Comprehensive Overview of the Property Practitioners Bill

1. PRESENTATION ON THE PROPERTY PRACTICTIONERS BILL

2. STRUCTURE OF THE BILL • Chapter 1: Definitions, application, objects, exceptions and establishment of the Authority; • Chapter 2: Establishment of Board of Authority, composition, disqualification, powers, conflict of interest, termination, meetings, committees and dissolution of Board; • Chapter 3: appointment of CEO, staff, inspectors and powers of inspectors, compliances notices and determination of fines; • Chapter 4: Establishment, appointment and powers of Property Practitioners Ombud; • Chapter 5: funds of authority and financial year and deposits; • Chapter 6: property practitioners fidelity fund, control and management of the fund, investment of monies in fund, payments from fund, grants, indemnity insurance, fees payable by property practitioners, primary purpose of the fund, claims, co-operation by claimant, actions against authority IRO fund, application of insurance monies, transfer of rights and remedies to authority, fund exempt from insurance laws and prescribed payments from funds;

3. STRUCTURE OF THE BILL(cont) • Chapter 7: application for FFC, prohibition on rendering services without FFC, mandatory time periods for issuing FFC’s, disqualification, amendment of FFC, withdrawal or lapse of FFC, mandatory display of FFC, trust account, duty of property practitioners to keep accounting records, property practitioners not entitled to remuneration in certain circumstances, mandatory indemnity insurance, limitation or relationships with other property market service providers, insolvency or liquidation of property practitioner; • Chapter 8: property practitioners code of conduct, sanctionable conduct, undesirable practices, control and supervision of certain property practitioners, franchising, advertising and marketing, prohibition of payment of fees or commission prior to transfer of property, prohibition on conduct to influence issue of certificates; • Chapter 9: mandatory disclosure form and consumer education and information;

4. STRUCTURE OF THE BILL(cont) • Chapter 10: property sector transformation, regulations, penalties, delegation of powers by Minister, legal proceedings against authority, use of name of authority, transitional provisions, repeal and amendment of legislation and short title and commencement;

5. PREAMBLE TO THE BILL AND DEFINITION OF THE BILL • In its preamble, the Bill recognizes the existence of property market distortions (property ownership racial and gender imbalances, level of participation of the previously disadvantage) arising from the legacy of apartheid; • The property market is recognized as a national asset for economic, growth, development and redressing of the past deep-seated disparities and imbalances; • The preamble enjoins the State to take and implement appropriate measures to redress these imbalances; • The Bill redefine the definition of a property practitioners to restrict illegal operators; • The Bill expands the definition of property practitioners to include other role-players, e.g. bond originators, bridging finance companies, etc.; • The Bill creates a new cadre of property practitioners to be known as “property assessors/inspectors”; • Interns are to be known as “candidates”;

6. APLLICATION TO THE BILL • Bill apply to the marketing, promotion, managing, sale, letting, financing and purchase of immovable property and to any rights, obligations, interests, powers and duties associated with or relevant to such property;

7. EXEMPTION FROM APPLICATION OF THE BILL • Any person may in writing apply to the Authority for exemption from compliance with the specific provision of this Act; • Exemption (if granted) may not exceed three years and does not apply retrospectively; • Application must be accompanied by explanation of the reasons, applicable supporting documentation; • Application may be granted taking into account whether the exemption is likely to impact negatively on the general public, competition in the sector, benefiting one section to the detriment of another, sufficient regulatory protection of consumer rights and would not defeat the objects of the Act; • Exemptions granted must be published in the website indicating provisions exempted from, category of persons to whom it applies, start and end date of the exemption, reasons for granting the exemption, declaration that the exemption does not create special rights or legitimate interests and declaration that the exemption may be amended or withdrawn;

8. EXEMPTION FROM APPLICATION OF THE BILL • A person affected by the exemption may request reasons for his/her/its rejection of exemption and such person apply to the Minister for the review of the decision; • Given justifiable reasons, the Minister may amend or withdraw an exemption;

