The PPRA is currently carrying out inspections related to mandatory disclosures, franchisee marketing, and RCMP templates and Rebosa has indicated that many estate agents have recently been fined for violations, up to the maximum amount allowed for in the Act which is R15 000.
What does the Act say about inspections?
According to Section 21(1) of the Property Practitioners Act, an inspector may, at any reasonable time and without prior notice, conduct an inspection to determine whether the provisions of this Act are being or have been complied with, and for that purpose, may without a search warrant-
- enter and inspect any business premises, except private residences, of a property practitioner.
- require the property practitioner, manager, employee, or an agent of the practitioner to –
- produce to him or her the fidelity fund certificate of that property practitioner.
- produce to him or her any book, record, or other document related to the inspection and in the possession or under the control of that property practitioner, manager, employee, agent, or,
- furnish him or her with such information in respect of the fidelity fund certificate, book, record, or other documents at such place and in such manner as the inspector may determine,
- examine or make extracts from, or copies of, any such fidelity fund certificate, book record, or another document.
Issue #1: Mandatory Disclosures
Section 67 of the Act bars property practitioners from accepting mandates from sellers and lessors unless the prescribed mandatory disclosure form has been signed and supplied. The current issue is that agents have been fined the maximum of R15000 for not using the “Mandatory Disclosure Form” verbatim as per the regulation.
Adrianne Du Toit, head of stakeholder relations at Rebosa shares that “We have approached the PPRA to re-consider maximum fines being imposed for slight and even superficial alterations of the ‘Mandatory Disclosure Form’ and to issue warning letters to first offenders and lower fines for minor infractions instead”. She goes on to say that the PPRA will develop a new set of criteria to define lesser fines and provide a timeline.
“Unfortunately, the position of the Authority is that there will be no retrospective reduction of fines already imposed. The current position of imposing the R15000 fine for non-compliance will remain in full force and effect until the Authority develops new criteria and guidelines for imposing fines”, she concludes.
Rebosa has also requested a moratorium on this issue to allow agents at least 30 days to get their affairs in order.
Avoid a fine by using the exact format of the Mandatory Disclosure Form, which can be downloaded here.
Issue #2: Franchisee Marketing
This issue is a bit trickier as there are currently a few technical barriers to compliance. Section 65 (2) of the PP Act determines that a franchisee property practitioner must disclose clearly and unambiguously in all written communication, advertising, and marketing materials that he, she, or it operates in terms of a franchise agreement, as well as the name of the franchisor. Practically, according to the Act, this means the following:
Property practitioners should display their legal names registered at CIPRO and not trade names to avoid public confusion and that of the franchisor and the fact she/he operates in terms of a franchise agreement, as well as the name of the franchisor. For example – First Realty (Pty) Ltd, a franchisee of Chas Everitt.
A sole proprietor must use his/her name as it appears on his/her ID. For example – Jan du Toit, a franchisee of Remax.
“It has come to our attention that franchises are not displaying this information on all marketing material and specifically not on property portal advertising. This too carries a fine for non-compliance.
However, disclosing the franchisee and franchisor on portals presents a technical problem. We have requested a moratorium to change advertising on the property portals and are also in consultation with Private Property and Property 24 to find a technical solution for this requirement. The PPRA is working on this with us and will issue a guidance notice to clear this matter”, says Du Toit.
Du Toit goes on to mention that the PPRA is also prepared to provide relief to franchisees who have been found in transgression and deal with each transgression on a case-by-case basis.
Issue #3: RCMP Templates
Following South Africa’s FATF grey listing, the PPRA is scrutinising RMCP (Risk Management and Compliance Programme) templates and non-compliance also carries a hefty fine.
Rebosa has had RMCP Guidelines developed by their attorneys which have been sent to both the PPRA and FIC for approval.
Du Toit explains, “We are making amendments but until such time as we issue a template, property practitioners need to be mindful that it remains the responsibility of each estate agent to ensure that its own RMCP complies with FIC Act. Each firm is unique and must create and implement its own RMCP”.
In terms of section 4(d) FIC has issued a guidance note which can also be followed and can be accessed here.
