What you need to know about the Property Practitioners Act
Category News
After a proclamation notice was issued on the 14th of January 2022 by President Cyril Ramaphosa, the Property Practitioners Act 22 of 2019 officially came into effect on the 1st of February 2022.
This new Act will replace the Estate Agency Act which governed the ongoing workings and business relationships of Real Estate "agents" in a number of ways. These include new rules and regulations alongside an overhaul of the terminology used to describe the business and its practitioners.
In a nutshell, the new Act will provide for the registration of property practitioners, training and qualification programmes, the requirement to obtain a Fidelity Fund Certificate, and the compulsory use of trust accounts. Beyond this, the new rules provide a framework for consumer protection with the introduction of dispute mechanisms, a system for managing and letting property, and a complete transformation of the property sector overall.
What is a Property Practitioner?
Essentially, the newly adopted title encompasses a larger understanding than that of an agent defined under the previous Act. A Property Practitioner is legally defined as a person who directly or indirectly sells or leases properties including sales and rental agents, auctioneers, business brokers that deal with the sale and letting of immovable property, managing agents who receive remuneration for managing property on behalf of another, and trusts that do the work of a property practitioner.
The title "Property Practitioner" brings with it the understanding that an individual is fully compliant with the provisions set out by the Property Practitioners Act.
Trust account and fidelity fund certificate
According to sections 47 and 48 of the new Act, all members of what was previously known as a "Real Estate Agency" (this includes directors, owners, members or trustees) are now required to obtain and hold a Fidelity Fund Certificate. A Property Practitioner cannot operate within the Real Estate sector without a valid certificate in their possession at all times.
Any practitioner who is not in possession of a certificate may risk having to repay any amounts received with respect to money earned through property transactions following the 1st of February.
Beyond this, Property Practitioners must now open and hold one or more Section 54(1)(a) trust accounts with a registered bank and appoint an auditor. Once opened, Property Practitioners will then need to provide the Property Practitioners Regulatory Authority with all account details and auditor information relating to property transactions.
Regulatory authorities
On the legal end of the new management Act, the Property Practitioners Regulatory Authority has thus replaced the Estate Agency Board and is tasked primarily with ensuring that all property practitioners remain in compliance with the Act.
They will also regulate the conduct and manner in which Property Practitioners manage their portfolios where letting and renting may be concerned. Finally, they will implement measures to transform the property sector as well as conduct campaigns and workshops to educate both property practitioners and consumers throughout this process.
Protection of consumer interest
Consumer interests remain the primary reason for this change in policy. The new act will (as a consumer-focused piece of legislation) require Property Practitioners to ensure that a disclosure form is signed by all parties within a property transaction. This is known legally as Mandatory Disclosure.
If there is noncompliance, the agreement must be interpreted as if no defects or deficiencies in the property were disclosed.
A property practitioner will not be allowed to accept a sale or lease mandate unless the owner of the property has approved the signed Mandatory Disclosure. Consumers may hold a property practitioner liable if he or she fails to comply with these set provisions.
Essentially, the homeowner is requested to confirm whether he/she is aware of any defects and whether renovations have been effected on the property with the correct consent, permissions, and permits.
The transformation process
The Practitioners Act states that the Property Sector Transformation Charter will apply to all Property Practitioners and when procuring property-related goods and services, all vassals of the Government will be obliged to utilise the services of Property Practitioners who comply with the broad-based black economic empowerment (BBBEE) and employment equity legislation and policies.
This will also include the implementation and formation of the Property Sector Transformation Fund for the purpose of promoting black-owned firms and principles, increased participation of previously disadvantaged groups, and the promotion of consumer awareness at its core.
To find out more about the Property Practitioners Act 22 of 2019, please refer to the full document prepared by the Department of Human Settlements.
Read more of our trending news stories and get the latest property tips here - Homes of Distinction Blog
To contact one of our Property Practitioners follow the link: https://www.homesofdistinction.co.za/agents/
Homes of Distinction holds a Fidelity Fund Certificate issued by the Property Practitioners Regulatory Authority.
Author: LV Digital
