Agency fights to overturn ‘No FFC no commission’ ruling

Agency fights to overturn ‘No FFC no commission’ ruling

MAIN IMAGE: Romy Tarboton, director Signature Real Estate.

The estate agency that received the ‘No FFC no commission’ ruling in the Cape High Court last year, has launched a crowdfunding campaign to raise financial support to have this ruling overturned – if they are successful, the whole real estate industry will benefit.

Signature Real Estate is the estate agency that last year took the matter to court when a competitor refused to pay their commission share because the former wasn’t in possession of a valid Fidelity Fund certificate (FFC) at the time of the deal – even though the Estate Agency Affairs Board (EAAB) later admitted in writing that it is due to oversight by the Board that Signature wasn’t issued timeously with valid certificates.

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, even if the reason for the FFC not being issued is through no fault of the agent/agency, but as a result of an admitted mistake on the part of the Board.

Further reading: High Court rules no FFC no commission

Taking one for the team

Since the ruling in December she received dozens of calls and desperate pleas for help from estate agents across the country that suffered a similar fate. This is why they decided to apply for the right to appeal the ‘no FFC no commission’ ruling and are fighting to have this ruling overturned explains Romy Tarboton, principal of Signature.

“The only way we are able to fight back, is if we join forces and make our best attempt together to have this ruling overturned,” she says.

Earlier this year they were granted leave to appeal. Their legal team found that there is existing case law that contradicts the ruling by Davis. Tarboton says their legal team is very confident that the ruling can be overturned if they appeal.

However, to lodge an appeal is going to cost around R220 000 and last year’s legal battle in the Cape High Court already cost them over a quarter of a million rand. “We simply cannot do this alone,” says Tarboton. Consequently, last week they published a video on YouTube to announce that they launched a crowdfunding campaign ‘SA estate agents appeal ruling’ through Click n Donate to raise the necessary funds to cover the legal costs associated with the appeal. She is asking agents to make a donation of R200 or more each.

What happens should more funds be raised than is required? Tarboton, in answer to this question, replied that is why they are running the campaign through Click n Donate with a set target of R220 000 (the quoted cost of the legal services from their attorney and advocate). Once the set target has been reached, the platform is disabled so excess funds can’t be raised. By the end of last week they had raised R700.

“The EAAB admitted having erred but it is an estate agent that suffers the consequences, consequences that can amount to millions. I wish Ms Tarboton well in this endeavour, if successful many will benefit”, says Jan le Roux, CE of industry body Rebosa.

Timely FFC renewal remains a challenge

The late issuing of FFC’s remains a very real reality. The beginning of this year saw thousands of estate agents without renewed FFC’s even though they had applied timeously in the previous year. In February the Board’s new CEO Mamodupi Mohlala-Mulaudzi told the Portfolio Committee on Human Settlements that a backlog of 27 000 FFC’s was one of the first things she had to address after she took over at the beginning of the year.

However, despite Mohlala’s efforts to turn things around, the timely issuing of FFC’s appears to remain a challenge for the Board. The deadline for renewal of FFCs for 2020 was 31 October. Rebosa says they’ve since received so many complaints that they recently launched an FFC query platform to assist agents who have applied for renewal and hasn’t received feedback from the EAAB. This endeavour is focused entirely on renewals for 2020. Agents can also visit rebosa.co.za to lodge a query.

Showing 16 comments
  • Greg
    Reply

    I would agree to have the ruling overturned in similar cases where a legitimate registered Estate Agency has does not have a valid FFC due to errors or delays by the EAAB but how would we then control the scores of unqualified and illegal agents / agencies who continue to operate without valid FFC’s ?

    • Romy Tarboton
      Reply

      Greg I would like to make a point in that we were ABSOLUTELY not advocating for the promotion of unlicensed Agents.
      Signature has held a valid FFC every year since its inception in 2010 and stand firm in our belief that a license is necessary in order to practice Real Estate.
      In our instance, and through no fault of ours (we applied for renewal, paid in time with correct reference numbers et al) BUT the Board issued our FFC’s in the incorrect name. It was through the Boards admitted mistake that payment was withheld from us for work we rightfully did.
      All we asked the Judge to consider, was that on the merits of our case, and the fact that we were ENTITLED to have been issued with correct FFC’s, that we receive payment.

