Transcript Estate Agency Affairs Board - South Africa

ESTATE AGENCY AFFAIRS BOARD
Presentation to Arello 2014:
Presented by Bryan Chaplog
CEO of EAAB
TABLE OF CONTENT
 History of the EAAB
 Functions of the EAAB
 Challenges in the sector
 Enforcement Activities and Penalties
HISTORY
 The Estate Agency Affairs Act was promulgated in
1976 due to
 - Large scale mismanagement of trust monies by
estate agents
 - Unethical behavior of Estate Agents
 - Consumer complaints
 - Self- regulation did not work
 - Government needed to intervene and regulate
STRUCTURE AND RESPONSIBILITIES
 The EAAB Act provides for the establishment of a
15 member Board as follows:
 5 Members from the real estate sector;
 5 Members from consumer interest;
 5 Members from professional fraternity;
 The EAAB is operationally run by a CEO
supported by an Executive Management team;
 The staff compliment is 85 staff operating from a
centralised office;
 Opening regional offices in major provinces
STRUCTURE AND RESPONSIBILITIES
Primary Mandate of EAAB
 Regulate, maintain and promote the standard of conduct of estate
agents having due regard to the public interest;
 Issue fidelity fund certificates to qualifying applicants;
 Prescribe the standard of training of estate agents;
 Investigate complaints against estate agents and institute disciplinary
proceedings against offending estate agents where required; and
 Manage and control the Estate Agents Fidelity Fund.
Secondary mandate
 The EAAB is the Supervisory Body of the estate agency profession
pursuant to the Financial Intelligence Centre Act and is obliged to
take all steps required to prevent; alternatively, identify and report
on, anti-money laundering and terrorist financing activities
Expanded Mandate
 Title deed restoration project;
 Transformation of the Real Estate Sector;
WE REGULATE
The EAAB issues licenses to Estate Agents to legally operate in some
sectors
Sectors
Real Estate - residential
Real Estate - commercial
Real Estate - agricultural
Business Brokers – selling of business
Time share
Property management
Shopping centers / Mall Management
Residential rental / commercial leases
Holiday Letting
Sheriffs, Mortgage Originators, Bridge
financing
Challenges
Challenges
Challenges
Challenges
New Act
FIDELITY FUND CERTIFICATES
The EAAB issues licenses to Estate Agents to legally operate in the sector
FINANCIAL YEARS COMPARISONS
56000
55000
54000
T
o 53000
t
52000
a
l 51000
50000
F
F 49000
C
48000
55232
52423
52304
50422
49981
FY 09/10
FY10/11
49726
47000
46000
FY 08/09
FY11/12
Financial Years
FY12/13
FY13/14
FIDELITY FUND CERTIFICATES CONT/…
The EAAB issues licenses to Estate Agents to legally operate in the sector
Financial Year 13/14 Fidelity Fund Certificate Statistics
Status
Number
Attorney
89
CC
4123
Partnership
108
PTY
2274
Sole Proprietor
2203
Full Status
14501
Intern Estate
15671
Principal
10757
Total
49726
EAAB IS THE PROFESSIONAL BODY OF THE
REAL ESTATE SECTOR
The EAAB has been appointed as the Professional
Body for the real estate sector through the South
African Qualifications Authority (SAQA).
We issue professional designations
- Professional Practitioner in Real Estate (PPRE)
- Master Practitioner in Real Estate (MPRE)
- Chartered Practitioner in Real Estate (CPRE)
Challenges in the Sector
EAAB DOES 100 COMPLIANCE INSPECTIONS
PER MONTH IN REAL ESTATE SECTOR
- We have an internal Inspectorate made up of
lawyers and accountants
- We have sign-up 13 external audit firms to
perform compliance inspections nationally
- We aim to inspect 6000 firms over a 5 year
period
- We include money laundering procedures in
audit
INSPECTION STATISTICS - NON-COMPLIANCE
Inspection contraventions during 2012/ 2013
Estate agencies operating illegally
Principals with no valid Fidelity Fund Certificates
Non- principal & interns with no valid Fidelity
Fund Certificates
Primary trust account operated in contravention
to the EAA Act
Secondary and investment account operated in
contravention to the EAA Act
Interest earned on trust monies - not properly
dealt with
Retention of trust monies & payment from trust
account in contravention to the EAA Act
Insufficient accounting records of trust account
Improper admin of trust account
Accounting Records improperly maintained
GAUTENG KWAZULU WESTERN
NATAL
CAPE
97
86
5
103
106
131
310
29
37
253
210
50
86
88
16
67
10
9
58
16
5
158
189
471
65
65
188
25
17
51
INSPECTION STATISTICS - NON-COMPLIANCE
Inspection contraventions during 2012/ 2013
Contravention in respect of contract generally
Contravention in respect of sole mandates
Contraventions in respect of lease agreement
Contraventions in respect of sale agreement
Cessation of practice without notifying the
EAAB
Non-existent estate agencies
Non-compliance with FIC act in respect of Duty
to identify clients & keep records
Non-compliance with FIC Act i.r.o. Cash &
Electronic Transaction exceeding R25 000
Non-compliance with FIC Act i.r.o. internal
rules
TOTAL CONTRAVENTIONS TO THE ESTATE
AGENCY AFFAIRS ACT
GAUTENG KWA ZULU WESTERN
NATAL
CAPE
90
104
15
89
20
15
66
68
22
72
22
21
77
21
7
40
166
16
19
0
32
50
18
7
241
56
21
2530
1534
400
Challenges in sector



