R1. General duty to protect the public’s interest

  1. General duty to protect the public’s interest

In terms of estate agents’ general duty to members of the public and other persons or bodies, an estate agent –

Code:

2.1 shall not or according to the conduct of his business do or omit to do any act which is or may be contrary to the integrity of estate agents in general;

Discussion:

This clause lays down the general standard of conduct expected of an estate agent where such conduct is not specifically regulated elsewhere in the Code. The clause is restricted to actions or omissions on the part of an estate agent in the conduct of his business. An estate agent can therefore never be found guilty of improper conduct because of his conduct in his private life or a business other than his estate agency business.

Dishonest or corrupt conduct, reckless in business affairs and indifference to duty constitutes some of the contraventions contemplated by this clause.

Code:

2.2 shall protect the interests of his client at all times to the best of his ability, with due regard to the interests of all other parties concerned;

Discussion:

This clause imposes a general duty on an estate agent to protect his client’s interest to the best of his ability, with due regard to the interest of all other parties concerned.

Examples of the general duty under this clause are the following:

  • An estate agent is given the mandate to sell or let property must use his best endeavours to perform the mandate. Unless specifically arranged with his client, he cannot simply sit back and not attempt to market the property. What is expected of him will depend on the circumstances of each case. Evert estate agent must decide for himself on the most effective way to market a client’s property, taking into account special circumstances, such as marketing costs and location of the property.
  • An estate agent given the mandate to sell a property is obliged to try and find a buyer for the property on the best possible terms and the best price for the seller.
  • When holding a show-house-day or introducing prospective purchasers to a property, an estate agent should take all reasonable precautionary measures to ensure that viewers do not damage the property or remove items therefrom. The nature of these measures will depend on the circumstances of each case. An estate agent should therefore make a risk assessment and finalize security arrangements with the seller of the property, before holding a show-house day.

An estate agent is naturally not obliged to protect a client’s interests at all cost. For example, an estate agent cannot be expected to lie, cheat, steal or participate in fraudulent schemes to perform his client’s mandate.

Clause 2.2 places no obligation on an estate agent to protect the interest of the non-client although he must still have due regard to such person’s interest.

Code:

2.3 shall not in his capacity as an estate agent willfully or negligently fail to perform any work or duties with such degree of care and skill as might reasonably be expected of an estate agent;

Discussion:

2.3 An estate agent must maintain high standards of professional conduct at all times and although not a registered valuer or a lawyer, must apply his mind when he expresses an opinion on a property’s value or complete standard contract documents (such as an Offer to Purchase). An estate agent may well be found guilty of improper conduct if a contract document completed by him is later found to be null and void because it had been incorrectly completed. Other possible contraventions of this clause are:

  • An estate agent completes a pre-printed sale agreement form but fails to incorporate a clause in the contract which was in the circumstances clearly necessary to protect the interests of the seller and/or the purchaser, such as, for instance, a suspensive condition that the sale is subject to the purchaser obtaining loan finance.

 

  • A sale agreement is subject to the condition that the purchaser obtains a loan from a financial institution on or before a certain date. The estate agent completes the loan application form, but because this is done incorrectly the application is refused. The time limit for fulfilment of the suspensive condition expires and the sale falls through. Had the estate agent completed the application correctly, the loan would have been granted and the sale finalized.

Code:

2.3 shall comply with both the Act and the regulations promulgated thereunder:

Discussion:

2.4 Non-compliance with Estate Agent Act 112 of 1976 and the regulations framed thereunder not only constitutes a criminal offence but now also constitutes improper conduct. If, for example, a complaint is lodged against a candidate estate agent and it appears that he failed to comply with the regulations governing candidate estate agents (for example he did not act under the supervision and control of his principle) disciplinary steps may be taken against him by the board.

Code:

2.5 shall not through the medium of a company, close corporation or third party, or by using such company, close corporation or a third party as a front of nominee do anything which would not be permissible for him to do if he were operating as an estate agent”

Discussion:

2.5 The purpose of the clause is to prohibit an estate agent from using companies or close corporations (or other nominees) as fronts to achieve objectives that would have improper conduct had he acted in his own name.

Code:

2.6 shall not deny equal services to any person for reasons of race, sex, or country of national origin:

Discussion:

This clause prohibits an estate agent from discrimination against any seller or prospective purchaser of a property on the grounds of such person’s race, creed (if religious beliefs or political opinions or principles), sex, or country of national origin. This means that an estate agent may not, of his accord, deny his services to any person of a lower standard than he normally gives. Practical examples would be:

  • An estate agent is instructed by a seller to market his property. The estate agent may not refuse the mandate because of such a person’s race, creed, sex, or country of national origin. He may, however, refuse the mandate on the grounds for example because the seller’s is asking price is too high or marketing expenses would be excessive with the estate agent’s remuneration.
  • A prospective purchaser contacts an estate agent and asks to view properties that the estate agent has for sale. The estate agent may not refuse his services to such a person because of his race, creed, etc. Any refusal to undertake services that would put the agent in a position of supporting discrimination will constitute a breach of this clause.
  • A seller informs the appointed estate agent that he will not sell the property to a person belonging to a certain race or religious/political groups. The estate agent may accept the mandate on the stipulated condition. In other words, an estate agent may refuse to introduce a prospective purchaser to a seller’s property, if the seller has prohibited from doing so. Clearly, the estate agent is not, of his own accord, denying equal services to the purchaser – he is simply carrying out the seller’s instructions.

(This example is subject to the likely introduction of a Bill of Rights in South Africa. Which might well outlaw the conduct of this nature on the part of a seller and which in effect place an obligation on the estate agent to refuse a mandate in such circumstances).

Code:

2.7    shall not discriminate against a prospective purchaser of immovable property because such purchaser will not, or is unlikely to, make use of financial assistance made available by any specific person or financial institution and which the estate agent offers to arrange on his behalf.

Discussion:

The philosophy underlying this clause is that every debtor is entitled to choose his creditor. Take the following examples:

  • An estate agent has a sole mandate on a property. A prospective purchaser approaches him to view the property but the estate agent informs him that unless he is willing to take up a loan with a specific financial institution, he (the estate agent) will refuse to introduce him to the property.
  • An estate agent prepares an Offer to Purchase for a prospective purchaser. The document used contains a standard clause stating that the offer is subject to the suspensive condition that the purchaser obtains a loan from a specific financial institution on or before a certain specified date.

The purchaser requests the estate agent to change the name of the financial institution since he would rather take up a loan with another institution. The offer provides that commission is payable by the seller, but the estate agent has an arrangement with the financial institution named in the document that commission will be paid by the institution as an advance to the estate agent on the conclusion of the agreement of sale.

The estate agent now informs the purchaser that should the name of the institution be changed, he (the purchaser) will have to pay commission after the contract. This action on the part of the estate amounts to a punitive measure against an innocent purchaser, who merely wishes to obtain loan finance from the financial institution of his choice.

On the above specific facts, the estate agent will be guilty of contravention of clause 2.7

Compare listings

Compare