The Committee was in the process of looking at amendments to the draft Property Practitioners Bill after consultative stakeholder engagements, and after Members had looked at all the submissions and deliberated on them.
The Department ’s legal team took Members through the amendments. Of particular importance, there was now a new chapter on transformation which was very detailed, unlike the previous single clause 65. A property sector transformation charter code would apply to all property practitioners. This meant that when procuring property related goods and services, all organs of state had to utilise the services of property practitioners who complied with the broad-based black economic empowerment (BBBEE) and employment equity (EE) legislation and policies. The Authority was also now mandated to open the transformation fund within six months of coming into effect.
Property practitioners with a turnover of less than R2.5 million would be exempted from opening trust accounts The other important issue was on Fidelity Fund Certificates (FFCs), where it had been amended and now property practitioners would not have to apply annually, but every three years, and payment would be proof of compliance even without having the physical certificate.
The Members were generally satisfied with the changes that had been proposed, which covered aspects of the Bill such as definitions, the composition of the Board, the addition of a research repository, linkages with education and training institutions, the handling of complaints, the retention of records, and whether franchising would be retained in the Act.
The Committee agreed to convene the following day to consider the cleaned A-list Bill.
Property Practitioners Bill
Adv Khwezi Ngwenya, Chief Dirtector: Legal Services, Department of Human Settlements (DHS), said he would begin the deliberations on the Property Practitioners at the long title on the second page. It read: “To provide for the regulation of property practitioners; to provide for the continuation of the Estate Agency Affairs Board as the Property Practitioners Regulatory Authority; to provide for the appointment of the Members of the Board and matters incidental thereto; to provide for the appointment of the Chief Executive Officer and other staff Members of the Authority..” The DHS had deleted the words, “to provide for the establishment, appointment, powers and functions of the Property Practitioner’s Ombud Office,” and substituted them with, “to provide for transformation of the property practitioners sector; to provide for the establishment of the transformation fund and establishment of the research centre on transformation…” It further goes on to state, “to provide for compliance with and enforcement of the provisions of the Act; to provide for the continuation of the Estate Agents Fidelity Fund as the Property Practitioners Fidelity Fund; to provide for consumer protection and education; to provide for the repeal of the Estate Agency Affairs Act, 1976; and to provide for matters connected therewith.”
The Chairperson said Members had said the reference to the Ombud’s office shouldbe removed, and asked if they were in agreement with the change.
Mr K Sithole (IFP) wanted to find out the difference between the fidelity fund and transformation fund.
The Chairperson said fidelity certificates were issued through the fidelity fund, while the purpose and essence of the transformation fund was for transformation in the sector through, for example, training and empowerment.
Adv Khwezi agreed and added that the difference was clearly provided in the Bill. Members would be able to see the difference clearly when they started dealing with the specific provisions in the Bill.
Arrangement of Sections
Adv Khwezi referred to the arrangement of sections on page 3, and said there was a substitution of the establishment of the office of the Ombud, and there was now a new Chapter 4 titled “Transformation of the property sector.” The others were just the arrangement of sections, and he would not deal with them.
The Chairperson interjected and said that so that Members were satisfied, it was mindful to remember that Chapter 4 was where Members had agreed to have an entire chapter speaking on the transformation of the industry.
Adv Khwezi stated that he would skip to Chapter 1, which was on page 6.
He said that during submissions in September, the definition of accounting records was raised by auditors and accountants, and therefore the Department had found it important to insert it and it now reads as follows:
“"accounting records" -
(a) means information in written or electronic form concerning the trust accounts of the property practitioner as required in terms of this Act, including but not limited to, records of all transactions involving trust monies, general and subsidiary ledgers and other documents and books used in the administration of the trust accounts; and
(b) in relation to the property practitioner’s business as such, means information in written or electronic form concerning the financial affairs of the business as required in terms of this Act or any other Act that may be applicable to the business of the property practitioner, including but not limited to, records of assets, liabilities, income and expenses, general and subsidiary ledgers and other documents and books used in the preparation of financial statements of the business”
The definition as it stood had been agreed between the Department and them, and also other sectors’ submissions.
The Chairperson commented that the definition was among what had been presented last week.
Members agreed with the new definition.
Adv Khwezi said another issue was the definition of “audit”, which stated that "audit" had the meaning ascribed to it in the Auditing Profession Act, 2005 (Act No. 26 of 2005).
The Chairperson added that in other words, the Committee did not want to invent its own definition and as such it was been taken from international auditing standards.
All Members were satisfied.
