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Property Practitioners Bill Commentary - 2

14 February 2019

Transformation of the property sector
You might recall that the property sector has a Transformation Charter which was finalised in 2017. In chapter 4 of the new Act it is confirmed that this Transformation Charter applies to all Property Practitioners. When procuring services from Property Practitioners, all organs of state are obliged to use the services of practitioners who comply with broad-based black economic empowerment and employment equity legislation and policies.

The Property Practitioners Regulatory Authority (PPRA) is also obliged to assess the state of transformation within the industry and take steps to speed up transformation.

To fund these efforts, the PPRA has to create a Property Sector Transformation Fund. The money in this fund can be used in numerous ways to promote the interests of the historically disadvantaged, including providing for training and development.

The Act also establishes the Property Sector Research Centre. The purpose of this centre is to increase research, promote innovation, develop human potential and generate new knowledge. The Research Centre is intended to be the central repository of expert knowledge in the property sector. It is also intended to “support the realisation of South Africa’s transformation into a knowledge-based economy in which the generation of knowledge translates into socio-economic benefits.” It must also promote consumer awareness and education.

I’m not sure how to interpret this part of the Act. The ideas seem noble, but whether the PPRA and the Property Sector Research Centre are ever going to be able to do anything to achieve these lofty ideals is yet to be seen. I fear that this part of the Act might turn out to be a platitude, with very little positive effect.

Compliance and enforcement
The Act will be policed by inspectors who will have wide-ranging powers of search and seizure. They will have to identify themselves with certificates of appointment or identification cards.

Inspectors will be entitled to enter business premises (not private residences) without a search warrant and demand access to the business records or other documents. If an inspector wishes to have access to a private residence from which a business is being conducted, the inspector must give advance notice.

The inspectors’ powers are even greater with a search warrant.

Inspectors are entitled to confiscate and remove records or data which might be used in legal proceedings against the Property Practitioner.

The Act goes into substantial detail as regards the procedures that need to be followed in obtaining and executing a search warrant. The inspector is entitled to rely on the assistance of the South African Police Services, who can use force to overcome resistance, or to gain entry.

It is intended that the Minister will publish regulations which will distinguish between contraventions of the Act that are of a minor nature and contraventions which are of a substantial nature. Minor offences can be dealt with by using compliance notices and fines. There would be no criminal prosecution for these minor contraventions.

The Minister must also set the limits of fines that will have to be paid for contraventions of the Act. All fines will be paid to the PPRA.

The PPRA will have the authority to utilise any part of the fine to pay compensation to any person who has suffered loss as a result of the conduct of the Property Practitioner.

The PPRA’S duty to adjudicate on disputes
The PPRA is also obliged to deal with any complaints that might be lodged against Property Practitioners. The scope of the PPRA is however limited to complaints relating to financing, marketing, management, letting, hiring, sale and purchase of property. Once again, it seems as if the business brokers are excluded from this part of the Act.

The Act sets out time limits for the procedures which the PPRA has to follow once it has received a complaint. Firstly, it has to acknowledge receipt within 7 days and issue a case number.

The PPRA can then either refer the dispute to mediation or adjudication. If the dispute goes to mediation, the PPRA must appoint a mediator within 7 days and the mediator has a further 7 days to set a date for the mediation, which must be within a 30 day period.

The Act specifically makes provision for the PPRA to deal with disputes between Property Practitioners, on a “cost recovery” basis. It therefore seems that Property Practitioners will have to pay to have their internal disputes resolved in this forum.

For matters where a Property Practitioner fails to comply with a compliance notice, or fails to pay a fine, or where mediation has failed, or where the complaint/contravention is of a serious nature, the PPRA must have the matter adjudicated.

The adjudication will take place before an independent, legally qualified person who may also appoint independent assessors for assistance.

Once appointed, the adjudicator will have 14 days to set the matter down for hearing and this hearing must take place within 60 days. While the Act specifies that the PPRA must appoint a mediator within 7 days, the Act is silent on how long the PPRA has to appoint an adjudicator.

The decision of the adjudicator will have the same force as a judgement of the Magistrate’s Court. The adjudicator also has the authority to order the PPRA to pay up to 80% of any fine to the complainant as compensation.

The Act makes provision for an appeal process if any of the parties disagree with the decision of the adjudicator. The adjudication appeal committee will consist of three independent suitably qualified persons who will have 14 days to set the matter down for hearing. This hearing must take place within 60 days.

While the drafting of these sections dealing with non-compliance and disputes could have been better, the Act does place a premium on the speedy resolution of matters and this can only be good for the industry.

Finances
The Act sets out where the PPRA will be getting its funding from. This money will come from Parliament, from fees paid by Property Practitioners, from interest generated from the investment of surplus funds, and any other source.

The Act envisages that money or property might be donated or bequeathed to the PPRA. This seems highly unlikely.

The Act also gives the PPRA the authority to recover costs that it has expended in carrying out inspections, investigations and disciplinary proceedings, or in carrying out audits on trust accounts from the Property Practitioner in default.

The financial year end of the PPRA will be 31 March of each year. It is strange that the financial year end is not going to coincide with the national tax year end.

This ends Part 2 of this commentary on the Property Practitioners Bill. In Part 3, I will be dealing with the Fidelity Fund and Fidelity Fund Certificates.

Deon Welz
Miltons Matsemela Inc

Republished with permission

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