The property practitioners act came into operation on February 1, 2022, and has brought about significant changes in the property sector, writes Gareth Bailey.
The Property Practitioners Act is a timely update as it replaces the Estate Agency Affairs Act which came into effect 46 years ago in 1976.
In terms of the new Act, estate agents, mortgage originators, managing agents, online agencies and developers who sell their own properties, all fall under the broad definition of a property practitioner and therefore are accountable.
One of the major changes is the introduction of a mandatory sellers’ disclosure document which requires property practitioners to request that sellers complete and sign a disclosure form. The form lists all defects in the property that the seller or landlord are aware of, and it needs to be completed in writing at the time of mandate acquisition. It is to be presented to prospective purchasers when viewing the property or submitting an offer to purchase.
According to David Warmback of legal firm Shepstone & Wylie, “while the Mandatory Disclosure does not constitute a warranty or guarantee of any kind, its rationale, and rightly so, is that a prospective purchaser or lessee of a property may rely on such information when deciding whether and on what terms to purchase or lease the property.
Essentially the owner is requested to confirm whether he is aware of any defects relating to the roof, plumbing, electrics, sewer system, heating and air- conditioning, foundations and dampness, structural defects, encroachments, and whether renovations have been effected to the property, and if so, whether done with all relevant consents, permissions and permits.”
This should give purchasers a more complete understanding of the condition of the property and the maintenance work required, along with the risk associated with the property, before submitting an offer. Therefore, they can hopefully plan their budget more carefully knowing what they are likely to spend in total, including the cost of any repairs.
Another provision which protects the consumer is the way that it limits relationships between property practitioners and other service providers.
“A property practitioner is prohibited from entering into any arrangement – whether formally or informally – whereby a consumer is obliged or encouraged to use a particular service provider, including an attorney or conveyancer to render any service or ancillary services in respect of any transaction of which that property practitioner was the effective cause.
“This clearly prohibits any arrangement where a consumer is incentivised for making use of a particular service provider and a contravention of this provision disentitles the relevant service provider to remuneration, and if remuneration was paid, then the remuneration must, on request, be refunded to the affected party, together with interest. A failure to comply with such request within one month of being requested to do so constitutes an offence,” says David Warmback.
Another area that the new Act addresses is the matter of transformation, providing that the Property Sector Transformation Charter will apply to all property practitioners and when procuring property related goods and services, all organs of state will be obliged to utilise the services of property practitioners who comply with the broad-based black economic empowerment and employment equity legislation and policies.
The Practitioners Act provides for the establishment of a Property Sector Transformation Fund which will include as its purpose, the promotion of black- owned firms and principals, participation of the historically disadvantaged, and promotion of consumer awareness, and consumer education and training.
In summary, I think the new Property Practitioners Act goes a long way towards protecting consumer rights and promoting the health of the property industry in South Africa. While it may mean more paperwork at times, consumers will sleep more easily knowing that their interests are being protected by our maturing legislation.