  • ray donnelly
    Reply

    Best I DONT actually comment as what I think of the EAAB and their ineptitude is basically UNPRINTABLE

  • cyril pulvenis
    Reply

    NO FFC NO COMMISSION. There is no place for bogus agents

    • James Otter
      Reply

      I don’t see Signature Estates Agents as being bogus.

      • Romy Tarboton
        Reply

        Thanks James!

  • Geoff Stroebel
    Reply

    I have never had a problem with a FFC being renewed in 12 years. Yes, the EAAB has serious issues but I believe that it is mostly the agent’s/agencies fault. So I say that the ruling should stand.

    • Romy Tarboton
      Reply

      Geoff, have you ever heard the expression that ‘even a broken clock is right twice a day?’
      I am sincerely happy to hear you personally haven’t had a problem, but have you no concern for the 27 000 professional colleagues that were stripped of their ability to earn a living when their FFC’s were not timeously issued at the beginning of 2019?

  • Matt Mercer
    Reply

    Agreed Cyril – but what happens if you are one of the 27000 who have paid their certificate but aren’t processed in time through no fault of their own. It’s happened to all of us. I paid my contribution because it is the right think to do ….. if you can’t afford R200 there is nothing wrong with paying what you think is fair …. some folks have paid R50 ….. every little bit counts

  • James Otter
    Reply

    The case should be determined on the morality of the situation and the spirit of the law. Applying the letter of the law in this case is unjust, based on the evidence you have presented. Whilst the sharing agent is acting in accordance with the law, it is acting unethically by pursuing this case. It is an abnormal situation requiring special attention and commonsense in the light of the circumstances which Judge Davis seems to lack.

    With regard to the non-issue of FFCs properly applied for, it seems that the law requires the estate agents to cease trading until the certificates are issued which is absurd. Provision should be made that if the estate agent can prove an application has been trading is permissible (This would have resolved the above case).

  • Matt Mercer
    Reply

    Also Romy Tarboten doesn’t need to appeal- she is doing it as service to the industry. The industry bodies can’t spearhead this for political reasons but we can all make a difference if we choose.

  • Matt Mercer
    Reply

    Agreed 100% James Otter. Read this ruling from 2016- which the judge ignored.
    http://www.saflii.org/za/cases/ZAGPJHC/2016/391.html

  • James Otter
    Reply

    Going back to the legalities of case study. Here’s another legal way of looking at it. If the two agencies had a sharing agreement and one agent did not have a FFC does it entitle the agency with the FFC to keep the commission earned by the other agent? Isn’t that unlawful enrichment? It seems to me that the disqualified commission should be returned to the client who utilized the services of both estate agents in terms of the law. I would suggest that the Judge should have instructed that to be done to follow the letter of the law. The client could waive that entitlement and solve the problem or keep the commission. I would be interested in seeing a counter-argument.

    • Olivia De Freitas
      Reply

      James Otter, ironically enough the agent who witheld the commission, based on the fact that Signature did not have a valid FFC, has on other platforms complained about the EAAB not issuing her FFC on time. Double standards it seems.

  • Hurricane
    Reply

    Estate agents are a rip off n don’t deserve such high commission. The laws of the country should be followed period.

  • Ian Badenhorst
    Reply

    Any Agent who at the time of a sale contract being agreed between the willing buyer and seller and at such time a valid FFC certificate was in existence, then I believe the Agent should be entitled to any and all Commissions and fees that was earned at such time under what was a valid certificate.

    To protect agents from damage due to the EAAB or future Property Practitioners Bill under FFC disputes with delay or whatever question may be involved in the issue of a FFC, I believe the right process should be to have a guardian fund by the requisite Law Society under each Province where attorneys / conveyancer and who are required to pay over such commissions should be permitted to make determinations as to whether a valid FFC was in place at the time of the sale being concluded. secondly if there is any doubt of the validity of the FFC then such commission payable should be held in trust for a period not exceeding 3 months after which the funds with its interest should be transferred to a law society Guardians fund for a further 3 Months.
    Should the Agent not make successful claim by a valid FFC certificate by then the monies shall be repatriated to the Attorney who was originally the conveyance, who shall refund the seller the applicable value as was the commission deducted from the selling price.

    No other party (EAAB, or new Property Practitioners Bill regulator or the attorneys) should have any claim to the funds thereafter.

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