The Property Practitioners Act 22 of 2019 (“Act”) replaces the outdated Estate Agency Affairs Act,1976. The Act is aimed at regulating property practitioners and introducing transformation into the estate agency sector. It was introduced as a Bill in the National Assembly in 2018 and finally assented to by the President in September 2019. A commencement date has not yet been proclaimed.

There is an extensive definition of what constitutes a property practitioner for purposes of the Act. A property practitioner is defined as a natural or juristic person who, for the acquisition of gain, on his own account or in partnership, in any manner holds himself out as a person who, directly or indirectly, on the instructions of or on behalf of any other person:

• by auction or otherwise sells, purchases, manages or publicly exhibits for sale property;
• lets or hires or publicly exhibits for hire property or any business undertaking or negotiates in connection therewith;
• collects or receives any monies payable on account of a lease of a property or any business undertaking or negotiates in connection therewith;
• provides or facilitates financing for or in connection with the management, sale or lease of a property. This would include bridging finance and a bond broker, but excludes a financial institution as defined in the Financial Services Board Act;
• provides services as an intermediary or facilitator with the primary purpose to, or to attempt to, effect the conclusion of an agreement to sell and purchase, or hire or let, as the case may be, a property. There are certain exclusions to this, such as an attorney, sheriff or a person who does not provide such services in the ordinary course of business.

In addition to the above, which is not an exhaustive list, any person who for remuneration manages a property on behalf of another is also a property practitioner for purposes of the Act.

The Act applies to marketing, promotion, managing, sale, letting, financing and purchase of immovable property and to any rights, obligations, interests, duties, or powers associated with or relevant to such property. Any person may however apply for an exemption from compliance with any specific provision of the Act.

The Act establishes a new regulatory body to be known as the Property Practitioners Regulatory Authority (“Authority”), replacing the old Estate Agency Affairs Board. The new Authority will be funded by Government and fees paid by the property practitioners. The functions of this Authority, include regulating the conduct of property practitioners, ensuring compliance with the Act, protecting consumers from undesirable and sanctionable practices, and education of both property practitioners and consumers.

The Authority will appoint inspectors to determine and enforce compliance with the Act. An inspector may at any reasonable time and without prior notice conduct an inspection and may without a warrant, enter and inspect any business premises. They may also require the property practitioner to produce his fidelity fund certificate or any book, record or other document related to the inspection, and examine and make copies of such documents. Private residences cannot be inspected unless the property practitioner conducts his business from the private residence and advance written notice is given.

No property practitioner may Act without a valid Fidelity Fund Certificate. Furthermore, a conveyancer may not pay any monies to a property practitioner unless he has received a copy of the practitioner’s certificate. A property practitioner must every three years apply to the Authority for a certificate. Upon payment of prescribed fees, the Authority must supply the Certificate within 30 days, unless extended by the Authority for a period of up to 20 working days, failing which it is deemed that the application for the certificate is compliant.

The Estate Agents Fidelity Fund is retained in the Act but renamed as the Property Practitioners Fidelity Fund. Like its predecessor, the Fund’s main objective is to reimburse persons who suffer financial loss because of theft of trust money by a property practitioner in possession of a fidelity fund certificate. A claim cannot be lodged against the Fund unless the claimant has first laid a criminal charge against the property practitioner. If the Fund rejects a claim the claimant has three years to institute an action before the claim prescribes.

If a property practitioner is found guilty of sanctionable conduct, the Authority may withdraw the Fidelity Fund certificate, impose a fine, or reprimand the property practitioner. Sanctionable conduct includes, inter alia, contraventions of the code of conduct, carrying on a prohibited undesirable practice, committing an offence involving an element of dishonesty, discrimination against consumers, failure to pay monies due to the Authority or the Fund, or failing to comply with the Act. 

A key focus area of the Act is transformation. Within six months of the establishment of the Authority, a transformation fund is to be created. Funds will be gathered from government grants, fees and fines payable by property practitioners, investments etc. and such funds will be utilized to promote the interest of historically disadvantaged individuals and firms.

Another focus area of the Act is consumer protection. A property practitioner may not accept a mandate unless the lessor or seller has returned a fully completed and signed mandatory disclosure form. Such form must be provided to the prospective lessee or purchaser who intends to make an offer to lease or buy. If a form is not completed, signed or attached to the agreement, it must be interpreted as if no defects in the property were disclosed to the purchaser. If a property practitioner fails to obtain a completed disclosure form, the practitioner may be held liable to the affected consumer. Furthermore, the cost of an agreement to sell or lease must be for the seller’s or lessor’s account. In addition, a property practitioner may not enter into any arrangement obliging a consumer to use a particular service provider (e.g. Conveyancer) and although there is no definition of “arrangement” it probably includes a “financial incentive”; thus a property practitioner is likely prohibited from receiving commissions from mortgage bond originators, bridging finance companies or attorneys.