Adv Khwezi stated that there was also another proposal by the Real Estate Business Owners of SA (REBOSA) to define business property practitioner, but this had been omitted as it was not found anywhere in the Bill.
Members gave their approval.
Another definition was on the word “principal,” which states: “principal means a property practitioner who is a director of a company, member of a close cooperation, trustee of a trust, partner of a partnership or owner of sole proprietorship that operates as a property practitioner.”
The Chairperson added when Members were talking about it during the stakeholders’ engagement, it was agreed it had to be added.
Members said they accepted the definition.
Adv Khwezi moved on to page 7, and said property practitioner “(a) means any natural or juristic person or…” Here the words “business undertaking” were omitted, and now it goes on as “…who or which for the acquisition of gain on his, her or its own account or in partnership, in any manner holds himself, herself or itself out as a person or business undertaking who or which, directly or indirectly, on the instructions of or on behalf of any other person…”
The Chair commented that she thought it was clean, as Members had agreed before to remove the business property practitioner.
Mr Sithole noted that though it had been omitted, he could still see it in the next section so he was not sure.
Adv Khwezi responded that they were not defining anywhere it appeared, but were simply removing it at sub-clause (a) and leaving it at (i). Further, they had omitted it only from the definition and not from everywhere it appeared in the Bill.
Mr M Bara (DA) wanted clarity, pointing out that where it had been removed in sub clause (a) and where it had been retained in (i), seemed to him that it meant the same thing.
Adv Gideon Hoon, Principal State Law Advisor, commented that from a legislative point of view, the two as used in sub-clause (a) and (i) had different meanings.
Adv Jan Tladi, Technical Legal Analyst, Estate Agency Affairs Board (EAAB) added that in sub-clause (i) it related to the property, but in sub clause (a) it related to a company which was a juristic person and that was why it had been deleted.
Adv Phumelele Ngema, Parliamentary Legal Advisor, added that in this instance in respect of the explanations from her colleagues, if one looked at sub clause (a), it was in her understanding that it was a duplication as there was already a juristic person mentioned. The other spoke to whatever one sells, which was property, and that once it was amended, it would make sense.
Mr M Malatsi (DA) said that from his understanding, one referred to a person while the other referred to a process. However, instead of using the same exact phrase for purposes of ambiguity, one should find a way of doing away with the business undertaking as an entity, not grouping by process.
Mr M Wolmarans (ANC) added that if one read it without the red in sub clause (a), it made sense, but if one contextualised it up to where it says you present yourself as the person doing the transaction, he agreed that they should omit it in (a) and leave it in (i).
The Chairperson said it should be agreed that when the Bill came back tomorrow without the red, as a clean A-list Bill, Members would look at it again to see if it made sense.
Adv Khwezi went on to state that the other important section was the exclusion of managing agents. The proposal was they be included and if one looked at (iv), they had been excluded and it now states, “provides, procures, facilitates, secures or otherwise obtains or markets financing for or in connection with the management, sale or lease of a property or a business undertaking, including a provider of bridging finance and a bond broker, but excluding any person contemplated in the definition of ‘financial institution’ in section 1 of the Financial Services Board Act, 1990 (Act No. 97 of 1990)” Further if one looks at sub clause (c), the same had also been excluded and it now reads, “(c) includes any person who for remuneration manages a property on behalf of another.” Thereby it excludes a managing agent as defined in section 1 of the Community Schemes Ombud Service Act, 2011.
The Chairperson asked Members if they were happy with the deletion, and they stated that they were.
Adv Khwezi reminded Members that during engagements there were unanimous proposals from auditors, accountants, banks and other stakeholders that there was need to define a trust account. So now it had been defined as follows;
““trust money” means -
(a) money entrusted to an estate agent in his or her capacity as a property practitioner;
(b) money collected or received by an estate agent and payable in respect of or on account of any act referred to in subparagraph (i), (ii), (iii) or (iv) of paragraph (a) of the definition of ‘a property practitioner’;
(c) any other money, including insurance premiums, collected or received by a property practitioner and payable in respect of any immovable property, business undertaking or contract for the building or erection of any improvements on immovable property.”
The Chairperson asked Members if everything was clear, noting that that was a clear definition of trust money.
Mr Malatsi wanted clarity on where it was provided for in the Act.
Mr Khwezi responded that it was in Clause 53 and 54 of the Bill.
Adv Khwezi stated that this clause referred to the function of the Authority, where it was just a case of the substitution of “estate agents” with “property practitioners,” as agreed.
