Who is a Property Practitioner? Understanding South Africa's Property Industry Regulation

The property industry is heavily regulated in South Africa, and anyone who wishes to operate in this industry must first understand the various pieces of legislation that govern it. One of the most important pieces of legislation that property practitioners need to be aware of is the Property Practitioners Act.In order to fully comprehend the scope of the Act, it is essential to first understand what a "property practitioner" is. The definition of a property practitioner is much broader than that of an "estate agent" under the Estate Agency Affairs Act (EAA). A property practitioner is any person who, for gain, directly or indirectly, on the instructions or behalf of another:

  • Sells, purchases, manages, or publicly exhibits for sale any property or business undertaking;
  • Leases or hires, or publicly exhibits for hire, any property or business undertaking;
  • Collects or receives money payable for a lease;
  • Provides, procures, facilitates, secures, or otherwise obtains or markets financing for or in connection with the management, sale, or lease of a property or business undertaking; and/or
  • Renders services as an intermediary to effect the conclusion of an agreement to sell or let a property or business undertaking (except where this is not done in the ordinary course of the person's business; where it is done by a natural person in their personal capacity, or where the person is an attorney, candidate attorney, or sheriff).

As can be seen, the definition of a property practitioner extends well beyond estate agents. It also includes auctioneers, property developers, property managers, franchisees, providers of bridging finance and bond brokers (aside from financial institutions), and, for certain provisions, all directors, trustees, and/or employees of property practitioners.It is important to note that anyone who falls within the ambit of the definition of a "property practitioner" is required under the Act to obtain a certificate issued by the Fidelity Fund on an annual basis. 

Without a valid certificate, a property practitioner may not render services or receive fees. Conveyancers are also prohibited from paying any money to a property practitioner without receiving a copy of that property practitioner's valid Fidelity Fund certificate.The Fidelity Fund's primary purpose is to reimburse persons who suffer pecuniary loss as a result of the theft of trust money by property practitioners, or as a result of property practitioners failing to comply with the provisions of the Act requiring a separate trust account and proper accounting records.In addition to obtaining a certificate from the Fidelity Fund, property practitioners are also required to maintain indemnity insurance (to the extent required by the Minister of Human Settlements), comply with a property practitioners' code of conduct (to be prescribed by the Minister of Human Settlements), and provide certain mandatory disclosures to potential purchasers and lessees. 

These obligations are all designed to ensure that consumers are protected. Any property practitioner who contravenes the Act will be required to repay any fees received for a property transaction and may be issued with a fine. Furthermore, any person convicted of an offence in terms of the Act is liable to pay a fine or to imprisonment for up to 10 years.The Act has established the Property Practitioners Regulatory Authority (Authority), which is intended to replace the Estate Agency Affairs Board. The Authority is required, among other things, to ensure compliance with the Act, regulate the conduct of property practitioners, implement measures to transform the property sector, and conduct campaigns to educate property practitioners and consumers.