property practitioner to a public member during business must be stored. If the communication is on social media and accessible to the public, it doesn’t have to be stored. (5 years)
Schedule 1 –
Lists administrative matters relating to exemptions
Manner and Form of Application:
Clause 41.1 Discusses how to distribute the exemption application to the PPRA.
Clause 41.2: Process of Exemptions – All applications must be loaded to the PPRA web portal or sent to the PPRA email address or post or delivery. The PPRA has 60 days to respond unless the PPRA has good grounds to extend this time, and if so, they must advise the applicant. The period of 60 days may be extended for a maximum of 20 more days. If information is missing from the application, the 60 day period starts afresh. Should the PPRA fail to comply, the application is deemed approved. An application for exemption may be applied for by an individual or by an entity.
Administration of exemption applications – Exemptions do not only apply to education, but to any aspect related to property, i.e. payment of FFC or non-executive directors may apply for exclusion from holding an FFC
Administrative matters relating to registrations and Fidelity Fund Certificates
Clause 41: A single FFC will be issued in respect of all capacities in which a property practitioner acts. FFCs will not state the status of the property practitioner. As a precondition to issuing an FFC, the Authority cannot require a practitioner to bring into compliance any matter pertaining to any period preceding the date upon which an FFC was previously issued unless a complaint is lodged.
Once FFC is approved, the PPRA must upload it to the agents portal within ten days. Conveyancers must hold the FFC of the agency and the agent before distributing funds. An FFC downloaded from the portal will constitute an original. Finally, The PPRA must give the practitioner 30 days notice before withdrawing an FFC and allow the practitioner to apply for an exemption.
According to the Act, you must renew your FFC every three years:
Clause 40: (1) Every property practitioner, excluding a property practitioner referred to in paragraph (g) of the definition of “property practitioner” in section 1, must, within the prescribed period and in the prescribed manner, every three years apply to the Authority for a Fidelity Fund certificate, and such application must be accompanied by the fees contemplated in section 34.
Schedule 3 – Grants from the FF
Clause 41.29 Fund must always hold a minimum of R400m. Excess funds shall be used for Transformation Fund.
Schedule 4 – General administrative matters
Clause 41.32 the Authority must upload email addresses or any delivery address for exemption applications on its website. Where a property practitioner acts for a business, then that business information must be reflected on all correspondence and marketing material of that property practitioner. The documents above must also state:
- that the entity holds an FFC
- whether or not the entity holds a trust account
- the property practitioner name and confirmation that he holds a valid FFC
The Authority must give the practitioner 30 days to supply any information that the authority requests. Any person claiming theft, fraud etc., against an agent does not have to take steps against the practitioner. A recognised financial reporting framework must prepare financial accounting, and The SA Institute of Chartered Accountants must determine the type of audit required.
Schedule 5 – Transition
Clause 41.41: An applicant shall not be precluded from registered in consequence of that person being in any way non-compliant with any of the provisions of the Act unless:
Subject to criminal prosecution
Previous FFC withdrawn as a result of failure to comply with regulations
A Property practitioner who has previously failed to register may do so now with no penalties as long as he does so within six months of the Act and receives the FFC within 12 months from the date of his registration.
The Authority will liaise with representative bodies to bring non-compliant practitioners to compliance. All existing FFC’s and qualifications achieved during the 12 months pre the effective date must be upheld.
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Disclaimer: PropAcademy has prepared these notes to the best of their knowledge and have taken advice from various experts. PropAcademy are indemnified against any misrepresentation or error that may occur herein.