In this Clause, they had added 7 (a) and (2). (2) reads:
“(2) The total number of the Board Members contemplated in subsection (1)(a) must consist of - a) a combination of the following skills and competencies: (i) Sufficient financial expertise; (ii) relevant legal experience; (iii) sufficient experience as property practitioners; (iv) sufficient experience in the promotion and protection of consumer interests; (v) sufficient experience in property management and financing; and
(b) At least - (i) one member nominated by the Minister of Rural Development and Land Reform and Trade and Industry, in consultation with the Minister; and (ii) one member nominated by the Minister of Public Works, in consultation with the Minister.”
These proposals had been made by stakeholders from the academic world, and Members agreed that they were very good.
The Chairperson wanted to find out whether it referred to the issue of consumers sitting on the board.
Adv Khwezi replied in the affirmative.
Mr Sithole said that he was trying to understand the removal of involvement of stakeholders from rural land development. The Bill was not just going to operate just for now and in order to also cover the future, rural areas had to be included.
The Chairperson asked Members to comment.
Mr Malatsi wanted to find out whether Mr Sithole was advocating the inclusion of the Ministry of Rural Development, and if so, he supported it.
Mr Sithole replied that he was.
Mr Bara commented that he was indifferent.
Mr L Khoarai (ANC) said that he supported it, though direct appointments added more roles to the Ministry.
Ms P Mabe (ANC) said it should be stated that a person of expertise on rural development was needed, instead of a direct appointment by the Minister.
Mr Malatsi supported Ms Mabe, and said that as they were dealing with the amendments to the Bill now, and if they were seeking to have rural areas transformed, it would be prudent to include it.
The Chairperson said he was happy there should be an insertion to the effect that someone with rural development knowledge should be added.
Adv Kwezi said that they would insert it accordingly.
As agreed, the Clause now provides that the “Minister may not appoint a person to the Board – “(a) who was not a South African citizen or a permanent resident, and who was not ordinarily resident in the Republic..”
The Chairperson read that one could not be a member of the Board unless he was a citizen or a permanent resident, and stated that that was straightforward.
Adv Khwezi said that this was Chapter 4 and was all red as it was an entirely new chapter on transformation of the property sector, as had been agreed. It reads as follows;
“20. (1) The Property Sector Transformation Charter Code as amended from time to time applies to all property practitioners.
(2) When procuring property related goods and services, all organs of state must utilise the services of property practitioners who comply with the broad-based black economic empowerment and employment equity legislation and policies.
(3) The Authority must from time to time -
(a) Implement and assess measures to progressively promote an inclusive and integrated property sector;
(b) Implement appropriate measures and assess the state of transformation within the property sector;
(c) Create such mechanisms for the continuous monitoring and evaluation of the sector performance on the transformation imperatives as may be prescribed; and
(d) Introduce measures to be implemented, which may include incubation and capacity building programmes to redress the imbalances of the past.”
The Chairperson commented that the definition was properly worded, and asked Members if they were happy with it.
Members agreed the clause was okay.
Adv Khwezi said the other critical section in the transformation sector was clause 21 on the transformation fund, which provided:
“21. (1) The Board must establish a Property Sector Transformation Fund into which grants contemplated in section 38 are paid.
(2) The Minister may prescribe measures to promote economic transformation by facilitating the accessibility of finance for property ownership, property development and investment in order to enable meaningful participation of historically disadvantaged individuals, including women and youth.
(3) The Authority must utilise the Transformation Fund, which may include the following transformation and empowerment programmes:
(a) Principalisation Programme, to promote Black-owned firms and principals.
(b) Regularisation Programme, to promote and encourage participation of the historically disadvantaged due to non-compliance.
(c) Consumer Awareness Programme, to promote awareness of property transanctions and business undertakings.
(d) Work Readiness Programme, to promote and enhance participation of the historically disadvantaged in the property sector.
(4) The Authority must, in consultation with the Services Sector Education and Training Authority (SETA) develop special dispensation for the training and development of the historically disadvantaged, which must include recognition of prior learning.”
Section 3 was to compel the Authority on particular programmes of transformation by way of regulation as may be prescribed by the Minister from time to time.
The Chairperson reminded Mr Sithole that he had asked a question on what the transformation fund would do, and this was the answer.
Mr Malatsi referred to the clause, saying that it did not talk about how the funding would operate, which he felt should be a key aspect of the Chapter. How would it be funded?
Ms Mabe said that to add on to what Mr Sithole was saying, the Act dated back to 1976. If they said blindly that the Authority should deal with the fund without timelines, it would be open-ended and could take more than a long time to do it. She gave an example of the Services SETA, stating that there was need to provide timelines.