9. OBJECTS OF THE BILL • Regulate the conduct of property practitioners; • Establishment, powers, functions and governance of Authority; • Protection and promotion of consumer interests; • Provide dispute resolution mechanism in the property market; • Educate, train and develop property practitioners; • Provide licensing framework for property practitioners; • Provide just and equitable legal framework for the property market; • Promote meaningful participation of HDI’s and SMME’s; • Transformation of the property market;

10. ESTABLISHMENT OF THE PROPERTY PRACTITIONERS REGULATORY AUTHORITY • The new organization is to be known as the Property Practitioners Regulatory Authority; • PPRA is a national entity subject to PFMA; • PPRA acts through the Board;

11. COMPOSITION AND APPOINTMENT OF BOARD • Board consists of not less than nine and not more than ten members appointed by Minister and including the CEO; • Board must be consisted of a combination of the following skills: sufficient financial expertise, relevant legal experience, sufficient experience as property practitioners, sufficient experience in promoting and protecting consumer rights, and sufficient experience in property management and financing; • Two members nominated by Ministers of Rural Development and Public Works;

12. DISQUALIFICATION OF BOARD MEMBERS • Non-South African citizen; • Anyone who is an MP, MPL, etc.; • Anyone whose spouse, life partner or immediate family member, business partner, who has a direct or indirect interests in the supply of goods or services to the authority; • Who is disqualified to serve as a director in terms of the Companies Act; • Who has been found guilty of fraud, dishonesty, unprofessional, dishonorable or breach of fiduciary duty; • Whose name or directorship, partnership/trustee/member in a juristic person is on the National Treasury list of tender defaulters; • Who has been discharged from position of trust; • Whose membership to a Board of National Public Entity has been prematurely terminated for being dishonorable; • Who has contravened the Act and the EAA Act; • Who is of an unsound mind; • Unrehabilitated insolvent;

13. POWERS AND DUTIES OF THE BOARD • Ensure that the Authority complies with this Act and any other applicable law; • Ensure that the Authority performs its duties and functions efficiently and effectively; • Provide corporate governance to the Authority; • Determine and enforce broad policy framework of the Authority; • Ensure that the Authority exercise its functions in accordance with accountability and transparency; • Advise Minister on efficacy of the Act, state transformation of the sector, regulations, education and training of practitioners and any other matter; • Maintain the Fidelity Fund and hold it in trust;

14. APPOINTMENT OF CEO AND STAFF AUTHORITY • Board must appoint suitably qualified person as CEO, for a contract not exceeding five years, and the CEO is accountable to the Board for the day to day management and operations of the Authority; • CEO must employ suitably qualified persons to efficiently and effectively perform powers and duties of the Authority; • CEO may delegate any of his/her functions or powers to any of staff members subject to qualifications he/she may determine;

15. APPOINMENT OF INSPECTORS • CEO may appoint any suitably qualified person as inspector; • Inspector must be issued with a certificate and ide. card to confirm his/her appointment; • Inspector must always be in possession of his/her appointment certificate or id. Card when conducting inspections; • An inspector must show the certificate or card to any person affected by an inspection or upon request; • An inspector has the powers of a Peace Officer as defined in terms of CPA, 1977;

16. POWERS OF INSPECTORS • Inspector may at all reasonable times with an inspection authority, without prior notice, at a place other than a private residence, for any contravention of the Act other than a criminal offence, enter and inspect such place; • If the inspector suspects that a criminal offence is being committed or the premises are of a private nature, should apply for a warrant; • The inspector may enter and search any premises without a warrant, if he/she reasonably believe that a warrant will be issued or the delay would defeat the object of the search; • Inspector may issue a compliance notice/order requesting the practitioner to comply or impose a relevant fine for the contravention;

