New property act provides extra protection for consumers
Category Commercial and Industrial News
This month, property professionals have hailed the commencement of the new Property Practitioners Act (PPA), which completely replaces the Estate Agency Affairs Act 112 of 1976. The Act aims to protect consumers while creating a concise framework for property practitioners to operate in. 3Cube Property Solutions examines this new legislation - which has been welcomed by both the legal and real estate communities - and how it protects you as a buyer, seller or renter of commercial or industrial real estate.
Marketing regulations
In terms of the Property Practitioners Act, no real estate agent or broker is allowed to market a property for sale or to rent at any price other than the one agreed upon by the property's owner.
In addition, no property practitioner is permitted to use any marketing technique or method that could be defined as "harmful or misleading". Practitioners may not use any underhanded method to persuade a property owner to give him or her a mandate to sell or lease out their property. Regard must be given at all times to the level of general experience that the property owner has in selling or leasing property.
Rules around remuneration
Under the new act, no real estate broker can show a client any property that he or she has already seen with another real estate agent. This is to prevent a scenario in which two estate agents may believe that they are entitled to a commission on one transaction.
In addition, no mandate or contract can include any clause stating that the seller or lessor will be required to directly pay a property agent or broker any remuneration or commission related to the sale or rental of any property. Similarly, there may be no clause in any contract of sale or lease that entitles a real estate agent or broker to deduct any amount from monies entrusted to him during the selling or leasing of a property.
No contract related to the sale of immovable property can state that any portion of the purchase price that has been entrusted to the real estate agent or broker must be paid to the seller before the transfer process has been concluded. In most cases, the seller will only receive his or her money once the property has been registered in the buyer's name. However, the Act makes provision for certain exceptions to this rule.
It is possible for the purchaser to have signed a separate document - before signing the offer to purchase agreement - that consents to the seller receiving the funds prior to the conclusion of transfer formalities. In this case, the document signed must have provided a clear explanation of the risks and other implications that this early payment creates for the person purchasing the property.
The act stipulates that every contract of sale of immovable property needs to be signed by the seller, the purchaser and the estate agent or broker.
It should also be noted that no real estate agent or broker is permitted to operate a trust account, unless the account is managed in a manner compliant with the Property Practitioners Act.
3Cube Property Solutions welcomes the new consumer protections brought about by the Property Practitioners Act. To find out more about buying, selling or leasing commercial or industrial property in Gauteng, contact us today.
Author: 3Cube Property Solutions