The Chairperson summed up that what Members were saying was that sub-clause 1 in Clause 21 was not sufficient, and that there was need to expand it.
Mr Bara said that the main issue was how contributions to the fund would be collected. Also, was there thought of incentivising established firms to contribute to the fund?
Adv Khwezi said that if they looked at sub-clause 2, the Department was trying to introduce mechanisms by providing the Minister with powers to make regulations, for example, for different funds from different sectors, e.g. grants or others. What they were saying was the Minister would prescribe measures and mechanisms. They did not want to say the grants would come from here or there.
Mr Wolmarans said that while he agreed, he had jumped forward to Clause 23. Though the meeting was not yet there, the grant was not defined.
The Chairperson told Adv Khwezi that what Members were saying was that that the wording of the clause was too broad. It should be amendment so as to enforce time frames, to make sure the Board was compelled to set up the fund. Could they agree that the Bill would provide timelines?
Adv Khwezi replied that the Department would insert a six-months period.
Mr Malatsi added that in doing so, could the Committee get clarity on sub-clause 2 so as to know the structure of contributions, and whether they were voluntary or not?
The Chairperson said that Members were clear on this, and requested the presentation to move on.
Adv Khwezi stated that in this clause there were various submissions, particularly from academics, to establish a knowledge repository in order to store research and support in terms of research-based information. This was also in line with the process of transformation through support of the research centre. The Clause provides;
“22. (1) The Property Sector Research Centre is hereby established.
(2) The Property Sector Research Centre must conduct market research in partnership with the National Research Foundation.
(3) The Property Sector Research Centre must -
(a) be aimed at increasing the national scientific research and innovation capability through the development of human capacity and stimulating the generation of new knowledge in the property sector;
(b) be the central repository of expert knowledge on pre-determined areas of the transformation of the property sector in South Africa; and
(c) support the realisation of South Africa’s transformation into a knowledge-based economy in which the generation of knowledge translates into socio-economic benefits.
(4) The property sector research agenda must prioritise the following:
(a) Identification of barriers to entry and meaningful participation in the property sector by historically disadvantaged individuals;
(b) Demographic distribution of skills that determine resilience in the property sector;
(c) An inclusive, accessible and transformatory curriculum development and enhancement in the technical and vocational education and training and higher education sectors in South Africa;
(d) Systematic patterns of discriminatory behaviour in the property development and management value-chain;
(e) Efficacy of compliance, monitoring and enforcement mechanisms to advance the transformation of the property sector;
(f) The rural-urban dynamic in property sector growth and transformation; and
(g) The contribution of the property sector in urban spatial transformation and economy.
(5) The Property Sector Research Centre must annually promote consumer awareness and education, which must include:
(a) The education of consumers on their rights and responsibilities in respect of property ownership and development;
(b) All the empowerment programmes of the Authority; and
(c) Consumer protection and lodging of claims”
The Chairperson said Members would recall stating that a research centre must be established to have a capacity building place to grow the sector which was readily available.
Mr Malatsi asked how the property research centre would be staffed.
Adv Tladi answered that they had already thought of that at the EAAB, and they would be doing it.
Mr Bara wanted to find out how the research centre incorporated skills within the sector, for example in terms of funding modules and linkages between training provided by the Services SETA, stating that there were no provisions for this.
The Chairperson added that what was critical was what Mr Bara was saying, which was to provide linkage with SETA and higher education for the purpose of collaboration.
Adv Khwezi responded that at Clause 21 (4) they would insert a provision to add consultation with the Services SETA.
The Chairperson commented that Members were making sure all the gaps were covered.
Adv Khwezi said that this was originally clause 38. This issue regarding the cost of establishing and managing trust accounts had been deliberated upon many times, and they were mindful of the input of Mr Bara on exemptions not defeating the purpose of transformation and protecting those only with a turnover of below R2.5 million. The clause states:
“23. (1) A property practitioner whose turnover was below R2.5 million must cause his, her or its accounting records to be subjected to an independent review by an accountant subject to the provisions of section X (1) to (7), applied with the necessary changes.
(2) The Minister may by notice in the Gazette—
(a) determine the circumstances under which certain property practitioners may be exempted from keeping trust accounts; and
(b) determine a different dispensation for the review of accounting records for those property practitioners.”
The Chairperson said it had been Members who had raised the issue of trust accounts, and asked if they accepted the changes.
Mr Malatsi stated that for clarity, the clause should be explained again.
