{"id":7137,"date":"2024-04-22T10:02:29","date_gmt":"2024-04-22T10:02:29","guid":{"rendered":"https:\/\/propertyprofessional.co.za\/?p=7137"},"modified":"2024-04-22T14:24:09","modified_gmt":"2024-04-22T14:24:09","slug":"new-legal-opinion-charging-agents-hoa-fees-is-illegal","status":"publish","type":"post","link":"https:\/\/propertyprofessional.co.za\/2024\/04\/22\/new-legal-opinion-charging-agents-hoa-fees-is-illegal\/","title":{"rendered":"New legal opinion: charging agents HOA fees is illegal"},"content":{"rendered":"\n
MAIN IMAGE: Senior counsel George Kairinos from Advocates Group 21, Jan le Roux \u2013 CE of Rebosa, and Jos\u00e9 De Abreu – founder and managing partner at De Abreu & Cohen Inc<\/strong><\/p>\n\n\n\n Editor<\/em><\/p>\n\n\n\n While some HOAs have stopped the practice of charging estate agents accreditation or marketing fees to operate within gated estates, many continue to do so, much to the frustration of agents who are legally not allowed to pay said fees, under fear of losing their FFCs.<\/p>\n\n\n\n \u201cIt is illegal for agents to engage in it, and to top it all off, it\u2019s purely a money-making mechanism on the part of these HOAs and needs to come to a complete end\u201d, says Jan le Roux, CE of Rebosa<\/a>. <\/p>\n\n\n\n Several HOAs have recently decided to cease the practice, but it still abounds. Against this backdrop, Rebosa asked Senior Counsel George Kairinos from Advocates Group 21<\/a> for a legal opinion on the matter. This opinion has far-reaching implications.<\/p>\n\n\n\n What questions were asked?<\/strong><\/p>\n\n\n\n Advocate Kairinos was tasked with examining five specific issues to provide a comprehensive legal opinion:<\/p>\n\n\n\n What does Section 36(1), Regulation 35 in the PPA refer to, a quick refresher:<\/strong><\/p>\n\n\n\n The legalese follows, but Section 63(1) of the PPA states that arrangements in which an HOA, for example, receives money or another form of reward for providing an advantage to one agent over the other or excluding another agent are undesirable business practices.<\/p>\n\n\n\n Section 63(1) of the Property Practitioners Act, 22 of 2019, read with Regulation 35.1 provides that the Minister of Human Settlements declared the following business practices undesirable and therefore prohibited:-<\/p>\n\n\n\n What does the legal opinion say?<\/strong><\/p>\n\n\n\n You can read the full opinion here<\/a> with detailed explanations about the various regulations and legal interpretations Advocate Kairinos explored in formulating his opinion. For those less legally minded, herewith are his conclusions:<\/p>\n\n\n\n Kairinos\u2019 finding: HOA are subject to the provisions of the PPA<\/strong> because they are property practitioners when engaging in such conduct and are subject to the prohibition in section 63 if they are engaging in the prohibited conduct.<\/p>\n\n\n\n Jos\u00e9 De Abreu – founder and managing partner at De Abreu & Cohen Inc<\/a> \u2013 says that while he concurs with Kairinos \u201cthat an HOA, when engaging in the offending conduct, acts as a property practitioner as defined within the ambit of the Property Practitioners Act (\u201cPPA\u201d)\u201d he concedes that this view may be open to some contestation and debate amongst legal practitioners\u201d. <\/p>\n\n\n\n Kairinos\u2019 finding: Regulation 35 would apply to the offending activities of the HOA.<\/p>\n\n\n\n Here De Abreu believes the issue is far more clear cut, stating, \u201cI am firmly of the view that even if HOAs are not \u201cproperty practitioners as defined in the PPA, they are nonetheless subject to the provisions of regulation 35 and must comply with the prohibition of \u201cundesirable business practices\u201d as set out therein. Indeed, it would be nonsensical to argue that HOAs are not \u201cproperty practitioners\u201d while at the same time arguing that only property practitioners are subject to the prohibitions contained in Regulation 35, as some of the undesirable business practices prescribed in Regulation 35 expressly apply to and include \u201cany body corporate<\/em> or homeowners association<\/em>\u201d in terms of regulation 35.1.1.2.\u201d<\/p>\n\n\n\n Kairinos\u2019 finding: The conduct of the HOA does not constitute an offence.<\/p>\n\n\n\n Kairinos\u2019 finding: the conduct of the HOA in requiring payment from the estate agents is unlawful.<\/strong><\/p>\n\n\n\n Kairinos\u2019 finding: the Regulator would have authority in terms of section 26 to issue compliance notices and take the further steps provided for in Chapter 5.<\/strong><\/p>\n\n\n\n \u201cIn my view, it is therefore clear that the conduct of HOAs who engage in the conduct which forms the subject matter of the legal opinion clearly contravenes the prohibitions set out in Regulation 35 and that in such circumstances, the PPRA<\/a> not only has the authority to act against such HOAs but in fact is duty bound to do so, irrespective of whether HOA\u2019s are \u201cproperty practitioners\u2019 in terms of the PPA or not.<\/p>\n\n\n\n In fact, it has always been my view that the quickest way for the PPRA to bring a halt to these offending practices by some HOAs is for the PPRA to take firm action directly against the HOAs in question in addition to any other action taken against the property practitioners who succumb to the commercial pressure applied by HOAs\u201d, believes De Abreu.<\/p>\n\n\n\n \u201cOne wonders whether these HOAs will change their tune about effectively forcing agents to break the law once they are in the same boat in terms of facing action by the PPRA\u201d, muses le Roux.<\/p>\n\n\n\n Will this opinion change anything?<\/strong><\/p>\n\n\n\n \u201cIt\u2019s been frustrating to see how the HOAs move the goalposts every year. For instance, in the first year, they said if we pay the accreditation fees, we will have more advantages, which clearly is not legal. The next year, they changed those to fees to admin fees. Regardless of what it\u2019s called, it’s against the Act, and we are hopeful that this opinion will clear the way for change,\u201d hopes Giel Viljoen<\/a>, Principal Property Practitioner at Leapfrog Property Group Stellenbosch.<\/p>\n\n\n\n \u201cWhether the senior counsel\u2019s opinion obtained by Rebosa will have an effect or impact on these continued practices by HOAs will, in my view, depend on whether the PPRA takes direct action against HOAs including, if necessary, legal action to interdict such prohibited conduct. As far as I am aware, up to now, the PPRA has only taken action against property practitioners who co-operate with the HOAs and pay them the accreditation or similar fees. It is my hope, however, that the opinion obtained from the senior counsel by Rebosa will prompt the PPRA to take appropriate and firm action against the Home Owners Associations directly, as in my opinion, only such direct action is likely to bring a speedy and complete halt to these undesirable practices by the HOAs\u201d, says De Abreu.<\/p>\n\n\n\n Le Roux shares that \u201cRebosa firmly believe these undesirable practices will only cease if everyone stops doing it. To this end, we urge the PPRA to immediately start taking action against offending HOAs with the same diligence it has shown in rooting out offending estate agents\u201d.<\/p>\n","protected":false},"excerpt":{"rendered":" Could this be the end of undesirable business practices? Senior counsel George Kairinos\u2019 legal opinion heralds big changes for HOAs.<\/p>\n","protected":false},"author":4,"featured_media":7156,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1199,161,404,160],"tags":[2593,2595,2592,1512,2441,1133,2594,1513,1239,183,1333],"yoast_head":"\n\n
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