Author: Abbaas Kamalie

 As of 1 February 2022, the new Property Practitioners Act (PPA) took effect and with it bringing much-needed legal clarity on the processes to be followed by the Real Estate sector. The major focus of the PPA is the protection of consumers in the property industry which will be done by way of a transformation in the property sector through the regulation of Estate Agents, who will now be referred to as Property Practitioners. The key aspects of the PPA are highlighted below. 

Definition of a Property Practitioner 

The PPA has broaden the definition of a Property Practitioner which includes, not only estate agents, but mortgage originators, rental agents, property leasing managers, bridging agents, managers of a property practitioner business and auctioneers to name a few. 

Property Practitioners Regulatory Authority 

The Property Practitioners Regulatory Authority (PPRA) will be replacing the previous Estate Agents Affairs Board. The PPRA is tasked with regulating dealings between property practitioners and property related consumers with the main focus being that of conduct and compliance by property practitioners and the protection of consumers alike. The PPRA will also be regulating and putting measures in place for financing, marketing, managing, letting, hiring, sales, property consumer education and the purchasing of property as stipulated in section 5(4) of the PPA. 

Protection of Consumers / Disclosure 

With consumer protection in mind, a property practitioner is required to obtain a comprehensive property disclosure form, signed by the owner of the property, in order to accept a mandate. Irrespective whether it be for a sale of a property or for a lease agreement, it is compulsory that the form be provided to a prospective buyer or lessee who makes an offer and if an offer is accepted, it must be included in the agreement of sale. Should no disclosure form be included, it may be interpreted that there were no defects disclosed relating to the property and as such property practitioners may be held liable. 

Fidelity Fund Certificates 

All practitioners are now required to have a valid Fidelity Fund Certificate, a valid tax clearance certificate as well as a BEE certificate at the time of a transaction. According to the PPA, no practitioner may claim commission without a valid Fidelity Fund Certificate as per section 56(1) of the PPA. Included in the changes, is also the duration of validity of the certificates which is now 3 years instead of 1 year, displaying of a Fidelity Fund Certificate openly in order to be easily inspected by anyone and the process regarding obtaining/renewal of a Fidelity Fund Certificate. 

Trust Accounts 

Property Practitioners are only required to have a trust account should they actually be handling trust monies. The PPA highlights when property practitioners are exempt from having a trust account, of the exemptions include where they did/do not receive any trust monies, if they have a third-party collecting agent or if there is another property practitioner that specifically handles collecting and distributing trust monies on their behalf. 

The PPA further sets out when property practitioners are required to have their annual financial statements being audited by an auditor and when an independent review by a registered accountant is applicable. For example, when a property practitioner is exempt from keeping a trust account when either they have never received trust monies, no longer receives trust monies or submits an affidavit in terms of section 2.1.1.3 of the PPA, the property practitioner will be exempt from having its annual financial statements and other accounts audited, he/she will only be required to have such account records independently reviewed by a registered accountant in terms of section 2.3 of the PPA. 

Training and Transformation 

The PPA stipulates the involvement of the Property Practitioners Regulatory Authority with various industries in the real estate sector in which property practitioners operate to establish principles that set qualification standards, course material in support of the standards established and further examinations for those who wish to qualify as a property practitioner as well as a standard for practical training of principal and non-principal property practitioners. The PPA aims to make training for property practitioners more affordable as well as restructure the qualification process in order to have a property practitioner sell property sooner under supervision. 

With another one of the main focuses of the PPA being the transformation of the property sector, it further aims to promote, through training and development, previously disadvantage individuals in the property market by means of a Property Sector Transformation Fund. 

Conclusion 

It is evident that the PPA aims to establish a property sector that has a streamlined process relating to property transactions. This is done with not only the protection of consumers in mind but also having ethical practices legislatively included in the 

operations of property practitioners. This will help to ensure that a uniform code of conduct and effective procedures are being followed by all property practitioners.