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A few changes are on the way for property practitioners, many of whom were not previously classified as such. This comes after President Cyril Ramaphosa announced that the Property Practitioners Act (PPA) will take effect from the 1st of February 2022.

For many in the property industry, it will have a measurable effect on the way they conduct business. It will also include a new regulatory authority under which all property professions will be managed and regulated.

In many ways, the new legislation will be to the benefit of the consumer and ensure that they are protected from unethical or questionable property practices.

Here follow some of the changes that will be brought about with the commencement of the new Act:

It will broaden the scope of who qualifies as a property practitioner

In the past, only traditional estate agents were subject to most of the various property laws. The Act will change the definition of “Property Practitioner” to include property brokers, home inspectors, property developers, homeowners’ associations, bond originators, timeshare companies, fractional title sellers, and property managers. In this way, anybody who has any part in the selling, buying, leasing, marketing, or financing of a property, will be considered a property practitioner.

It will implement a new regulatory authority

Estate Agents are all familiar with the Estate Agencies Affairs Board, which will be disbanded and replaced by a new governing body. The new authority will be called “the Board of Authority” and will regulate the property profession for all those who now qualify as property practitioners.

It makes the disclosure of property defects mandatory

While in the past property practitioners merely included a comprehensive defects disclosure document in their business dealings as a matter of best practice, it will now become mandatory for all property practitioners to disclose these kinds of details in all sale and lease agreements. This means that it is no longer just during a property transfer that defects must be disclosed, but also in all lease agreements. The disclosure must be attached to all sale and lease agreements.

It makes Fidelity Fund Certificates a central concern

Fidelity Fund Certificates (FFCs) will be required by all property practitioners who own trust accounts and must be readily available to be inspected if requested by any relevant party. FFC holders must also display their certificates in their place(s) of business. A FFC notice must be given on all relevant letterheads or marketing materials. These certificates add an extra layer of security and trust to the day-to-day operations of property practitioners concerning the consumer.

It has auditing implications

All property practitioners will be required to appoint an auditor and must keep separate accounting records for each trust account that they have. They must open one if they do not have one already and all trust money must be deposited in appropriate trust accounts. These trust accounts must be individually audited. It is the responsibility of the property practitioner to provide the Board of Authority with all information on their trust account(s) and appointed auditors.

Please note that all the information above is non-exhaustive and only reflects some of the new legislation applicable to property practitioners from the 1st of February 2022. For detailed information and to ensure that you are compliant with the new Property Practitioners Act, please contact Madeleyn Incorporated.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

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