Property Practitioners Act Summary

Property Practitioners Act Summary

Property Practitioners Act Summary
The new Property Practitioners Act (Act no 22 of 2019) (“PPA”) and Regulations came into effect on 1 February 2022. This Act and Regulations replace the old Estate Agency Affairs Act (“EAAA”) and Regulations. The newly introduced Act introduces several changes within the property sector, with a primary focus on regulations.

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:

The definition of the Property Practitioner (“PP”) is far more inclusive than the Estate Agent under the EAAA and includes a natural or juristic person who, for gain, and on behalf of another person directly or indirectly:
  • 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.

Trust Accounts:

  • 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.

Unidentified receipts:

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.
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