Adv Khwezi stated that the opening of trust accounts had a number of compliance requirements, and this was costly. Those below a turnover of R2.5 million did not have to submit their accounts to independent auditors to show they qualified. Many black property practitioners failed to submit this because they did not transact as much, and were still required to comply. What they were trying to do was to provide some form of relief.
The Chairperson said they were trying to offer the relief as most were not able to continue operating because of compliance requirements for mandatory trust accounts until they were able to grow. This had been the main cry in the provinces.
Mr Malatsi wanted clarity, as old dispensation said “business,” whereas this new one now says “individual” accounts. He also sought clarity on applications for exemption.
The Chairperson responded that one had to apply for exemption to the Minister.
Mr Bara added that the exemption was not automatic, and could be either granted or rejected upon proving a turnover of R2.5 million. This trust account was a barrier as many people could not afford it. This was a good move, the effect of which would be tasted when it the Bill becames operational. He supported this specific clause.
Mr Wolmarans said asked what the rationale for the turnover of R2.5 million had been based on.
Adv Khwezi responded that the basis of the threshold was from the Property Sector Charter Code, based on their own analysis of what the turnover was.
Mr Malatsi referred to applications for exemption, and suggested that as the intention was to open up the industry, would the volume of exemptions not become administratively cumbersome to the Ministry? Was it not better to let the Board or the Authority deal with this? They did not want the process of exemption to take longer than necessary.
The Chairperson said that she had assumed that the process was to be done by the Board, with the approval of the Ministry.
Adv Khwezi replied that that was correct. The processing part would be done by the Authority and the Ministry’s work was only to grant. Everything else which related to the Ombuds was deleted, starting from pages 18, 19 and 20.
Adv Khwezi stated that this was not a major issue and only the word “must” had been inserted, as agreed by Members.
Adv Khwezi said that Clause 26 on the lodging of complaints provides that:
“26. (1) Any person may, in the prescribed form, lodge a complaint with the Authority against a property practitioner in respect of financing, marketing, management, letting, hiring, sale or purchase of property.
(2) The Authority must, in writing, acknowledge receipt thereof and inform the complainant of the case number assigned to the complaint.
(3) After receiving the complaint, the Authority may require the complainant to submit further information or documentation in relation to the complaint.”
With regard to complaints, they were basically compelling the Authority to give reasons in writing, rather than giving it discretion.
The Chairperson noted that the clause was very straightforward.
Mr Bara asked whether it was important to have a turn-around period within which the reasons would be given, rather than it being open-ended in terms of response.
Ms Mabe stated that she had a different proposal. This was because sometimes, because of a lack of knowledge, people acquired information in different ways so if one limited time, this might affect some of them.
The Chairperson commented that Mr Bara was talking of the turn-around period for responding, and not the complaint itself.
Adv Khwezi stated that he had noted the concern, and it would be amended accordingly.
Adv Khwezi said that this clause states:
“27. (1) An Authority may -
(a) if it believes that a complaint may be resolved through mediation; or
(b) on application by the person concerned, refer the complaint for mediation, as prescribed.
(2) Within seven days of referral to mediation, the Authority must appoint a suitably qualified person as a mediator.
(3) The mediator must within seven days of appointment -
(a) give notice of the mediation as prescribed to all parties concerned; and
(b) set the matter down for mediation within 30 days.
(4) (a) The mediator assists the parties to resolve the dispute;
(b) If the parties come to an agreement which resolves the matter or mediation has failed, the mediator must -
(i) issue a certificate stating the outcome of the mediation;
(ii) serve a copy of that certificate on each party to the dispute;
(5) The Authority must keep the records of all mediation proceedings, including the agreements where applicable, as prescribed.
(6) Notwithstanding the provisions of subsection (1), property practitioners may consent to refer an inter-property practitioners’ dispute for mediation by the Authority, and the Authority may provide such mediation service on a cost recovery basis.
(7) If a matter is not resolved as contemplated in this section, the matter must be adjudicated in accordance with section 27. “
The Chairperson asked for Members to comment. There were no comments.
Members were interrupted by the National Assembly bells ringing, and they immediately rushed off to go and vote.
Adv Khwezi stated that the clause provided:
“28. (1) If -
(a) a person on whom a compliance notice had been served in accordance with section 24 -
(i) fails to comply with this Act as demanded in the compliance notice;
(ii) fails to timeously comply with the compliance notice; or
(iii) fails to timeously pay the fine determined by the Authority; or
(b) mediation had been attempted in accordance with section 26 but had failed;
(c) the serious nature of the complaint and the contravention in question warrants, the Authority must cause a notice of adjudication to be served on the person concerned as prescribed.
