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 a Fidelity Fund Certificate (FFC) through the Property Practitioners Regulatory Authority (PPRA) formally known as the EAAB. 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.
“A property practitioner is any person who, for the acquisition of gain, directly or indirectly, on the instructions or on behalf of another:
- sells, purchases, manages or publicly exhibits for sale any property or business undertaking;
- leases or hires or publicly exhibits for hire any property or business undertaking;
- collects or receives money payable for a lease;
- provides, procures, facilitates, secures or otherwise obtains or markets financing for or in connection with the management, sale or lease of a property or business undertaking; and
- renders services as an intermediary to affect the conclusion of an agreement to sell or let a property or business undertaking (except where this is not done in the ordinary course of the person’s business; where a natural person does it in their capacity, or where the person is an attorney, candidate attorney or sheriff).
Thus, the definition extends well beyond estate agents. It includes:
- Property developers (not natural persons selling their own property)
- Property managers
- Providers of bridging finance and bond brokers fall under this ambit but have applied for exemption. Financial institutions are not included as they are covered under their Act.
Anyone who falls within the ambit of the definition of a “property practitioner” is required under the Property Practitioners Act no. 22 of 2019 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
- A candidate attorney
- A sheriff.”
Often the question of an “administrator” pops up – why should they need a FFC if they do not deal directly with the public? They don’t. Why do they need a FFC if they are drafting lease or sale agreements? They don’t, as long as they are not signatory to the contract, and it is being overseen by the practitioner that they drafted it for. But if they are dealing with the public’s money or with the agency trust account then they will need an FFC.
Another question arises mainly from Managing Agency firms – why do my administrators have to become fully qualified property practitioners and hold an FFC? Well, the same applies. If they are not dealing directly with the public, if they are not dealing with the Trust Account then they do not need an FFC as they are performing a purely administrative function.