The Ship has Sailed … Almost
The National Assembly unanimously passed the Property Practitioners Bill on Tuesday 4 December 2018.
Please refer to our report of 23 November 2018 in which we highlighted the challenges. See below.
This is however, not the end of the road. The bill still has to be passed by the National Council of Provinces. This will only happen next year when Parliament sits again and after which the President can still consider same before signing the Bill into law.
Rebosa will still do everything humanly possible to effect the necessary changes we have been lobbying for. Below please find the latest and still valid Rebosa comments (with highlighted paragraphs) on the Bill’s current version. There is a long way to go.
For those of us wishing to blame government for what is lacking/wrong in the Bill, must please note that the Bill was passed unanimously. This effectively means that all the opposition parties also agreed to pass the Bill. This is therefore not just a government issue.
Highlights for your perusal (Note; not comprehensive)
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 subject to interpretation, that 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