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Estate agency fined R25,000 for operating illegally

slap in the face

The issue of non-compliance and the power of the Estate Agency Affairs Board (EAAB) to initiate and finalise disciplinary proceedings against transgressors is the subject of an Appeals Court application.

Cape Town estate agency, Heads Residential Property, based in Claremont, has been fined R25,000 for operating illegally in 2017, without the Fidelity Fund Certificate (FFC) required in terms of the Estate Agency Affairs Act.

This emerged after HomesTimes had been contacted by a number of property professionals following the recent publication of an article quoting the EAAB under the headline: Estate agents to blame for delays in issuing FFCs.

The EAAB said in a follow-up statement that it is currently investigating a second complaint against the agency, which is headed by Jonathan Bronkhorst.

“The EAAB relies on both practising estate agents and consumers to inform it of the possibility of persons or entities operating illegally as estate agents,” the board said in a statement to HomeTimes. “The estate agency did not have an FFC for the 2015/16 financial year.”

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Kevin Jacobs of estate agency RE/MAX Premier said he filed a complaint against Heads Residential Property about 18 months ago as Heads Residential Property was “blatantly trading illegally”. Jacobs also laid an official complaint against Heads with industry body, the Institute of Estate Agents of South Africa (IEASA).

Several other estate agencies and a few members of the public had also filed complaints against Heads’ non-compliance over a period of several years. They said that Heads had operated without Fidelity Fund certification for about seven years and has only since 2018 had an FFC. The property owners were advised by the EAAB not to use the services of Heads as the agency was not compliant.

What value does the EAAB actually have?Asking questions.resize

A Cape Town estate agent, whose name is known to HomeTimes, looked up the Heads FFC on the EAAB website and was “amazed that the Heads FFC document carries no endorsement despite the fact that the EAAB investigated and found that the agency was operating illegally for a lengthy period. I know of cases in which other agencies have had their certificates endorsed because, for example, of the late filing of documents when the EAAB itself had lost the required documentation.

“It seems to me that we have to pay substantial amounts [of money] to the EAAB for a service that does not provide value for money. Consumers do not seem aware of the protection offered by an FFC since they seem prepared to place their business with estate agencies that are not certified. They seem to place little value in an FFC, even when such accreditation is brought to their attention.

“In my view the EAAB needs to raise awareness in the public domain of the need to use only the services of estate agencies that have the official endorsement of an FFC.”

EAAB sharpening its clawscourtroom lawyer attorney resize

The EAAB is involved in two parallel, but separate, actions involving the issue of illegally operating estate agencies.

The first action comprises a recently completed research project undertaken by the EAAB using the input of targeted focus groups to establish the extent of estate agencies operating illegally in South Africa.

“The research has been finalised and a report will be furnished to the EAAB for consideration with a view to implementing such steps as may be required to resolve the issue in the interest of the consuming public,” the board said.

The second matter comprises a High Court challenge by the Atlantic Beach Homeowners Association (HOA) to the EAAB’s disciplinary jurisdiction over allegedly illegally operating estate agency practitioners.

The EAAB charged the Atlantic Beach HOA with operating illegally as an estate agent and summonsed the association to a disciplinary inquiry. In response, the HOA applied to the High Court in Cape Town for an interdict to stop the EAAB from conducting the disciplinary inquiry.

In a judgement delivered on 20 April, 2018, the court held that the EAAB was constituted and authorised to investigate and give judgement on issues such as whether persons or entities were illegally operating or holding themselves out as estate agents. If it was established that such persons or entities had acted, or had held themselves out, as estate agents, they were subject to sanction by the EAAB.

The enquiry was one that the EAAB, through its committees of inquiry, and not the Court, should undertake. Disciplinary inquiries should proceed without delay, interruptions or review proceedings, the judgement stated.

fake identity

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The EAAB said that the court found “it is in the public interest that such a disciplinary hearing should commence and be finalised as soon as reasonably possible. The Court could not pass judgement as to whether the conduct of individuals or entities was sanctionable as being in contravention of the Act, the Estate Agents Code of Conduct or relevant regulations promulgated in terms of the Act until the disciplinary proceedings concerned were finalised.

“The Court agreed with the EAAB that only once the disciplinary proceedings had been duly finalised, and if Atlantic Beach was dissatisfied with the outcome of those disciplinary proceedings, could it request the intervention of the Court; and then only on applicable and relevant grounds of review.”

The EAAB confirmed that the Atlantic Beach HOA has lodged an appeal against the verdict.

Words: Blake Wilkins


Review overview
  • Charles Haigh 5th October 2018

    R25000-00? for operating illegally for 7 years, that’s ridiculous, agents have been disqualified for not completing the CPD which effectively means they cannot operate until their FFC has been re-instated. Agencies are fined R10 000-00 because their Audit report was late. If an agency failed to renew their FFC the chances that their annual audit was not submitted on time or at all are great, besides the completion of the first cycle of CPD which they would not have been able to do without a valid FFC in place. The act is clear about sanctions against an agent or agency that transgresses, the fine is up to R25 000-00 per transgression – perhaps someone at the EAAB is “not yet competent” in the maths module of the basic NQF 4 level real estate.
    another important point is that if the firm is invalid, all the agents and or employees putting themselves out as estate agents are automatically disqualified. The EAAB needs to be consistent in its application. There are a lot more smaller honest agents and agencies just trying to get on with the business and get penalized severely for trivialities whilst others get away with their illegal activities with not much more than a slap on the wrist in context.