The Estate Agency Affairs Board’s Fidelity fund is set to lose about R70 million that will be paid to people who lost their monies due to alleged fraudulent activities of estate agency owners and estate agents alike.
The property sector has a lot of fly by night estate agents, fraudulent transactions resulting in monetary losses and agents operating without proper documents.
So grim is the situation that some “agents” are allegedly conducting the business as a pyramid scheme, selling one house to different people and using the money to pay off debts.
These are some of the revelations that were made at an awareness workshop organised by the EAAB and the National Property Forum in Pretoria yesterday.
Portia Mofikoe, spokeswoman for EAAB, said the fidelity fund had at the moment R528 million in its coffers but the money they were paying to people who lost their monies in fraudulent transactions would cripple it.
Two weeks ago, she said, they discovered that about R40m had allegedly been misappropriated by Constantia Sectional Title Managers (CSTM), the managing agent for about 450 bodies corporate of residential complexes in Gauteng.
And the partially completed investigations into the Wendy Machanik, Wakefield and Seef Properties matters have just revealed that about R30 million would also have to be paid to more people, bringing the entire amount to R70 million.
“This could paralyse the fidelity account, R70 million is a lot of money to take out of the fund,” she said, adding that in order to recoup that money from the transgressors, the only was for their assets to be liquidated.
NPF’s Leo Mlambo said they were trying to eliminate situations were people were trading despite not being compliant.
“We need to eliminate fly by nights and maintain professionalism in the industry. We are not willing to accommodate crooks,” he said.
Mlambo said, they were investigating a case where an estate agent, operating without a fedility fund certificate, is alleged to have sold the same house to different people. The first time was to pay off a debt he had incurred before selling the house. Then he sold the house to someone else, kept the profit and returned the money to the first buyer, saying the seller was no longer interested and doing the same to the next person. - Botho Molosankwe