Property Practitioners Bill
Our government started discussions around changes to the Estate Agency Affairs Act in 2006 when the Department of Trade and Industry still took responsibility for the real estate industry.
Almost 12 years later, there is urgent unprecedented activity in the Portfolio Committee on Human Settlements having meeting after meeting on the Property Practitioners Bill. This committee has now almost completed its work after which the Bill will go to the National Assembly and to the National Council of Provinces for tabling and debating, thereafter to be signed into law.
We have grounds to believe that there is some urgency to make this all happen before the end of the year.
Should this process happen as has been anticipated, it will then be up to the President to sign it when he deems fit i.e. anytime and most likely, before the 2019 general elections.
As you are all by now well aware, Rebosa went to great lengths and expense to analyse the Bill in detail and to make proposal after proposal.
Rebosa submitted written and oral comments/proposals, lobbied individual members of parliament and relevant interest groups, conducted industry consultations and attended public participation meetings. Quite frankly we exhausted every avenue available to us to ensure the best interests of our industry were taken into account to make a material difference. Over the past months I personally attended every Parliamentary Portfolio Committee meeting to monitor the progress of the Bill.
Below, please find the current version of the Bill for your perusal.
We were met with some successes.
All the wide encompassing definitions stayed in place and virtually anyone remotely associated with a property transaction will be affected by the Bill. Mortgage Originators did not escape. It appears that valuators have been excluded but subject to interpretation, property portals and property papers might be included.
Developers can still sell their properties to consumers without having to comply with the rules and regulations that all estate agents have to comply with. This is hard to comprehend as all their customers are consumers who deserve the same protection and service as ours.
Attorneys are still exempted to do what they have been doing lately, i.e. to employ staff, sell properties at a discounted rate and benefit from the conveyancing derived there from. There is no logical rationale for this.
Disqualification of Directors and Principals:
Unsuspecting agents can still wake up finding their own FFC and that of the entire company cancelled because of the omission or illegal behaviour of one of the directors or principals.
Supervision of Interns:
In terms of the current Code of Conduct principals are not responsible for the misdeeds of interns provided that they have done everything reasonable and possible to prevent same. The Bill states the contrary, i.e. the principal is responsible irrespective of any knowledge of wrongful activities of an intern – This is extremely detrimental to the industry.
The Ombudsman’s Scheme:
This has been scrapped – This may well have been a good idea.
Board of the Authority:
Gone are the days where 5 out of 15 board members “represented the industry”. The new board will have between 9 and 12 non-executive members who could be anyone, provided amongst other requirements, there is “sufficient experience of property practitioners, property management and financing”, all of which could in theory, embodied in one of the individuals appointed.
Having a valid BEE certificate remains a condition, failing which a FFC will not be issued. We have requested data from the EAAB in order to measure the impact hereof on smaller firms.To date we have not been furnished with this information but I will persevere to obtain it.
Without a valid tax clearance, a property practitioner will not be issued with a FFC.
Is there any good news?
Better definitions of accounting records, audit and trust money have been included.
Fidelity Fund Certificates:
The focus has moved from being “in possession of” to “having being issued with” a Fidelity Fund Certificate. This means a threat has been averted with a return to the wording in the current Act – nothing more. Good news is that Property Practitioners will be able to register for a period of three years instead of annually – this is positive and bound to help. We argued that initial registration should have been adequate but we are pleased with every three (3) years instead of on a yearly basis.
A very onerous clause which would have held the franchisor responsible for anything the franchisee might do, has been deleted to be replaced by a clause on franchising that states the absolute obvious and causes some difficulties.
We tried hard to convince the powers that be that agents should have a choice of having trust accounts. The current net result is that the Minister will be authorised to determine “the circumstances under which certain property practitioners may be exempted from keeping trust accounts” and property practitioners with turnovers of less than R2.5 million per annum will be allowed to have their accounting records reviewed by an accountant instead of audited. This appears to be a step forward but is fraught with difficulty. The relevant clauses are incorporated in the chapter on transformation, the implications of which are unclear.
Transformation is lacking in the industry and the creation of a fund is, in principle, advantageous to the industry
Property Sector Research Centre:
A property research centre will be established. This will be positive for the industry.
Payment Prior to Transfer:
Contrary to the initial draft, conveyancers will be able to pay commission prior to transfer in certain cases as is currently the case.
Proof of Registration:
Conveyancers will be contravening the Act (once the Bill becomes an Act) if payment of commission is made to an unregistered estate agent. This will go a long way towards combatting the issue of illegal estate agents.
Mediation and Adjudication
Depending on detail this might be positive for the industry
A word of caution. Currently, nothing is final and we will continue our endeavours to see positive changes happen. The contrary is unfortunately also possible – let us not count our chickens before they have hatched.
I will be in parliament again next week when further deliberations take place. We will keep you posted.
FIC Act Compliance
The deadline date for compliance of the implementation of the Financial Intelligence Centre Act, 38 of 2001 (the FIC Act), by the estate agency sector is 1 April 2019.
Below, please find a notice by the EAAB regarding implementation of the Act.
The EAABs study material on the ACT can be found on their website by clicking on the following link:
Jan le Roux