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We have Home Owners Associations and Gated
Communities forcing estate agents to
- Pay “accreditation fees to start selling properties
in gold estates, security estate e.g. “Oscar
Pistorius estate”
Between $1500 - $20000 per year
HOA’s forcing sellers to pay % of selling price to
the HOA as levy
Estate agent has to pay % of commission to HOA
Penalties for not using HOA “accredited agents”
Creating rules in the registration of title deeds
and HOA rules
Challenges in sector





In Constitutional Court facing challenge on our
search and seize rights vs right to privacy
constitutional rights. Auction industry
Ghost Bidding in Auction Industry
Paying out claims for actions of unlicensed estate
agents
Trust account mismanagement in the property
management sector
Fight between liquidator and Curator over
monies in the trust account
Solving Challenges in sector









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New Act being finalised
Partnership: external audit firm regulatory bodies
Online submission of audit report of the estate
agents by their own Audit firms
Blocking of Firms if audit reports not received eg
4800 firms in 2013 i.e. 45% of firms
Immediate production of charge letters based on
contraventions raised on online audit report
Auditors has to report on unlicensed trading and
Trust/ business account mismanagement
Illegal trading
Training of audit firms available
Working with HOA representative bodies to agree
on better practices
Enforcement and Penalties




We have Disciplinary Committees chaired by an
Advocate/Lawyer support by 2 Estate Agents
Summon the Complainant and Estate Agent
Make a ruling that is binding
New Act will make committee like a court




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A Reprimand
Fine of up to $2500 per count
Withdrawal of license
Appointment of a Curator Bonis
Take over business and bank account
Process with further legal action
Overall Performance of Claims
 The Board has received claims from consumers that has
suffered pecuniary loss at the hands of unscrupulous estate
agents;
 The new bill will strengthen the recovery process of these
amounts from the guilty estate agents as the current legislation
is lacking in this process.
STATISTICS OF NEW CLAIMS AGAINST THE FUND
Claims Statistics ($)
Value of claims lodged
Claims approved
Value of claims rejected
Claims pending
31 Mar- 14
1 044 733
486 652
407 782
150 298
31 Mar-13
235 220
28 860
38 900
167 460
31 Mar-12
1 050 233
380 366
258 822
411 043
FOCUS ON TRANSFORMATION OF THE REAL ESTATE SECTOR
‘One Learner-One Estate Agency’ Programme

The real estate sector currently comprises
approximately 10 000 estate agency enterprises.

It is encouraged that each enterprise look at
taking on at least one formerly disadvantaged
learner as an intern estate agent under their
mentorship;

The ultimate success of the programme will, of
course, necessarily depend on the collaboration
of all stakeholders and role-players within the
sector and their acceptance of the urgency of the
transformation imperative.

In this regard and the EAAB encourages firms to
participate in the programme.
Legislation Review and the Proposed
Property Practitioners Bill Cont/…
 The Bill with create a legislative environment for the Authority to
assist with title deed delivery nationally
 The Bill seeks to promote transformation within the Real Estate
Sector by requiring that all Practitioners comply with the Property
Sector Charter;
 It will promote operational effectiveness by ensuring that rulings
of the Authority are equivalent to Magistrate court orders or
rulings;
 The new bill is aligned to all the recent court rulings affecting the
real estate sector;
 Only pay claims for lisenced estate agents
Thank you