‘No FFC no commission’ to be resolved by Supreme Court

‘No FFC no commission’ to be resolved by Supreme Court

MAIN IMAGE: Romy Tarboton, director of Signature Real Estate

When the Estate Agency Affairs Board (EAAB) states an estate agent/agency has done all possible to be compliant but due to problems at the regulator wasn’t timeously issued with a fidelity fund certificate (FFC) – is this agent/agency entitled to claim commission? This has now become a matter for the Supreme Court to resolve.

In December 2018 Cape Town High Court judge Diane Davis ruled that an agent/agency isn’t entitled to claim commission if not in possession of a valid FFC at the time when the commission is earned. She dismissed the application by Signature Real Estate’s that they be entitled to claim commission because their intern agent had done all possible to be compliant and was even issued a backdated FFC by the EAAB stating the regulator had erred in issuing the FFC late. Davis ruled that the backdated FFC was irrelevant as she interpreted section 34 of the Estate Agency Affairs Act (EAAA) to require that the agent already be in possession of a valid FFC when the commission is earned. Agents should rather do all possible to ensure that they are timeously issued with FFC’s by the EAAB said Davis.

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Signature was recently granted leave to appeal by Davis.

At the hearing of the application for leave to appeal, Signature’s attorney brought to the attention of Davis a judgement from a similar case brought before the Gauteng court in September 2016. In the matter of Crous International (Pty) Ltd vs Printing Industries Federation of South Africa an estate agent was also not in possession of a valid FFC at the times when commission was earned because the FFC had not been issued by the EAAB. The reason given was that the estate agent had complied with all the necessary requirements for the certificate to be issued but due to technical problems that the EAAB was experiencing the documents couldn’t be printed and sent to the agent.

In the Crous case the judgement was that the agent had authorisation from the EAAB ‘in substance (though not in form) … to perform acts as an estate agent for payment.”

Davis said she doesn’t agree with the notion that there can be “substantial compliance” with sections 26 and 34A – there has to an official document to display as physical proof to the public that this agent had complied with all the requirements of the Act.

However, Davis said given the conflicting opinions expressed in her judgement and that in the Crous judgement on a “matter which has significant practical implications for the estate agents’ profession”, she considers it desirable that the conflict be resolved by the Supreme Court of Appeal. She therefor granted leave to appeal.

Commented Romy Tarboton, director of Signature Real Estate: “Our decision to appeal the ruling was motivated by the negative impact that the ruling has over all compliant estate agents in South Africa who could prospectively suffer as a result of a tardy Board.  We do not believe that the intention of Section 34(c) of the EAAA was for compliant agents to suffer when the EAAB fails to deliver.

“Whilst Judge Davis believes that the remedy lies against the Board, we respectfully disagree. As of 1 January 2019 there were allegedly over 8 000 estate agents that were without FFC’s despite having timeously applied and paid. The Board simply could not fulfil their mandate. I believe that restraining a compliant agent from trading as a result of the EAAB’s inefficiency is, quite frankly, unconstitutional. We are optimistic that our appeal will succeed at the Supreme Court.”

Property Professional will keep our readers updated on this important matter. If you have any comments of questions, you are welcome to send them to editor@propertyprofessional.co.za.

Showing 9 comments
  • jane stirton
    Reply

    The EAAB has failed to deliver and has been tardy on many issues. I am owed R600 odd by the EAAB since 2010. I asked for that money to be deducted off my CPD account for this year and am still waiting for a reply.

  • Mike Spencer
    Reply

    We would be far better off without an EAAB. Selling of property is NOT a profession it is a business. I agree that standards should be applicable but all of them are in reality BUSINESS requirements ie honesty, clear contracts, much of would be easily covered by the CPA. The board is a hindrance to the industry not an enabling factor. Registration of Interns is a nightmare. ALL registrations should be done via the company on on an individual basis which would go a long way to ensuring compliance. As it is most employers have no real idea whether their agents are registered or not. Having a list from the EAAB of all the people registered with your company and what was outstanding/owed would do a long way to getting things right. New entrants get nothing from the Board no code of conduct, no instructions of what they need to do and employers are not informed of new agents joining them or what they need to do regarding the workbooks etc.