(2) The Authority must appoint an independent legally qualified person as an adjudicator to conduct an adjudication of a complaint in terms of this section, who for purposes of this section is referred to as the "adjudicator".
(3) The Authority may upon application from the adjudicator on good grounds appoint independent assessors to assist him or her.
(4) Within 14 days of the appointment of the adjudicator, the adjudicator must -
(a) give notice of the adjudication as prescribed to all parties concerned; and
(b) set the matter down for hearing within 60 days.
(5) The adjudication must be held informally and expeditiously, subject to upholding the rules of natural justice and in accordance with prescribed procedure.
(6) (a) The adjudicator must upon conclusion of the adjudication make a determination as to whether the complaint was upheld or not.
(b) If the complaint was upheld, the adjudicator must make an order which in the circumstances was appropriate, and such an order has the status of an order of a magistrate’s court and must be executed accordingly.
(7) The order contemplated in subsection (6) may include—
(a) a fine which may not exceed the amount determined by the Minister of Justice for the purposes of section 29(1)(a) of the Magistrates’ Courts Act, 1944 (Act No. 32 of 1944);
(b) if appropriate in the circumstances, an order that the Authority pays not more than 80 percent of the fine as a compensation award to the complainant; and
(c) any appropriate order under the circumstances.
(8) The adjudicator must upon finalisation of the adjudication process provide written reasons for any of his or her determinations or orders.
(9) The Authority must keep the records of all hearings, including the order made and written reasons provided by the adjudicator, as prescribed.
(10) Notwithstanding the provisions of subsection (2), property practitioners may consent to refer an inter-property practitioners’ dispute for adjudication by the Authority, and the Authority may provide such service on a cost recovery basis.
(11) Subject to the provisions of subsection (7)(b), any fine paid pursuant to an order made by the adjudicator accrues to the Fund.”
The Chairperson invited Members to give input or comments on the clause.
Mr Wolmarans said that he needed clarity on sub-clause 5. Adjudication must be held in four months and there must be reports. If one dealt with it formally or informally, what was the weight of this?
Adv Khwezi replied that the rationale was informal so as not to take it to the status of the courts, to make the environment and procedures not so different from mediation. They also wanted to subject the process to make sure it was recorded.
A legal advisor said the word “informal” could be taken out because it would be in accordance with procedure.
Adv Tladi added that because the procedure was prescribed, they could take out the word “informal.”
The Chairperson commented that the agreement was to make it friendly and not intimidating as a court process.
Adv Khwezi stated that this referred to the adjudication appeal committee, and stated;
“29. (1) Any person who was aggrieved by the decision of the adjudicator in terms of section 27 may appeal against such decision to the Adjudication Appeal Committee in the prescribed format.
(2) The Authority must, within 14 days of the date on which it received the notice of appeal in terms of subsection (1), establish an Adjudication Appeal Committee consisting of three independent suitably qualified persons to hear the appeal.
(3) Within 14 days of the appointment of the Adjudication Appeal Committee, the Adjudication Appeal Committee must -
(a) give notice of the appeal as prescribed to all parties concerned; and
(b) set the matter down for hearing within 60 days.
(4) The appeal must be held informally and expeditiously, subject to upholding the rules of natural justice and in accordance with prescribed procedure.
(5) (a) The Adjudication Appeal Committee must upon conclusion of the appeal make a determination as to whether the complaint was upheld or not.
(b) If the complaint was upheld, the Adjudication Appeal Committee must make an order which in the circumstances was appropriate, and such an order has the status of an order of a magistrate’s court and must be executed accordingly.
(6) The Adjudication Appeal Committee must upon finalisation of the appeal process provide written reasons for any of its determinations or orders.
(7) The Authority must keep the records of all appeals, including the order made and written reasons provided by the Adjudication Appeal Committee, as prescribed.”
The Chairperson asked for Members to comment, and noted that there were none.
Adv Khwezi stated that from there, the next was Chapter 8 at page 30, as Chapters 6 and 7 had no amendments.
On the application for fidelity fund certificates, sub-clause 1 states;
“45. (1) Every property practitioner, excluding a property practitioner referred to in paragraph (g) of the definition of ‘‘property practitioner’’ in section 1, must, within the prescribed period and in the prescribed manner, every three years apply to the Authority for a Fidelity Fund certificate, and such application must be accompanied by the fees contemplated in section 33.”
Adv Khwezi reminded the Committee that it had originally wanted it to be annually but from submissions it became clear they needed to extend this to three years.
Mr Bara said that he was happy with three years, but in terms of revenue made out of these certificates, how did one sustain this?
