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Legal framework for agents

The Conduct of Estate Agents (Property Practitioners) is regulated by The Property Practitioners Act which came into effect in February 2022. The Property Practitioners Regulatory Authority holds Property Practitioners accountable to a code of ethics.

Avoiding alliances between estate agents & conveyancers

It has been long an unspoken practice in the Real Estate sector that Estate Agents appoint in Deeds of Sale Transferring Attorneys with whom they have a relationship, without consulting the Seller. In order to have Estate Agents “refer” work to Conveyancers,  Law Firms are expected to give incentives such as referral fees or kickbacks to Estate Agents and to entertain; shower them with free Lunches; gifts; holidays; and even pay for their marketing expenses among others. Although on the face of it this may seem harmless, it will lead to conflicts of interest. There is a risk that the Conveyancer may prioritise the interests of the Agent.

Sellers have the right to appoint a Transferring Attorney

Sellers are often not aware that it is their right to appoint a Transferring Attorney to Act on their behalf. The Code of Conduct is clear in terms of Section 58 of the Property Practitioner’s Act, which prohibits any practice whereby a Property Practitioner proposes to a Seller to use a certain Conveyancing Attorney who has “supported” the Agent with incentives.

Section 58(1) : Limitation on relationships with other property market service providers

"A property practitioner may not—

1. practise in association with any person which or who is prohibited by any law,any professional code of conduct, any code of ethics or protocol, report or charter on corporate governance, from doing so; or
2. enter into any arrangement, formally or informally, whereby a consumer isobliged or encouraged to use a particular service provider including an attorney to render any service or ancillary services in respect of any transaction of which that property practitioner was the effective cause."
   

Estate agents obligated to inform sellers of right to appoint conveyancer

Sellers should know that they have a right to appoint a Conveyancer of their choice and to have their rights protected. Agents must advise the Seller of their right to appoint a Conveyancer of their choice and are not to influence Sellers to refer the transfer to a Conveyancer  who may be the Agents preferred Attorney.

Penalty for estate agents in contravention

An agent who unethically appoints a Conveyancer of their choice breaches the trust of a buyer and seller to the transaction who should have confidence that their interests are being prioritised and protected during the conveyancing process. An Agent in contravention of this Act will be required to repay any fees received for the property transaction and may get a fine.

Appoint your own conveyancer for your private property sale

Email lawyer@capetownlawyer.co.za & request your conveyancing attorneys to guide you through a no-agent property sale process.