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Estate agents win legal action against regulator

Published Mar 18, 2021


The Estate Agency Affairs Board (EAAB) has eight days to immediately issue outstanding operating licences to estate agents who had, through the Real Estate Business Owners of South Africa (Rebosa), taken the regulatory body to court in an urgent application to be able to work legally and earn an income.

Gauteng High Court Judge F Kathree-Setiloane ruled in favour of Rebosa when she ordered the EAAB to issue the outstanding 2021 fidelity fund certificates to Rebosa members in the urgent application.

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The operating licence is an essential legal requirement of every estate agent and the timeous issue of the certificates has been a problem of the EAAB - the body responsible for regulating and controlling certain activities of estate agents - since at least 2014, with extensive backlogs from previous years, according to court documents.

Others in the real estate world say it has been a problem for decades.

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In terms of the Estate Agency Affairs Act, an estate agent must have a valid FFC to receive any payment or commission arising from their duties as an estate agent. Even if an FFC has been applied for, if a valid FFC is not held by an estate agent at the time of a transaction, the estate agent is not entitled to any commission or payment for the transaction

The issuing of these outstanding FFCs will mean Rebosa members, who had applied for but not yet received their FFCs for 2021, will now be able to earn.

In court papers the Judge said after the launch of the urgent application by Rebosa, the EAAB had issued FFC’s to 162 of the 209 individual applicants, “but simply failed to provide the court with an explanation or apology for its failure to act earlier. Notably, the EAAB not only did not tender the applicants’ costs but contended that the applicants should be ordered to pay the costs, despite knowing full well that” they were at fault.

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Rebosa was thus entitled to punitive costs on this and a number of other issues, but Justice Kathree-Setiloane did not grant Rebosa to seek a personal costs order against the CEO of the EAAB, Mamodupi Mohlala-Mulaudzi.

“I do exercise my discretion in favour of making this order. While her conduct in this litigation can hardly be described as beyond reproach, I am not convinced that she acted recklessly or with mala fides. There is an ongoing relationship between the EAAB and Rebosa. For a proper resolution of the challenges that the EAAB is experiencing with the timeous issue of FFCs, their respective CEOs need to co-operate and work with each other.”

Justice Kathree-Setiloane also ordered the EAAB to, within 15 days of the order, to determine the applications made by each of the estate agencies and estate agents listed for a fidelity fund certificate in terms of section 16 of the Act, who at the date of hearing have not yet had their applications determined or their FFCs issued. After the 15 days, those who were determined to be able to get FFCs to get them within five days, and those determined not to be given reasons for such a determination within five days.

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In court documents Rebosa CEO David (Jan) le Roux, said : “Year after year, come January, large numbers of FFCs have simply not been issued to estate agents who qualify for them”.

Le Roux, by and large, attributes the cause of this to the information technology system of the EAAB (“IT system”). He says Rebosa has over the years tried to assist the EAAB directly by providing it, on an ongoing basis, with updated lists of "queries" submitted by estate agents to Rebosa. These lists are updated and submitted to the EAAB at weekly and bi-weekly intervals. However, according to Le Roux, even where these lists are submitted to the EAAB, the EAAB “often makes inadequate effort to resolve the queries and FFCs remain unissued”.

The judge also ordered that :

The EAAB, within 30 days of this order, file a report with the High Court and serve a copy on the applicants, to indicate:

How many applications were lodged by estate agencies and estate agents with the EAAB on or before 31 October 2020 for a fidelity fund certificate for the year commencing 1 January 2021;

In how many of the applications above has the EAAB determined that a fidelity fund certificate will be issued;

In how many of the applications referred to above has a fidelity fund certificate been issued to the estate agency or estate agent in question;

In how many of the applications have the EAAB determined that a fidelity fund certificate will not be issued;

The total number of current unresolved queries lodged by estate agents with the EAAB;

What is the total of the funds currently held by the EAAB in its suspense account

She also ordered that the applicants are granted leave, should they allege that the EAAB has not complied with any part of this order, to set the matter down for further hearing by this Court on an urgent basis for the granting of further relief, on the papers already filed and such further papers as they may be advised to file.

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