For as long as I can remember (and that’s quite some time), practising attorneys have been allowed to act as estate agents under their own practice names provided they do so from the premises of their practices. This hasn’t caused a stir in the real estate industry until now, mainly because of the franchise known as 3%.Com. The company has a number of members throughout South Africa and is perceived to be aggressively competing with traditional estate agencies for real estate business.
Real estate agents may well be up in arms, but they should take the time to read the legalities around the issue, for a full understanding.
1. The law governing legal practices
The only legislation governing attorneys in the industry is the definition of an estate agent in Section 1(d) of the Estate Agency Affairs Act of 1976. It exempts attorneys from the provisions of the Act on the terms I have mentioned – they must act under their own names and do so from their normal premises. I see no reason why this does not include the right to act under a brand name with a slogan and logo provided the attorneys clearly identify their legal practices and premises in their promotional and other material.
2. EAAB or law society jurisdiction?
All attorneys practising as estate agents within their prescribed limits are currently accountable solely to their law societies and not to the EAAB for their activities. Making them subject to the EAAB for their real estate businesses while remaining responsible to their law societies for their legal practices would be challenging, confusing and divisive under the present legislation. It would only work if all attorneys were required to separate their agency businesses from their legal practices and operate entirely separately as normal estate agents. That means that Section 1(d) would have to be abolished or reversed.
3. Attorneys’ staff members operating as ‘agents’
All estate agents operating under the 1976 Act are obliged to obtain NQF4 qualification while their principals have to have NQF5 qualification. Attorneys do not need the latter qualifying certificate but can their staff act in the same way as normal estate agents (or even just promoters) working for principals without obtaining qualification under NQF4? In my opinion the answer is no. The Act does not exempt normal staff members in legal practices, only their principals who must be admitted and practising attorneys. It does also exclude candidate attorneys. As I read it, attorneys must do their own marketing as agents and cannot allow unqualified staff members to act in this capacity. It has nothing to do with them being covered by the principal’s fidelity fund certificate.
4. Attorneys’ advertising and marketing material
Here’s where attorneys have to be cautious. Being exempt from the provisions of the 1976 Act does not exempt them from the normal rules of their societies restraining marketing of their practices. They cannot, under their logo and brand names, advertise themselves in a way that transgresses the rules governing touting. Attorneys are not allowed to distribute flyers promoting their practices from door-to-door and canvass whole suburbs and other areas for this purpose. Promoting their real estate activities does not exempt them from this provision as their practices have to be identified in this material. They are bound to market both their practices and real estate businesses within the confines of their law society rules. If they should market their businesses in such a way that constitutes attracting conveyancing and other legal work over and above purely selling immovable properties they will be breaking their society’s rules.
In all other ways attorneys legally acting as estate agents are entitled to market and promote their businesses in the same way as normal estate agents.
Words: John Gilchrist, Director of Property Law Publications