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The Property Practitioners Act: Required Content of Property Transaction Agreements

  • February 16, 2022
  • Abigail Reynolds (Corporate & Commercial Law Specialist)

The Property Practitioners Act (“the Act”) was signed into law in 2019 and finally came into force on 1 February 2022.

It will have a significant impact on estate agents, property developers and other property practitioners, and contains more obligations than in the Estate Agency Affairs Act that it repeals.

It will apply in respect of the sale or rental of properties for profit.

Prescribed Content of Property Agreements: 

The Act prescribes certain content that must be included in each property transaction agreement, such as:

1. Guarantee of Valid Fidelity Fund Certificate (see section 48, section 53 and Regulation 37.2): 

1.1 In each property transaction agreement to which the property practitioner is a party, the property practitioner must state that he/it guarantees that he/it is the holder of a valid Fidelity Fund Certificate. 

1.2 The wording provided for this in Regulation 37.2 is ““[Insert name of property practitioner as defined in the agreement] hereby warrants the validity of his / her / its Fidelity Fund certificate as at the date of signature of this Agreement.”

1.3 If the property practitioner fails to hold the valid certificate or make that guarantee:

1.3.1 the property practitioner is obliged to repay any amount received in respect of or as a result of the relevant property transaction; and

1.3.2 the property practitioner is at risk of a fine or imprisonment for a period not exceeding 10 years.

2. Mandatory Disclosure Form (see section 67 and Regulation 36): 

2.1 Each property transaction agreement must have attached to it a fully completed mandatory disclosure form which has been signed by the seller or landlord. 

2.2 The Regulations (see Reg 36) promulgated under the Act prescribe the format of this form. 

2.3 The form deals with disclosures of known defects in the property, and obliges the seller or landlord to confirm whether, to their knowledge, there are, for example known defects in the roof, electrical systems or plumbing system .

2.4 In addition to attaching this form to the agreement, the property practitioner is obliged to provide it to all prospective purchasers or lessees of the relevant property.

2.5 If the property practitioner fails to comply with the above, an affected consumer can hold him/it liable under the Act.

2.6 If the form was not completed, signed or attached, the agreement must be completed as if NO defects or deficiencies were disclosed to the purchaser.

3. Wording on Letterheads (see Regulation 37.1): 

3.1 The following wording must appear on all letterheads or marketing material pertaining to a property practitioner: “Registered with the PPRA“. And where a candidate estate agent is making use of such letterheads or is referenced in such marketing material, the fact that such individual is a candidate estate agent must be clearly stated. 

Because of the above prescribed content, and because this Act is already in force, we urge all property practitioners to amend and update their property transaction agreements so that they comply with this new Act.

About the author

Abigail Reynolds (Corporate & Commercial Law Specialist)

Abigail Reynolds is the founder and Principal Attorney of Reynolds Attorneys. She is a Corporate & Commercial Law Attorney and Qualified Mediator, and sits on the Company Law Matters Committee of the Law Society of South Africa, as well as the Commercial, Company, Consumer and Tax Law Committee of the Cape Law Society.
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Nicole Copley

NGO law

Nicole Copley is an NGO lawyer who works for NGO clients all over South Africa and internationally. She qualified with a BA LLB LLM (Tax) from the University of KwaZulu-Natal, Durban (with a Masters in tax exemption), and is a Master Tax Practitioner SATM.

Nicole advises on, drafts and amends founding documents for and sets up every sort of organisation required by South African NGOs. She makes tax exemption and 18A (deduction of donations) applications, and applications to be registered with the Nonprofit Organisations Board. She (and her team) keep registrations up to date and assist with compliance and reporting. She also NPO reporting and other services. She advises on re-structuring and assists not-for-profits in understanding and applying the useful provisions of B-BBEE.

She also does commercial drafting work for her NGO clients, vetting and drafting agreements for them. She works for a wide range of types and sizes of organisations and aims to provide a pragmatic and efficient service. Her decades of experience in consulting to NGOs means she takes the long view, is focused on governance, ethics, credibility and sustainability and steers clients away from quick fixes, helping them build/renovate so that the organisation outlasts current office bearers.

Nicole works with other consultants to the not-for-profit sector, collaborating on training, newsletters, advising government on legislation for the sector and, most recently, a series of practical guides for the sector, called “NGO Matters”, originally published by Juta but now published by Nicole as NGO Matters Publications.

She has been a consultant since 2019.

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