Conveyancer liability under the new Property Practitioners Act

The Property Practitioners Act 22 of 2019 (the Act) was approved by Parliament in September 2019 and includes an estate agent within the ambit of a property practitioner as per the definition contained in Section 1. Although the Act has not yet commenced, it is intended to repeal the Estate Agency Affairs Act 112 of 1976 (the EAA) in its entirety in the near future.

Sections 56(1) and 56(2) of the Act respectively state that an estate agent is under no circumstances entitled to any commission arising from the performance of their duties under a mandate, unless such agent is registered and holds a Fidelity Fund certificate. The Act therefore dictates that an estate agent will only be entitled to claim commission if they are duly registered under the EAA and in possession of a valid Fidelity Fund certificate1. Furthermore, in accordance with Section 48(1) of the Act, property practitioners are effectively barred from rendering services unless they are registered and possess a valid Fidelity Fund certificate.

Section 48(4) of the Act stipulates that an estate agent who receives commission in the absence of the aforementioned certificate will be required to pay back same. This must be done immediately upon receipt of a written request from any relevant party, such as a seller or another estate agent.

A practitioner who does not comply with the above will be guilty of an offense under the Act and may be liable to a fine or imprisonment for a period not exceeding 10 years.

According to section 56(3) of the Act, an estate agent who receives any commission in the absence of a certificate must immediately pay that amount to the Practitioners Fidelity Fund Regulatory Authority (the Regulatory Authority). The latter has assumed the duties of the Estate Agency Affairs Board, and has the power to award equitable redress to a claimant.

Section 56(5) of the Act is particularly important as it states that a conveyancer may not pay any remuneration or other monies to a property practitioner unless he has been provided with a certified copy of such practitioner’s Fidelity Fund certificate. The certificate must be valid during the period or on the date of the transaction to which payment is being made. If a conveyancer makes payment to an estate agent without having satisfied himself of the above, he may be held liable criminally, or otherwise, by the Regulatory Authority as per section 56(6) of the Act.

While we are awaiting clarity on the full implications of the above section, we are of the opinion that the Regulatory Authority may recover the commission erroneously paid to an unregistered estate agent from a negligent conveyancer. Conveyancers therefore bear a statutory mandate to ensure that they are dealing with registered estate agents who possess valid Fidelity Fund certificates, prior to paying the agents’ commission.

 

[1] See also Taljaard v Botha Properties (2008) 3 ALL SA 453 (SCA): where the court held that an estate agent who was not in possession of a Fidelity Fund Certificate at the time of conclusion of his mandate, was not entitled to claim commission.

012 – 452 1300 info@vdt.co.za www.vdt.co.za

June 25, 2020
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