06 Jun


It has come to our attention that the Property Practitioners Regulatory Authority (the PPRA) has issued a pro forma application form that Property Practitioners (PP) who have not yet received their fidelity Fund Certificates (FFCs) can complete and submit, which allows property practitioners to be exempted from holding a FFC. The reason cited on the application reads as follows: “I am advised that the PPRA is currently in a transitional phase in implementing the Property Practitioners Act 22/2019 and the registration and issuing of FFCs to all practitioners. In the interim I apply for an exemption from the requirement to be issued with an FFC in terms of S48(1) of the Act, until 31/8/2022 to allow for time to register and obtain an FFC.”

A copy of the application form can be found HERE.

The question that springs to mind is this: Is it even legal and what are the consequences of such a step?

Section 48(1) of the Act reads as follows:

“No person or entity may act as a property practitioner unless, in addition to any other requirements provided for in or under this Act
(a) he or she or it has been issued with a Fidelity Fund certificate contemplated in section 47; or

(b) if he or she or it employs any other person as a property practitioner, that person has also been issued with a Fidelity Fund certificate contemplated in section 47.”

The holding of a FFC by a property practitioner is accordingly mandatory and always has been. Section 4 of the Act does give the PPRA the power to exempt any person from compliance with any provision of the Act, but this is only after careful consideration of the circumstances of the case, including whether the exemption “is likely to impact negatively on the interests of the general public”; whether consumers rights and interests will continue to be protected; and whether the exemption would “defeat the objects of the Act”.

Our submission is that the proposed exemption falls to be dismissed on all these grounds, given that this exemption is for any PP and not just maybe a select few. The very purpose of a FFC is to not only to ensure that all PPs are registered with the PPRA but it also provides valuable statutory insurance for members of the public who might be the victims of theft of trust money by a PP. In section 34(1)(a) this insurance is limited to cover the theft of trust monies by a property practitioner “who was in possession of a FFC at the time of the theft”. The Regulations also only provide for exemptions from having to have a Trust Account. It does not appear to us that the intention of Section 4 was to allow the PPRA to exempt a PP from trading without an FFC. That would be unheard of. The question then arises as to whether the Fidelity Fund would be entitled or obliged to compensate a member of the public, who is the victim of a theft by a property practitioner who had been exempted from holding a FFC. Our opinion is that the Fidelty Fund might well be legally obliged to follow the Act and to repudiate such a claim. That said however, we have now also received written confirmation from the PPRA that we as conveyancers may pay out commission to PPs who don’t have FFCs provided they can provide us with a Letter of Exemption from the PPRA. One must of course also bear in that the Act allows a PP to be “deemed” to be in possession of a FFC if the PPRA has not issues one within the prescribed 30 (or 50, if the PPRA has allowed itself the additional 20) working days, after an application has been filed. For all we know they intend to limit these exemptions to those applicants. We must then also assume that this exemption implies that sellers may not refuse to pay commission nor may they claim commission back once it has been paid, and that the Fidelity Fund will honour any claims where such PPs do run off with trust funds. We certainly hope so!

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