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The 1^st of February 2022 marked the coming into operation of the eagerly anticipated Property Practitioner Act 22 of 2019 (the “Act”), the establishment of the Property Practitioner Regulatory Authority (the “PPRA”) and the Property Practitioner’s Fidelity Fund which replaced the Estate Agency Affairs Act 112 of 1976, the Estate Agency Affairs Board and the Estate Agents Fidelity Fund respectively. The Act has directly impacted various players in the property sector such as property purchasers, sellers, property developers, estate agents as well as aspirants in the profession. The Act provides for greater consumer protection and transformation of the property sector amongst other pertinent matters.

The operation of a property practitioner in South Africa is regulated by the Property Practitioners Regulatory Authority which carries the functions of regulating the conduct of Property Practitioners in dealing with consumers insofar as marketing, managing, financing, selling and letting of property.  The Authority ensures compliance with the Act and protects consumers from undesirable and sanctionable practices which are defined in depth in the Act.

Firstly, in order to understand the application of the Act it is important to understand who or what falls under the very wide definition of a “property practitioner” – the Act provides that any natural person or legal entity that holds out against payment to act on the instruction or behalf of another in the ordinary course of business carrying out the following activities:

• Auctions; sells; publicly exhibits; negotiates purchase or sale property or a business;

• Rents; hires; publicly exhibits or negotiates hire of a property or a business;

• Canvasses for landlords and tenants or sellers and purchasers of properties or businesses;

• Acts as an intermediary or facilitator to effect the conclusion of an agreement;

• Markets, promotes or advertises any part, unit, section of, rights or shares in (including a time share and fractional ownership) a property or property development;

• Manages a property on behalf of another;

Further to the above, a property practitioner is also a director of a company, member of a closed corporation, trustee of a trust or person employed by a property practitioner who performs any of the activities listed above (along with the activities of managing, supervising or controlling the day-to-day operations of the business) on behalf of the relevant entity.

Now that a property practitioner has been defined and the various activities that can lead to ones’ classification as such have been rounded up, the responsibilities and duties falling on those in this category with regards to the PPRA and the Property Practitioner’s Fidelity Fund can be laid out.

• Every property practitioner must be in possession of a Fidelity Fund Certificate. This certificate is valid only for three years.

• The holder of a certificate must display the certificate at every place where he conducts business to enable consumers to inspect it easily and accessibly.

• The holder of a certificate must ensure that the prescribed sentence regarding their holding of a Fidelity Fund certificate is reproduced in legibly on any letterheads or marketing materials relating to that Property Practitioner’s practice as well as any agreement relating to property transactions entered into by the Property Practitioner which clause ensures that he, she or it guarantees the validity of the certificate, “[Insert name of property practitioner] hereby warrants the validity of his / her / its Fidelity Fund Certificate as at the date of signature of this Agreement.”

• Every Property Practitioner must on request produce the certificate or a certified copy. No person who has not been issued with a valid certificate may act as a Property Practitioner.

• A Property Practitioner has the obligation to for a period of 5 years retain the following documents: all documents exchanged with the Authority; if applicable, correspondence with his, her or its employer or franchisor; any agreement incidental to his, her or its carrying on the business of a Property Practitioner; any agreement, mandate, mandatory disclosure form or other document relating to the financing, sale, purchase or lease of a property; any advertising or marketing material related to his, her or its carrying on the business of a Property practitioner; and any other document prescribed by the Minister.

Who may be disqualified from being issued with a certificate? This includes, but not limited to, any person who is not a South African citizen and who does not lawfully reside in SA, any person who is not in possession of a valid BEE certificate and any person who is not in possession of a valid tax clearance certificate.

With reference to the Property Practitioners Fidelity Fund there are certain aspects which are fundamental for consumers to understand which includes:

• The purpose of the fund is to reimburse persons who suffer pecuniary loss due to theft of trust money by a Property Practitioner.

• Fund must receive payment annually of a fee for the issue of a Fidelity Fund certificate.

The Act seeks to make room for transformation in the Property Sector through the Authority opening a Property Sector Transformation Fund, which fund will receive grants from the Property Practitioners Fidelity Fund. This fund will be used to promote transformation by encouraging participation of historically disadvantaged people, promoting black owned firms and principals and working with SETA to develop training and development of historically disadvantaged people, which must include recognition of prior learning.

The above paragraph leads to the Act’s provisions regarding the training and supervision of property practitioners in training – referred to as “candidate estate agents”. The Act seeks to raise the level of training and instruction that candidates receive to adequately prepare them to enter the sector as fully qualified property practitioners while reducing their amount of risk and liability. This is done through the following provisions:

• A candidate property practitioner may not hold himself or herself out or advertise, as someone who has complied with the educational requirements contemplated in the Regulations or as someone who is no longer subject to any restriction.

• A candidate practitioner may not draft or complete any document or clause in a document conferring a mandate or relating to the sale or lease of property. A contravention here results in the candidate not being entitled to any remuneration or payment or damages arising from the transaction.

• It is not a defense that the principal was not aware of the actions or omissions of the candidate. A principal must ensure proper control and supervision as they shall be responsible for all acts of a candidate estate agent done in his or her capacity as such, of which the principal Property Practitioner is aware.

• No person may act as a candidate estate agent for a period exceeding an aggregated 180 days. After the 180-day period they must sit for their PDE, provided that if such person fails to pass then on application and good cause shown, the Authority may permit the candidate to register as a candidate for another 180 days.

To conclude, it is evident that the new Act primarily aims to protect the interests of the consumer. Consumers should make use of the protection afforded to them in terms of the Act and ensure that the property practitioner is in possession of a Fidelity Fund Certificate that has been issued by the Property Practitioners Regulatory Authority before mandating the practitioner to render his or her services.

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