Article contributed by Umhlanga Attorney Firm - Fawzia Khan & Associates
On 19 September 2019, President Ramaphosa signed into law the Property Practitioners Act 22 of 2019 (“the PPA”). The actual date when this Act will come into effect is still to be announced in the Government Gazette. The PPA is designed to assist and protect consumers involved in property transactions. It records that the property industry is in need of transformation and measures are needed to benefit historically disadvantaged individuals.
The Board of Authority will replace the Estate Agency Affairs Board and will regulate and govern the profession. The Board is required to publish guideline agreements on its website and conduct campaigns to educate and inform the general public of their rights in property transactions. A purchaser or tenant can request an agreement of sale or lease agreement to be in any of the official languages in South Africa and the seller or landlord is required to oblige. A property practitioner owes a buyer and a seller a duty of care. So, who is regarded as a property practitioner? Well, it’s no longer limited to only estate agents, but extends to almost everyone working within the property sector. These include managing agents, auctioneers, trustees of trusts, property brokers, bridging finance companies, bond originators, home inspectors, home owners’ associations, timeshare and fractional title operators, property developers, property managers and any person who acts as an intermediary in a property transaction. Digital portals who sell or exhibit property electronically are also included. Those excluded from the list would be an owner of property who wants to sell his home privately, legal practitioners and the sheriff of the court.
A property practitioner has to be in possession of a valid fidelity fund certificate to be able to claim a commission. No valid fidelity fund certificate would mean that any commission paid would have to be refunded. Ouch! Parties are not allowed to contract out of the provisions of the Act. It’s also compulsory for a disclosure form, setting out all the defects in the property to be completed and signed by the property practitioner and the seller/ or landlord. If there’s no disclosure form attached to a sale or lease agreement, it will be regarded as if there were no defects in the property. Candidate property practitioners are to be supervised at all times and they are not allowed to draft or complete any document or clause in a document in which a mandate is conferred. A principal property practitioner will not be able to raise a defence that he/she was unaware of an act or omission of the property practitioner or the candidate property practitioner. Estate agency franchisors will be held liable for the misconduct of their franchisees, which makes it very onerous on the franchisors.
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