09 May Property Practitioners Act Summary
highlights of key changes
Professional bodies and legislation:
- The EAA Act, Regulations and Code of Conduct is replaced by the new PPA, its Regulations and Code of Conduct;
- The Estate Agency Affairs Board is replaced by the Property Practitioners Regulatory Authority (PPRA)
- The Estate Agents Fidelity Fund is replaced by the Property Practitioners Fidelity Fund
- There is also now a new Property Practitioners Ombud to resolve issues and complaints
Property Practitioner – Definition:
- Sells, purchases, manages or publicly exhibits for sale, property or any business undertaking;
- Lets or hires or public exhibits for hire, property or any business undertaking;
- Collects or receives any monies payable on account of a lease of property or business undertaking;
- Provides, procures, facilitates, secures/obtains or markets financing for or in connection with the management, sale or lease of a property or business undertaking;
- Is an intermediary or facilitator in concluding an agreement to sell, purchase or let or hire.
Exemptions – Section 23 and Regulation 2:
- A PP with a turnover below R2.5mil will only require an Independent Review of their business AFS instead of an audit as per the EAAA.
- A PP is exempt from keeping a trust account if it,
- Never received or no longer receives any trust monies, AND
- Submits an affidavit in the prescribed form
- All PP other than Business PP are exempt from operating Trust account.
- All managing agents of a body corporate are exempt from operating a trust account if the Body corporate has its own bank account i.t.o. STSM legislation.
Fidelity Fund Certificates:
PP must apply annually for a Fidelity fund certificate in the prescribed form before 31 October.
- Only the references to the sections in the Act changed. The rest stayed the same:
- All PP must open a section 54(1)(a) trust account, which is referenced as such;
- All PP may open a trust savings account with reference section 54(2) – interest bearing;
- All PP must appoint an auditor;
- All PP must notify, in writing, the PPRA of the opening of any trust accounts and the appointment of the auditor.
- Money must be retained in the trust account until the PP:
- Is lawfully entitled to such money, or;
- Is lawfully instructed to make payment therefrom.
- Banks must submit a certificate to the PPRA declaring the interest.
- PP to keep separate trust accounting records of all transactions, balance the records monthly, and administer the accounts in the prescribed manner.
- Trust accounts must be audited annually.
- Business AFS to be audited annually (unless Independent review is allowed per the above exemption).
- The same auditor must audit both.
- The audit deadline for both the business and trust records is within 6 months of year-end.
As per the PPA, property practitioners must pay any unidentified or unclaimed money over to Fidelity Fund after 3 years (nothing specified per the EAAA).
Disqualifications from receiving FFC:
Per the PPA you are disqualified if you have no valid tax clearance certificate and a valid BEE certificate.
Other administrative matters:
- PP must annually update auditor details before year-end (i.e. confirm the auditor for the year) with the PPRA.
- A 5-year document retention requirement.
Code of Conduct:
- PP may not solicit/influence trust creditors to pay interest over to the PP.
- A written agreement is required to identify to whom the interest belongs. If not agreed, then it will accrue to the fidelity fund.
- PP may not include a clause allowing for the transfer of sale proceeds to the seller before registration in the buyer’s name.
- No remuneration may be demanded/received until:
- Suspensive conditions are fulfilled or;
- Resolutive conditions will not lead to the transaction falling away.