17. FINES • Minister will publish maximum fines payable IRO any contravention of the Act; • The maximum fine may not for a particular year exceed the amount prescribed IRO one year of imprisonment in accordance with the Adjustment of Fines Act, 1991;

18. COMPLIANCE NOTICES • Authority may issue a compliance notice where there is contravention calling upon the practitioner to comply within a specified period; • The compliance notice may determine the fine payable IRO such contravention; • Fine must be paid within the stipulated period and accrues to the Fund;

19. ESTABISHMENT OF THE PROPERTY PRACTITIONERS OMBUD • Minister must appoint a suitably qualified person as Property Practitioners Ombud for a period not exceeding five years; • Office of Ombud must be appropriately resourced to be able to execute its functions; • Ombud serve as an appeal process on matters dealt with by the Authority or resolve any service related matters where the Authority has failed to resolve the matter; • Ombud may only handle the matter if all internal remedies within the Authority has been exhausted;

20. POWERS AND FUNCTIONS OF THE PROPERTY PRACTITIONERS OMBUD • Ombud may mediate or adjudicate on cases referred to him/her; • Ombud must annually report to the Minister on the office achievements and non-achievements;

21. FUNDS OF THE AUTHORITY • Funds appropriated by Parliament; • Consists of fees payable by practitioners; • Monies derived from investments; • Authority must utilize the funds to defray its expenses; • Authority may recover costs of an inspection/audit/investigation from a concerned practitioner; • Minister may annually determine fees payable by practitioners in the Gazette;

22. PROPERTY PRACTITIONERS FIDELITY FUND • Existing Estate Agents Fund will be transferred to be the Property Practitioners Fidelity Fund; • Following must be paid into the Fund: monies paid in accordance with the Act or on account of the Fund, income derived from investment, monies recovered in terms of the Fund, insurance recovered IRO Fund and interest paid to the fund; • Board is responsible for the management and control of the Fund; • Board holds a fiduciary duty and duty of care and skill to the Fund;

23. PAYMENT FROM FUND • Claims including costs against the Fund; • Legal and accounting costs incurred in investigating and defending claims; • Insurance premiums IRO Fund; • Fund management, control and administration expenses; • Payment of grants;

24. GRANTS PAYABLE BY THE FUND • Subject to terms and conditions determined by the Board, the following may be paid out of the Fund: • Research and development; • Promotion of standard of conduct of practitioners; • Maintenance of education and training standards of practitioners; • Transformation of the sector; • Consumer education;

25. FEES PAYABLE BY PROPERTY PRACTITIONERS • Payment of a prescribed annual application fee for a FFC; • Minister must publish such in the Gazette;

26. PRIMARY PURPOSE OF THE FUND • Reimburse persons who suffered pecuniary loss on account of theft of trust money by a practitioner in possession of FFC at the time of the theft; • Failure by practitioner to comply with section 53 (1); • The claimant must lodge claim within 3 years;

27. CLAIMS AGAINST THE FUND • Claim must be lodged in a prescribed manner; • Before lodging a claim, a criminal offence must be opened with SAPS; • Authority must hold an enquiry in a prescribed manner;

28. CO-OPERATION BY CLAIMANT • Claimant must participate, co-operate and assist Authority regarding his/her claim; • Authority may withhold payment of claim on account of non-compliance with a reasonable request by SAPS, NPA, to co-operate and assist in the investigation; • Neither the Authority or the Fund is liable for any interest on the claim-amount withheld;

29. APPLICATION OF THE FIDELITY FUND CERTIFICATE • Practitioner must annually apply to the Authority for a FFC accompanied by payable fees; • Practitioner referred to in paragraph (d) “Attorney” must apply for a Registration Certificate accompanied by payable fees; • Practitioner may not use or display a lapsed FFC; • When the practitioners changes his/her contact details, he/she must inform the Authority within 14 days;

