The Commencement of the Property Practitioners Act 22 of 2019

Before the Property Practitioners Act (“PPA“) there was the Estate Agencies Affairs Act (“EAAA“). The EAAA regulated all things to do with property and estate agency. However, following the changes in time and practice, the EAAA became inadequate to regulate the real estate industry. The EAAA also did not regulate or cater to transformation within the industry. The PPA therefore repeals the EAAA in its entirety.

The PPA was signed into law in 2019 but did not come into effect immediately. The date has however been set by the President and the PPA will commence on 01 February 2022. Along with the commencement of the PPA are accompanying regulations (the “PPA Regulations“).

The PPA brings about many changes to the real estate industry and shifts the focus of the legislation to be more consumer focused to offer consumers much greater protection than previously offered under the EAAA. Below we have listed a few of the important changes which the PPA brings about but there are many more which are not listed here which must be considered.

The first major change is that the PPA brings about is the definition of a “property practitioner“. The definition of a “property practitioner” has been greatly expanded when compared to the definition of an “estate agent”. The new definition now casts the net much wider and includes all parties involved in the sale and/or lease and/or advertisement of property, this includes websites which allow for the advertisement of property by property practitioners (yes, you know those ones).

With being deemed a property practitioner comes a whole list of compliance aspects which property practitioners must implement if they want to continue to operate lawfully. Failure to comply could mean property practitioners racking up fines and possible jail time.

The first compliance aspect is the holding of a Fidelity Fund Certificate. The PPA converts the Estate Agents Fidelity Fund into the Property Practitioners Fidelity Fund (“PPFF“). No property practitioner may conduct business unless they are in possession of a Fidelity Fund Certificate issued by the PPFF. Where this requirement becomes more onerous is that, if the property practitioner is a company (think a real estate company), each director of the company must also be in possession of a Fidelity Fund Certificate.

The PPA enforces this rule by stating that a property practitioner is not entitled to receive renumeration or payment unless the property practitioner and every director of the property practitioner company possess a Fidelity Fund Certificate.

There are further compliance aspects which result from the issuing of a Fidelity Fund Certificate which property practitioners will need to be aware of.

Secondly, all property practitioners must open and keep one (or many) trust accounts. Once a trust account is opened a property practitioner will need to appoint an auditor and provide all the information relating to the trust account and auditor to the Property Practitioners Regulatory Authority (“PPRA“).

The PPRA, regulates and overseas all matters related to the PPA and property industry.

Thirdly, the PPA affords consumers much greater protection when purchasing or leasing property as it now requires that a property practitioner must not accept a mandate unless the seller or lessor of the property has provided that with a fully compliant and signed mandatory disclosure form which form must then be provided to a prospective buyer or lessee.

The mandatory disclosure form must indicate all deficiencies and defects in the property to allow the prospective buyer or lessee to make an informed decision. Property practitioners who do not comply with this requirement may be held liable by the affected consumer. Say goodbye to apartments that fall apart as soon as you move in and houses with alien civilisations living under the floorboards.

While all these compliance aspects might seem daunting the PPA offers some reprieve. The PPA makes provision for a property practitioner to apply to be exempt from the operation of certain provisions of the PPA. Property practitioners may apply using the prescribed form in the PPA Regulations to the PPRA to be exempt from the operation of the PPA.

The PPA is therefore worth noting especially as many businesses that were never regulated as estate agents before may now find themselves being classified as property practitioners. And, although the PPA allows for the application for an exemption it is not guaranteed.

So, where your business operates in any sphere of the real estate industry it would be best to assess whether the PPA applies to you and your operations and if so, are you compliant with the PPA’s requirements and/or are you able to apply for an exemption.

– Lauren van der Byl

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