What the PPA means to home buyers and sellers
Category RealNEWS
The Property Practitioners Act (PPA) which comes into effect this month has some important implications for home buyers and sellers, as well as the estate agents, lawyers, mortgage originators, auctioneers, developers and property managers involved in the real estate sector.
Of these, says Gerhard Kotzé, MD of the RealNet estate agency group, the three most important are as follows:
Firstly, every person or business who earns a commission or a fee from the sale or lease of any property will be required to hold a valid Fidelity Fund Certificate (FFC) from the new Property Practitioners Regulatory Authority (PPRA), and to be able to prove that they are tax and BBBEE compliant.
"The FFCs will be valid for three years and property practitioners will have a big incentive to obtain them and keep them current because those who don't have an FFC will not be entitled to be paid any commission or fees," he notes.
"And we are confident it will go a long way to ensure a more regulated estate agency industry, which is currently plagued with scores of unregistered agents, and too many incidents of these bogus operators scamming consumers out of thousands of rands worth of deposits and other fees.
"The big benefit to home buyers, sellers, landlords and tenants will be more peace of mind that they are dealing with properly qualified, legitimate property practitioners and will have the protection of the PPRA in the event of any misconduct or if any deposits or other funds are misappropriated."
The second most important provision of the new legislation is that it is now compulsory to include a comprehensive defects disclosure document in every sale or lease agreement.
"Most estate agents and agencies have been including such documents for several years now," says Kotzé, "but now it will actually be illegal to accept a mandate to market a property for sale or to let unless the owner has completed it by carefully listing any and all defects in the property that he or she is aware of.
"Then when the sale or lease is concluded, this document must specifically be signed by all parties involved, including the agent - and we like it because it puts everyone on the same page about the condition of the property and any problems that may exist and need to be fixed, and closes the door on many potential post-deal disputes.
"Indeed, the only room for doubt now is when a buyer or tenant discovers a latent defect - that is, one that could not be seen at the time the deal was concluded and that the property owner could not have known about."
Thirdly, he says, the PPA outlaws once and for all the practice of gated estates charging "accreditation fees" for estate agents to be allowed to conclude property sales or rentals within the development.
"This has for many years had the dual effect of restricting the rights of property owners to freely choose which agency or estate agent they would prefer to represent them, and of shutting many smaller agencies out of potential transactions because they could not afford the annual accreditation fees.
"Now both those problems will be resolved, and in the case of new estates and security complexes, developers will also no longer be able to conclude sales themselves unless they register and obtain an FFC. This will once again provide a greater level of consumer protection and peace of mind - especially in the case of 'off plan' projects."
Author: RealNet
