Thinking Inside the Box

A Paddocks Sectional Title Lifestyle Blog

Agent accreditation in community schemes

Should-You-Employ-an-Estate-Agent

By Zerlinda van der Merwe

In our consulting department, we are often instructed to review the governance documentation of community schemes, especially in light of the changes introduced by the Sectional Titles Schemes Management Act 8 of 2011, and the Community Schemes Ombud Service Act 9 of 2011. When undertaking these instructions, we often advise our clients, as scheme executives, managing agents and members, that should their governance documentation include rules or provisions, regulating and restricting the estate and rental agents (“agents”) operating within their community scheme, these rules and provisions need to be substantially amended or deleted in its entirety.

During the course of February 2014, the Estate Agency Affairs Board (“EAAB”) issued a Practice Note in order to “prohibit unlawful practices and promote an acceptable standard of conduct within homeowners’ associations in the rendering of estate agency services”. Despite this notice, many community schemes continued, and still continue, to regulate and restrict agents operating within these schemes, in terms of their governance documentation.

In this regard, the practices raised, and prohibited, in terms of the notice was the practice of requiring these agents from paying accreditation fees in exchange for being allowed to exclusively market units or erven within the schemes; the practice of restricting owners to the appointment of only accredited agents, and imposing penalties for non-compliance; and the practice of claiming a percentage of the commission earned by agents relating to units or erven within these schemes.

Let us take a look at some of the provisions that we have come across when reviewing the governance documentation of community schemes that attempt to regulate and restrict agents in schemes. The governance documentation of a community scheme:

  • must not prohibit the appointment of certain agents by its members, or dictate which agents are allowed to operate within a scheme;
  • cannot interfere with the contractual relationship between an owner, as seller or landlord, and an agent, dictating the contents of the agreements entered into between the parties, or the termination thereof;
  • cannot regulate the contents of an agreement of sale or lease, or vet any potential purchasers or tenants;
  • must not attempt to impose penalties on agents, or require any form of payment from them in exchange for any benefit offered, such as exclusive marketing within the scheme.

It is not the responsibility of the scheme executives to ensure that agents operating within their schemes are registered with the EAAB, and have valid Fidelity Fund Certificates. This responsibility, and any potential risk associated with same, is reserved for their clients, namely owners, as sellers or landlords. 

Should you have any queries on this topic, contact us at Paddocks on 021 686 3950 or at consulting@paddocks.co.za.

Image source: wmaproperty.com

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2 comments on “Agent accreditation in community schemes

  1. Ann Greening
    September 13, 2017

    Good morning, Zerlinda,

    Thank you for you latest “Inside the Box” article. I found it very interesting as, some years ago we attempted to add a CR restricting the sale of units to approved Estate Agents. Our local attorney advised us against this, on the grounds that we would be interfering with the owners’ proprietary rights. However, we did need a means of preventing poorly-informed EAs from providing incorrect information on our Village to prospective buyers; so we added and registered the following CR:

    “17(2) ESTATE AGENTS. No owner of a Unit may employ the services of any Estate Agent to sell or otherwise alienate its Unit, unless the Estate Agent has been registered with the Board of Trustees for control purposes; to ensure that the Agent is possessed of the necessary facts and data pertaining to the complex.”

    The rule does not prevent an owner from using the agent of his choice, and an agent is not required to pay any fee. In fact, we provide agents with information sheets, including our CRs, free of charge. The “control purposes” means only that we know the agents who are operating in our Village, and ensure that they obtain all the information that they need to facilitate the sale (and that we do not end up having new owners with false expectations – which leads to endless problems!).

    One of the items we provide covers the requirement that an endowment is payable on the sale of a section. This was incorporated in the original deeds of sale, and includes the requirement that owners bind their successors in title to the same conditions, and so on in perpetuity. I do not believe that the EAAB has the right to decide not to include this item in Deeds of sale: or to exclude any other items required by law (e.g. that a copy of the schemes CRs be appended).

    I’d appreciate your comments on these items.

    Regards

    Anne Greening

    • Paddocks
      November 1, 2017

      Dear Ann,

      Your rule and title deed condition, in the circumstances, is in order. With regards to further queries on your matter, please email us on consulting@paddocks.co.za, and we can provide you with a no-obligation quote, so that we can assist you.

      Kind regards,
      Paddocks

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