Buying A House Can Be A Costly Journey Without An Experienced Guide 

The guide comes in the form of a professional and experienced estate agent.

But how do you know you’re getting an experienced “guide” and not being led astray? 

The answer is simple: a Fidelity Fund Certificate (FFC).

Why do estate agents need a Fidelity Fund Certificate?

– A FFC is a certificate issued by the Property Practitioners Regulatory Authority (PPRA). It proves that an estate agent is adequately registered and trained with their regulatory board and whose conduct will adhere to the PPRA’s standards.

– The Estate Agency Affairs Act (112 of 1976) states that all estate agents must be registered with the PPRA and possess a valid FFC to operate as an agent. 

– The Property Practitioners Act (22 of 2019) replaced the Estate Agency Affairs Act on 1 February 2022 and contains the exact requirements for obtaining FFCs. 

– An FFC needs to be renewed annually, and no agent may trade with an expired certificate FFC.

What happens if an estate agent does not have an FFC?

– According to the Act, it is illegal for an agent to operate without a valid FFC. An agent may also not claim a commission for services rendered when their FFC had expired. 

– In most cases, this is a clear-cut scenario — if an agent does not have an FFC, they may not operate and may not claim a commission.

What if it is not the estate agent’s fault that their registration is not up to date?

– As with any registration process, there may be delays in processing applications and renewals. However, an estate agent may operate legally and claim their commission if they can prove that they submitted their application or renewal documents on time.

However, when an estate agent relies on their principal to complete the necessary application or renewal process, and the principal fails to complete the registration, the onus remains that of the agent to follow up. In short, the agent may not collect any commission for services rendered until they obtain their FFC or the necessary proof that the application or renewal is in process.

Must the estate agent’s FFC be verified before services are rendered?

– It is advisable for all Sellers to verify an agent’s FFC or obtain a copy beforehand. However, many agents continue operating as usual without a valid certificate. 

-The conveyancing agent (a.k.a. transfer attorney), responsible for paying the estate agent’s commission, is bound by law to obtain proof of the agent’s FFC before paying the commission. 

– If any party to the sale becomes aware that the agent does not possess a valid FFC during the property transfer, the conveyancer is bound by law to refuse the agent their commission.

What recourse do estate agents have when they lose out on their commission?

– In a case where an estate agent loses out on their commission because of a lack of a valid FFC, where the fault is not their own, the agent will have the right to take the case to court. However, they will not claim against the purchaser or conveyancer but rather against their principal/agency or possibly even the PPRA itself, whichever caused the delay in FFC issuing or renewal.

– The use of Fidelity Fund Certificates and agents’ obligation to be registered with the Estate Agency Affairs Board are steps that ensure a safer business environment for property practitioners, purchasers, and sellers. However, when events such as this occur, it puts the estate agent in an uncomfortable position. They will have to fight for their ability to go on operating within their field.

— Marsha