The Chairperson said that for revenue, they had said proof of payment would be deemed that one had complied.
Adv Tladi stated that the intention was not to reduce revenue. A person would pay for three years and not undergo the administrative process of having to pay every year.
Mr Wolmarans wanted to find out whether that meant people paid in lump sums.
The Chairperson said this was the case.
Mr Wolmarans said that gave comfort, as long as it does not hinder paying. That was what instalments were for, because a bulk amount would defeat that purpose.
Adv Khwezi said that that would be included. However, what was important was avoiding having to do it every year, which was costly in terms of administrative processes, so once one had paid, it was deemed that it had been issued to one for that period.
Ms Mabe added that there had been a complaint over the issuing certificates and wanted clarity whether this was what Members were talking about.
The Chairperson replied that that was what they were talking about, and what was being added on top of that was a period of three years.
Mr Bara said that the debate of inefficiency could not be abandoned, because it was like saying, pay me once and wait three years. They had to look at limitations. For example, if it was capacity, they should deal with it so as to not lead to the same problems in three years’ time and finding themselves sitting in the very same position they were in now.
The Chairperson said that in other words, this three-year period was not supposed to give leeway to the Authority not to issue certificates.
Ms Mabe suggested that maybe a sentence should be added to say that every year, they should account for the certificates issued so as to become obligated.
The Chairperson reminded Members that the Bill would come with regulations, and that would be covered there.
Adv Khwezi stated that the clause read;
“46. (1) No person or entity may act as a property practitioner unless, in addition to any other requirements provided for in or under this Act—
(a) he or she or it has been issued with a Fidelity Fund certificate contemplated in section 46; or
(b) if he or she or it employs any other person as a property practitioner, that person has also been issued with a Fidelity Fund certificate contemplated in section 46 44.”
In here, there had been substitution of “be in possession” with “had been issued.”
The Chairperson wanted to find out where it covered that the issue of proof of payment was sufficient. Otherwise the issue under discussion would not have been dealt with.
Adv Khwezi responded by saying that if one looked at the mandatory provisions of issuing certificates under 47, it was clearly worded, and it says payment was proof that one had complied.
The Chairperson questioned whether this still covered the big issue, that people were paying for another year when the current certificate had not been issued. So how do one deal with this issue of inefficiency? Did Clause 47 cover that?
Adv Khwezi responded that the Clause states;
“47. (1) The Authority must, within 30 working days, consider any application submitted to it in terms of this Act, which fully meets the prescribed requirements, unless the Authority, on good grounds in writing, informs the applicant of the reasons why that period is to be extended, provided that such extension may not exceed 20 working days.
(2) The period of 30 working days contemplated in subsection (1) commences afresh if the Authority requests the applicant to submit additional information or to correct the said application.”
Therefore, what it was doing was simply saying that a certificate must be issued within 30 days and if the Authority does not make an objection, and one was not in possession, it would be deemed to have been issued.
The Chairperson stated that she was convinced and asked if Members were okay.
Members were okay.
Adv Khwezi stated that the words that had been deleted here were; “(vii) is not in possession of a valid tax clearance certificate; and (viii) whose name, or the name of a juristic person of whom the person is a director, member, trustee, partner, shareholder, holder of membership or other beneficial interest has been listed by the National Treasury on its Register for Tender Defaulters.” This was because compliance was properly dealt with in that particular process so as to remove all barriers.
Mr Wolmarans had an issue concerning the removal of tax clearance certificates. As much as it seemed difficult, it should be there and should not be viewed as an impediment. In the event a property practitioner was given work by public works, he would not be paid without it. The same applied with a Black Economic Empowerment (BEE) certificate. This did not usually take a long time. If one did away with it, one might be helping people not comply with it.
The Chairperson added that if one did not put the two in, and the delay was caused by the clearance certificate, the reality of this was how did one do business without them? The business people know they need them and one did not want a complication where they now thought they did not need it. How could one apply for a fidelity certificate without a tax clearance certificate?
Adv Khwezi responded that it would be added.
Sub-clause 8, which had been deleted, had originally stated that, “The Minister may prescribe circumstances under which a property practitioner may be exempted from keeping a trust account.”
The Chairperson stated that that was clear.
Adv Khwezi said that at sub-clause 1, they had removed the word 10 years and inserted five years.
The Chairperson reminded Members that in Gauteng, property practitioners had argued that keeping records for 10 years would make the office packed unnecessarily.
Adv Khwezi went on and said that in sub-clause 4, they had also amended the requirement of keeping records in all the official languages of the Republic.
