The right to own property in South Africa is enshrined in Section 25 of the Constitution. The registration of rights to and over immovable property is regulated by the Deeds Registry Act, 1937, which sets out the registration requirements and processes necessary for the transfer of ownership or creation of real rights in respect of land, including the process whereby security is registered in favour of lenders (i.e. Banks).
Estate Agency Affairs Act
There are four main provisions that the Estate Agency Affairs Act covers:
- To establish the Estate Agency Affairs Board
- To establish and monitor the Estate Agents Fidelity Fund
- To control certain activities carried out by estate agents
- To deal with any incidental or disciplinary matters.
The State Agency Affairs Board (EAAB)
The EAAB protects the interests of the public and ensures that estate agents are compliant with the Act.
Every estate agent must have a correctly balanced trust account. Service charges cannot be debited from this trust account and are to be born as a normal business expense. The correct registered name of the estate agency with the EAAB must appear on all bank statements.
Trust accounts must be audited annually by an auditor registered with the Independent Regulatory Board (IRBA) and all reports are to be submitted by the auditor via the auditor’s portal on the EAB website.
An estate agency must be compliant in the following:
1. Submission of audit reports.
Failure to submit an audit report will result in the EAAB not issuing a new FFC (Fidelity Fund Certificate) to the principal nor his agents even if their fees have been paid. This means the agency and its agents may not trade as estate agents and the seller is not obligated to pay commission until the agency is compliant.
2. Not completing the required educational requirements within the stipulated time.
Should an agent not complete the prescribed industry qualifications within the prescribed time, the agent will not be issued a new FFC. The estate agent will also not be able to claim commission on any sale made by the agent.