The Property Practitioner’s Act is finally here. Signed into law by Pres. Cyril Ramaphosa in 2019, the PPA finally came into effect on 1 February 2022, replacing the Estate Agency Affairs Act of 1976. The PPA is aimed at the further transformation of the property sector and increased consumer protection. Henceforth, the PPA’s regulations will be enforced and overseen by a new regulatory body, the Board of Authority, which replaces the Estate Agencies Affair Board.
Property Practitioners
Where the EAAA only focused on estate agents, the PPA defines a “property practitioner” as any party that is involved in the selling, buying, leasing, marketing, or financing of a property. This broadens the scope of the legislation to include parties that were previously not governed by any form of legislation. Through this, the actions of role-players across the property sector will now be governed by a single set of guidelines, requiring all property practitioners to live up to the same standards.
Fidelity Fund Certificates
To ensure adherence to the PPA’s code of conduct, extensive focus is placed on the role of Fidelity Fund Certificates (FFC) and their use within the property sector. FFCs are there to offer consumers peace of mind, knowing that the property practitioners they are doing business with, will adhere to the PPA’s code of conduct and acknowledge their duty of care.
It is now mandatory for all property practitioners to prominently display their FFCs in every place of business. Furthermore, a disclaimer detailing the property practitioner’s FFC status, must be reproduced on all letterheads and marketing material.
In the past, consumers were expected to launch their own efforts to recover any losses directly from property practitioners. A welcome change in the PPA is that this is no longer the case. Where consumers’ money has been stolen or misused by a property practitioner, consumers can now claim their losses directly from the Fidelity Fund right from the start, entrusting any further investigations to the Board of Authority.
Transformation
In order to rectify the disparity that still exists in the employment of historically disadvantaged South Africans, the PPA includes specific mechanisms that promote transformation within the property sector. The primary of these being the establishment of the Property Sector Transformation Fund, which will fund transformative programmes, including the following:
- Principalisation programmes
- Regularisation programmes
- Consumer awareness programmes
- Work readiness programmes
Record-keeping
Property practitioners must appoint an auditor and open at least one trust account, with a dedicated accounting record for each account. The details of all trust accounts and the appointed auditor must then be provided to the Board of Authority. Money should always be deposited into the relevant trust account with clear and detailed records of all transactions.
Beyond accounting records, property practitioners must also keep the following documents for a minimum period of five years:
- Any documentation exchanged with the Board of Authority
- All legal documents related to the financing, sale, purchase, or lease of property
- All its advertising/marketing material
To learn more about the Property Practitioner’s Act, and to find out how you can become compliant with its regulations, get in touch with us.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)