The Chairperson reminded Members that in Durban, it had been argued that keeping records in all 11 languages was very cumbersome and unwarranted.
Adv Khwezi said he would go directly to sub-clause 5, which now provided;
“(5) A conveyancer may not pay any remuneration or other monies to a property practitioner unless that property practitioner has provided the conveyancer with a certified copy of his, her or its Fidelity Fund certificate valid during the period or on the date of the transaction to which such payment relates, and on the date of such payment: Provided that the conveyancer may pay remuneration or other monies to the person who is lawfully entitled to such remuneration and monies.”
This was to compel conveyancers to remunerate public practitioners.
The Chairperson invited comments from Members.
Mr Malatsi wanted clarification on an issue he had seen with clause 49 talking about withdrawal, where it refers to defaulting directors, and if their fidelity certificates were withdrawn, it would affect even the estate agents. What was the position?
Adv Tladi responded that both estate agents and directors had to comply. It made sense that if main entity was disqualified, it meant that all members were disqualified.
Mr Wolmarans said he needed clarity on the sub-clause 5 on conveyancers.
Adv Tladi replied that the intention here was that conveyancers should not pay commission if someone did not have an FFC. The provision that if one was lawfully entitled to it, did not translate to foregoing the FCFC. However, they would look at how far they could go to amplify the clause and give it clarity.
The Chairperson commented that the intention was clear, and it just needed to be cleaned up.
This clause reads:
“61. (1) Subject to subsection (2), the Minister may, after consultation with the Board, by notice in the Gazette, declare a particular business practice in the property market to be undesirable and consequently prohibited.
(2) When deciding whether or not a declaration contemplated in subsection (1) should be made, the Minister and the Board must consider -
(a) the right of every citizen to freely choose their trade, occupation or profession;
(b) that the practice concerned, directly or indirectly, had or was likely to have the effect of -
(i) damaging the relations between property practitioners, or any specific property practitioner, on the one hand, and any specific consumer, category of consumers or the general public on the other hand;
(ii) unreasonably prejudicing any consumer or category of consumers;
(iii) deceiving any consumer or category of consumers; or
(iv) unfairly affecting any consumer or category of consumers; and
(c) that if the practice was allowed to continue, one or more of the objects of this Act as contemplated in section 2 will or is likely to be defeated.”
They had deleted sub-clause 3 which originally said that, “(3) A property practitioner is not entitled to any remuneration or other payment in respect of or arising from the performance of any property purchase transaction prior to the transfer of the property and registration in the name of the purchaser.” This explained what they were dealing with – the property practitioner was not entitled to payment prior to the transfer of a property to a purchaser. Sub-clause 4 further seeks to give clarity to it.
Adv Khwezi stated that in this clause, franchising had been removed. Members had been very clear that it was not advisable to have a provision dealing with franchisors.
The Chairperson asked Members if that was the position.
Mr Bara said that Adv Khwezi should remind Members why it had been removed and what the rationale for removing it completely was. In KwaZulu-Natal, people had made submissions on it, but he did remember anyone saying that it should be removed completely, but rather that it should be managed so as to deal with the issue of fronting.
Adv Tladi replied that when one looked at it practically, it was difficult to manage it because one could buy a franchise when one was not a property practitioner, and then sell it to a property practitioner. So when drafting, they had found it very problematic and had thought it would be prudent not to include it in this legislation.
Adv Khwezi added that he was persuaded that maybe they could keep it. Admittedly, it would be difficult to be managed, but it could still be left in.
The Chairperson said that Members had said that some franchisers could be property practitioners and some were not. Also, one could not say now that there was a managing issue, one should take it out totally.
Mr Malatsi asked what the way forward was.
Mr Wolmarans said he was in favour of retaining it, and it should just be worked on.
Mr Bara said that franchising was part of a business opportunity and gave people an opportunity to work with known brands, and if they outlawed it, it would look like it was difficult and they did not want to work with it.
The Chairperson asked if Members agreed. They indicated that they did. Adv Khwezi was asked to work on it.
Adv Khwezi stated that this addressed the languages of agreements. This issue had already been covered. On page 45, what had been deleted was because there was now a new chapter on transformation, which had been covered.
This clause was just repealing of the Estate Agency Affairs Act, 1976 (Act No, 112 of 1976).
The Chairperson commented that instead of amending, Members had agreed that the Act should be repealed.
Adv Khwezi said this completed his input on the Bill.
The Chairperson said that the following day the Committee would meet to consider the clean A-List Bill. There With all the work they had done today, they would finish early tomorrow.
The meeting was adjourned.