This is how new property practitioners law will protect consumers

New property practitioners law will ensure consumer protection in the property industry by changing the obligations of property practitioners. Estate agents, now called property practitioners, who contravene the Act, will be liable for a fine or imprisonment of up to ten years.

Buying or renting a home is one of the biggest transactions consumers will ever enter into and therefore it is important for legislation to protect them from losing their hard-earned money by having to, for example, fix undisclosed defects.

The Property Practitioners Act came into operation on 1 February this year with the aim to:

• Regulate property practitioners
• Ensure the continuation of the Estate Agency Affairs Board as the Property Practitioners Regulatory Authority
• Provide for the appointment of the members of the Board, the appointment of the CEO and other staff members
• Ensure transformation of the property practitioners sector
• Establish the transformation fund and research centre
• Ensure compliance with and enforcement of the provisions of the Act
• Ensure the continuation of the Estate Agents Fidelity Fund as the Property Practitioners Fidelity Fund
• Protect consumers
• Repeal the Estate Agency Affairs Act.

Consumer protection

The Act makes provision for consumer protection in section 67, 68 and 69 by making a disclosure form mandatory, stipulating what must be in agreement and making it compulsory for the authority to educate and inform consumers.

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Mandatory disclosure

According to section 67, a property practitioner is not allowed to accept a mandate unless the seller of a property or owner of a property to let has provided a fully completed and signed mandatory disclosure in the prescribed form.

According to the draft regulations, the owner must disclose whether they are aware of:

• Defects in the roof
• Defects in the electrical system
• Defects in the plumbing system, including the swimming pool
• Defects in the heating and air conditioning systems, including air filters and humidifiers
• Defects in the septic or other sanitary disposal systems
• Defects in the property and/or the basement or foundations, including cracks, seepage and bulges or flooding, dampness or wet walls and unsafe concentrations of mould, or defects in drain tiling or sump pumps
• Structural defects
• A boundary line dispute, encroachment or encumbrances
• Remodelling and refurbishment that affected the structure
• Additions or improvements or any erections done with all required consents
• A structure that has been earmarked as a historic structure or heritage site.

The owner then certifies that the information is true and correct to the best of their knowledge at the date the form is signed. The buyer signs the form to acknowledge that they have been informed that professional expertise and/or technical skills and knowledge may be required to detect defects.

The property practitioner must provide a copy of the completed mandatory disclosure form to prospective buyers or renters so that they can make an offer for the purchase or lease. All relevant parties must sign the completed form and it must be attached to any agreement for the sale or lease of a property.

It forms an integral part of the agreement and if it is not completed, signed or attached, the agreement must be interpreted as if no defects or deficiencies of the property were disclosed to the buyer. Affected consumers can then hold the property practitioner liable.

The authority can then also act against a property practitioner or impose an appropriate sanction. Consumers are also allowed to inspect a property before finalising the transaction and must pay any costs involved in the inspection.

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Property agreements

Section 68 makes it compulsory for the developer or seller to draft the agreement to sell and buy or let and hire a property, as well as the mandatory disclosure form and pay for the drafting. The authority must publish an updated version of guideline agreements on its website from time to time.

Consumer education and information

According to section 69, the authority must conduct campaigns to educate and inform consumers of their rights in property transactions and property practitioners of their functions, duties and obligations. This section also states that a property practitioner owes a buyer and a seller a duty of care.

Issuing certificates

Section 66 also protects consumers against any other problems in a property that could be disguised although a certificate may be issued to certify that it is not a problem. It states that a property practitioner is not allowed to offer or receive financial or other incentives to influence someone who issues a certificate required by law, based on their expert opinion for:

• The condition or defects of electrical wiring
• The presence of vermin
• The presence of water or damp or
• Any other relevant matter or condition which may be provided for in any law.