    Yep do away with the EAAB and the industry would flourish!

  • Noeline Esterhuysen
    Reply

    Only people who have suffered at the gross inefficiency of the EAAB with regards to issueing of FFC can really understand how frustrating and demoralizing it can be to have complied from your side as an estate agent, but not receive the necessary documentation timeously.

    • Romy
      Reply

      Noeline I completely agree and have been the victim of this!

  • Johan van rensburg
    Reply

    If the court rules against them the EAAB must be liable

    • Romy
      Reply

      Touché

  • J Marais
    Reply

    I am in a similar position.. paid by 31st October 2018 and was only issued a certificate after numerous phone calls and a visit to the EAAB.
    Agents should stand together as what is happening is a gross injustice against all Agents.

  • Eric Reurts
    Reply

    The EAAB, can anything be more inefficient and more complicated and more frustrating to deal with?

    Sept 2013 I entered the industry FFC Intern Status issued.
    Jan 2014 FFC Intern status issued
    Feb 2014 Start NQF4 training including 10 days classroom at IEASA
    Cape Town. Live in Plettenberg Bay so considerable costs involved.
    Dec 2014 All required course material including POE submitted
    Jan 2015 FFC Intern status issued
    Feb 2015 Training institution satisfied with work done submits files to SETA
    Dec 2015 SETA issues certificate of competence
    Jan 2016 FFC Intern Status issued
    Feb 2016 Write NOF 4 Real Estate in Cape Town
    May 2016 Receive letter with results . Passed exam and now entitled to preface
    PPRE
    Jun 2016 Certificate arrives… shows me as MPRE (????) I am a Principal
    yee hah
    Jul 2016 EAAB cannot accept that certificate is incorrect . They don’t make
    mistakes. Send certified copy front and back (their stamp on the
    back. No reply.
    Jul 2016 EAAB refuses status upgrade to full status agent. Need logbook,
    without logbook training not complete First I hear of logbook . Never
    mentioned during training other than that the POE meets all the
    criteria for logbook . Why was I issued with certificate of
    Competence and allowed to write exam if the training was not
    complete.
    Jan 17 Situation not resolved. FFC issued showing Full Status Agent Intern at
    Agency . Many calls many emails no reply other than 1 liner. We need
    Logbook.
    Jan18 FFC issued Full Status Agent Intern at Agency . Actions as previous
    years now also with lawyers letter demanding upgrade in line with
    certificate issued . All simply ignored.
    Jan 19 FFC issued Full Status Agent Intern at Agency .
    Feb 19 Attend seminar in Cape Town given by advocate from EAAB. Manage
    to raise my issue. Asked to write and explaining my case. Did so .
    Reply? One liner. Submit logbook.

    So now I am in a quandary. Do I thumb suck and create a logbook and get my principal to sign off using 2014 dates/facts /legislation/interest rates . How does this “fraud” reconcile with the Code of Conduct. Or do I create a logbook using 2019 dates/ legislation/ interest rates etc. Questions asked no reply.
    What if they then if the logbook does “not meet standards”, do I loose the NOF4 qualification?
    Meantime as Intern, I am exempt from CPD every silver lining has a cloud

  • John Kirstein
    Reply

    I have had many problems with The EAAB over the past years., Queries always are answered in one sentence: ” Send proof of payment”. Last year I logged many queries and not one was responded two. My principal is going through the same problem and this, with the new legislation, has become every employees problem.
    Why does the EAAB not stagger FFC dates to spread the workload? Say a-f surnames in the 1st quarter, and so forth.
    Thanks.

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