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The new Property Practitioners Act (PPA) is kicking into effect as of today (1 February 2022), bringing significant changes to the property industry.

The Act applies to the marketing, promotion, management, sale, letting, and finance of immovable property and the services rendered by persons attending to any of the preceding (other than banks and attorneys).

The purpose of the Act is, amongst other things, to bring transformation to the real estate sector to make it more representative of the demographics of our country and to facilitate access to real estate for previously disadvantaged people.

It replaces the old Estate Agency Affairs Act, which dates to the early seventies. However, the Estate Agency Affairs Board will remain and will ensure compliance with the new Act and the regulations thereto.

Major changes affecting the consumer and agents alike are the following:

1. Compulsory disclosure of defects to a property 

A Disclosure Form signed by the seller/landlord must be attached to every sale or lease facilitated by an estate agent and should be procured when a mandate is secured.

In the absence of such disclosure, a presumption may be made in favour of the buyer that there are, in fact, no defects to a property, which may lead to claims against a seller despite the ‘voetstoots’ (buyer beware) clause in sale agreements.

It is essential to make use of the services of reputable estate agents who understand this and who will guide sellers to make full disclosure of any defects that they may be aware of at the time that a mandate is secured. The mandatory Disclosure Form will now form part of the sale or lease agreement.

2. Compulsory registration with the Estate Agency Affairs Board (FFC’s)

One of the positive changes is that agents now only have to renew their Fidelity Fund Certificates’ every three years. In other words, an FFC is valid for three years. 

This will substantially reduce administration and cost – both to the regulatory authority (the EAAB) and real estate firms.

3. Mandatory time periods for issuing certificates by the EAAB

There is now also a ‘deeming’ provision in the Act (Section 49(1)) – if the EAAB has not issued a Fidelity Fund Certificate within 30 days of application having been made (and provided all their requirements have been met) – the certificate shall be presumed to have been issued, and an agent can render the services of a real estate agent without penalty. 

This welcomed provision will help avoid administrative delays that are not of the making of the agent/agency.

4. Mandatory display of FFC’s

Agents must, at all times, display their registration certificates with the Estate Agency Affairs Board in their offices and their registration numbers on all documents and communication (FFC number). The legislator’s purpose is to ensure that all persons performing any property-related service are compliant – rooting out any unregistered agents providing property services to the public.  

A failure to display an FFC number would mean that a person claiming to be an agent (and who are in fact not registered) would not be entitled to commission. Most conveyancers would and should insist that agents provide their FFC numbers when they are instructed to attend to the transfer of a property – failing which there is no entitlement to commission.    

Consumers are advised to only deal with registered agents. This affords them protection against, for example, theft and generally ensure that they get the best service possible and have recourse to the EAAB should there be non-compliance or sub-par service provided by an agent. 

5. Mandatory Tax clearance certificates

The EAAB may refuse to register a person and issue an FFC if the person does not have a valid Tax Clearance Certificate.

The Act does not apply in the following circumstances:

  1. Selling privately.
  2. Making use of the services of an attorney.

Attorneys are governed by the Legal Practice Act and do not fall under the scope of the Property Practitioner’s Act. Attorneys and conveyancers can assist and advise buyers and sellers in drafting sale agreements and leases and negotiating any private sale agreement.

Want to know more about the Property Practitioners Act? Get in touch with us today. 

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