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Property Law News: Update on the Property Practitioners Act

  • Latest News
  • February 4, 2022
Property Law News: Update on the Property Practitioners Act

What Changes Can the Industry Expect From the Property Practitioners Act?

The Property Practitioners Act comes into force on 1 February 2022. This new property law brings far-reaching regulatory changes to the property industry. The Act places some relatively onerous burdens on property practitioners, all aimed at protecting consumers and enforcing statutory controls in their property dealings. By broadening the definition of a property practitioner, these regulations will apply more extensively throughout the property industry.

The Act has not come without industry criticism. However, at Property.CoZa, we are in support of stronger statutory safeguards within the property industry. ”The introduction of new legislation always needs some time for adjustment, but we welcome the introduction of the PPA and trust that the new Property Practitioners Regulatory Authority (PPRA) will work hand in hand with our industry representatives to address common industry challenges,” says Sandy Walsh, MD Property.CoZa South Africa.

Let’s drill down on the provision of the Act and the new regulatory landscape for property professionals and practices.


What is the Purpose of the Property Practitioners Act?

The Property Practitioners Act repeals the Estate Agency Affairs Act in its entirety. The legislation is geared to serve as umbrella regulations governing a broader definition of property practitioners. It is also aimed at securing consumer rights and achieving industry transformation.


What is a Property Practitioner in South Africa?

A central clause in the Property Practitioners Act is the extended definition of a ‘property practitioner’. This now includes anyone involved in the marketing and promotion of property, sales, financing, property managers, auctioneers, developers, home inspectors, time share and fractional title brokers, and homeowners’ associations – as well as candidate property professionals (the new term for trainee estate agents).


Replacement of the Estate Agencies Board With the Property Practitioner Board of Authority (PPRA)

The PPRA will take the reins from the Estate Agencies Board as the regulatory body for the property industry, with extended scope over its predecessor. The board will work to achieve the aims of the Act, with the power to impose penalties for non-compliance with its provisions.


Trust Account and Property Practitioner Fidelity Fund Certificate

A property practitioner is required to have a Fidelity Fund Certificate. Both natural persons and agencies or sole proprietaries (‘business property practitioners’) are required to be compliant under the Fidelity Fund Certificate provisions in the Act. Fidelity Fund Certificates need to be prominently displayed at an agency’s office and available for inspection by consumers. The validity of the property practitioners Fidelity Fund Certificate must be displayed in all marketing materials, letterheads, and agreements.

The Property Practitioners Act also details a property practitioner’s responsibilities around Trust Accounts. Every property practitioner should have a separate Trust Account where all relevant trust monies must be deposited. The property practitioner must appoint an auditor and conduct separate accounting for these accounts, which are to be audited. All trust-related information is to be provided to the PPRA.

The Act also allows for exemption from holding a Trust Account, and governs the winding up of these Trust Accounts, with the PPRA acting as an overseer throughout the process of pay-outs. Collectively, these provisions serve the interests of transparency around trust monies and act as additional safeguards.


Consumer Protection Through The Property Practitioners Act

A major provision directed at consumer protection is the Mandatory Disclosure Document. This document needs to be provided to owners and lessors and completed and signed before the finalisation of a mandate to sell. Prior to making an offer, this Disclosure Document needs to be provided to the prospective buyer or lessee. According to the Act, this document must be signed by all parties and be attached to the final agreement between the parties.


Property Buyer


The common practice of attaching detailed defects lists to final agreements has also been written into statute with the Property Practitioners Act. This is now an essential prerequisite to the acceptance of a mandate by a property practitioner and this document will form part of the final agreement between the parties.

In the absence of a disclosure form, the interpretation is that the property is defect-free.

One of the more contentious clauses of the Property Practitioners Act is Section 58(2). This section bans the property provider from proposing incentivised use of a conveyancer or property service provider by the consumer. A property practitioner in contravention of this provision is not entitled to remuneration and will have to pay back any monies associated with the transaction. He or she will also be liable to a fine or imprisonment.


Property Industry Training Standards in the Property Practitioners Act

The Act encompasses the establishment of a professional designation examination, with standardised requirements around course materials and practical training. Candidate property practitioners are obliged to inform their clients of their designation and are not authorised to complete any documentation in a property transaction. Candidate property practitioners are expected to do practical training under a practising property practitioner with at least three years’ experience.


Transformation Provisions in the Property Practitioners Act

Real Estate Agents

One of the primary objectives of the Act is the advancement of historically disadvantaged people and businesses within the property industry. This includes everything from principalisation, support, training, and development to consumer awareness. The Act establishes the Property Sector Transformation Fund to assist in funding enterprise development and support programmes for historically disadvantaged property practitioners.

“We are proud that many of our franchises have taken on intern agents and provided the guidance and support to help them through their internship and training in an environment conducive to learning and earning. Over 50% of the Property.CoZa sales force are from previously disadvantaged backgrounds,” says Walsh

The Act prescribes that the State must use the services of property service providers operating in line with broad-based black economic empowerment and employment equity policies and principles.


Property.CoZa: Home To Passionate, Professional Property Specialists

At Property.CoZa, our network of property professionals is here to give you peace of mind if you are looking to find an agent, find an agency, explore agent offerings, rent, buy or list your property. Walsh advises “Property Practitioners are required to following the regulations set out in the PPA and to follow the Code of Conduct. As a national property group, we take care to adhere to our industry best practice and we believe that stakeholders will benefit from the new statutory standards and the options available for recourse.” Contact Property.CoZa today or explore our site for our comprehensive range of property services and resources.

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