30. PROHIBITION OF RENDERING SERVICES WITHOUT THE FIDELITY FUND CERTIFICATE • No person may act as a practitioner without FFC; • If he/she/it employs another person, such person must have an FFC; • If it is a director, trustee, partner, member, everyone of them must be in possession of FFC; • Someone found guilty of acting without FFC, must immediately upon request repay any amount received IRO such act;

31. MANDATORY TIME PERIODS FOR ISSUING A FIDELITY FUND CERTIFICATE • Application for FFC must be issued within 30 days (unless there are justifiable reasons); • If the applicant is requested to furnish further details, the 30 days commences afresh; • If the Authority has failed to comply with the 30 days, the application is deemed approved and upon request by the applicant, the Authority must issue the FFC within 10 days;

32. DISQUALIFICATION FROM BEING A PROPERTY PRACTITIONER • Who is not a South African or who does not reside lawfully in the Republic; • Who in the preceeding five years have been found guilty of contravening the Act and the previous Act; • Who has been found guilty of acting fraudulently, unprofessionally, breach of fiduciary duty, etc.; • Who is of an unsound mind; • Unrehabilitated insolvent; • Is not in possession of a BEE certificate; • Is not in possession of a tax clearance certificate; • Who is in the National Treasury Register of Tender Defaulters; • Who is prohibited to be a practitioner; • Does not comply with the prescribed education standards; • Does not have practical experience prescribed by the Authority; • Who has failed to comply with audit requirements; • Who has been found guilty of discrimination

33. TRUST ACCOUNT • Practitioner must keep one or more trust account which must contain a reference to this section; • Must appoint an auditor; • Must furnish details of the auditor and trust account to the Authority; • Must deposit all monies held or received in the trust account; • The bank where a trust account is held must as prescribed submit a certificate to the Authority declaring interest in that account; • Must cause both the business and trust account to be audited by the same auditor; • Must submit an audit report annually; • Minister may prescribe circumstances from exemptions from keeping trust account;

34. DUTY TO KEEP ACCOUNTING RECORDS AND OTHER DOCUMENTS • Practitioner must keep all records (documents exchanged with Authority, correspondences, agreements, mandates, etc) for a period of five years; • Documents may be stored electronically; • Non-compliance to this section constitutes an offence;

35. NON-ENTITLEMENT TO COMMISSION AND REMUNERATION • Practitioner who is not in possession of a valid FFC is not entitled to commission/remuneration; • Conveyancer may not pay any remuneration unless the Practitioner has issued a valid FFC; • Non-compliance constitute an offence;

36. CODE OF CONDUCT AND SANCTIONABLE CONDUCT • Code of Conduct for practitioners to regulate their conduct will be developed; • Following instances will constitute sanctionable conduct: • Failure to pay any money due to the Authority; • Failure to respond to a written request by the Authority; • Failure to notify the Authority of the change of details; • Having committed sanctionable conduct, the Authority may: • Withdraw FFC; • Impose a fine; • Reprimand the practitioners;

37. MANDATORY DISPLAY OF THE FIDELITY FUND CERTIFICATE • Practitioner must prominently display the FFC in the workplace to be easily inspected and ensure that the prescribed sentence is legible and included in all agreements; • Failure to do so, the practitioner is guilty of an offence;

38. MANDATORY DISCLOSURE FORM AND CONSUMER EDUCATION • Practitioner may not accept a mandate unless the seller has fully completed and signed the mandatory disclosure form; • Practitioner must furnished the mandatory disclosure form to the prospective purchaser; • The consumer may request for the conducting of a home inspection on his/her account; • Authority must from time to time conduct consumer education;

39. TRANSFORMATION OF THE PROPERTY SECTOR • All practitioners must comply with the Property Sector Chater Code as revised from time to time; • Government across all levels must procures property related goods and services from practitioners who are complying with BEE and Employment Equity legislation; • Authority must from time to time implement and monitor transformation measures within the sector;

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