What new conduct rules must estate agents comply with?
The Code of Conduct, sanctionable conduct, and undesirable practices
This is #3 in our short series of 10 instalments on the most important ducks to have in a row by 1 February 2022. In this instalment, the new Code of Conduct and related conduct provisions are listed.
- The existing (soon to be ‘old’) Code of Conduct
With the repeal of the Estate Agency Affairs Act, the Code issued in terms thereof will also fall away on 1 February 2022.
- Sanctionable conduct and the new Code of Conduct
- A new Code of Conduct is housed in the regulations to the Property Practitioners Act. Fortunately, for practicing estate agents, the new Code’s provisions are already familiar to them, as the provisions are largely taken from the current Code.
- In preparing the new Code, the legislature had taken the provisions of the old Code and repackaged the provisions as follows:
- First, it took the provisions in chapter 3 of the old Conduct and renamed these “sanctionable conduct”. The sanctionable conduct provisions can be viewed here. These are now part of the regulations and not found in the new Code itself.
- Then the remaining provisions were taken and divided into two parts, namely those that will apply to all property practitioners in the real estate sector and those that will apply only to estate agents (such as the provisions relating to mandates and the duty to disclose, etc.). Find the new Code of Conduct here.
- Undesirable Practices
In regulation 35, two forms of undesirable practices are listed. The first applies to certain arrangements in franchisor-franchisee relationships that limits the use of service providers.
The second relates to arrangements between agents (and other property practitioners) and the management bodies of residential property developments (including a body corporate or homeowners’ association). It states:
- Any arrangement where there is payment or reward in exchange for some benefit or preferential treatment in respect of the marketing of properties in such property development, is undesirable.
- It is also problematic if owners in the development are obliged to sell their properties through the agency of such a managing organisation or an estate agent appointed by the organisation.
- Also listed as an undesirable practice is an arrangement where owners are obliged only to sell their properties to the managing organisation or someone appointed by that organisation.
- Further, and stated in broad terms, it is an undesirable practice where such arrangement between an estate agent and managing body effectively provides an advantage to that estate agent (or property practitioner/s) over others to render services in that development. Clearly this could have the effect to exclude or disadvantage some practitioners and is disallowed.
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