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It's EAAB vs Rebosa in court challenge over Fidelity Fund Certificates

Published Feb 2, 2021


The Estate Agency Affairs Board (EAAB) is not backing down from legal action instituted against it by real estate agency owners.

Real Estate Business Owners of South Africa (Rebosa) is requesting a court order forcing the EAAB to issue all outstanding Fidelity Fund Certificates (FFCs) due to agents who have otherwise met all their professional obligations.

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However, the EAAB has just announced that it will be defending the matter. “We are in the process of preparing our answering affidavit and we have served the notice of intention to oppose the application,” says Mamodupi Mohlala, chief executive of the EAAB.

On Friday evening Rebosa, “acting on behalf of hundreds of its members” who had not been issued their FFCs for 2021, said it had turned to the court “after years of attempted collaboration with the EAAB to rectify the Board’s ongoing service delivery issues”.

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In the statement, Tony Clarke, Rebosa chairman and Rawson Property Group managing director, claimed that the EAAB has not only failed to deliver on its mandate of regulating, maintaining and promoting the standard of conduct of estate agents, but has become “an active hinderance to their ability to conduct business in accordance with the law”.

“Having a current Fidelity Fund Certificate is an essential requirement for a real estate agent. To practice without one is to commit a criminal offence and forfeit any right to remuneration for your work.

“By failing to meet its legal obligation to issue FFCs to qualified agents, the EAAB is forcing property practitioners to either refrain from operating, indefinitely, or break the law in order to feed their families. This is unacceptable.”

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In the EAAB’s response, Mohlala states that the application before court relates to 210 agents “that allege that they did not received FFCs”.

“We are going through the list and have noted that some have already been issued, some are duplicates, some have outstanding information, and with those that that are new, we have already issued the FFCs. The FFCs were issued as from Saturday when we first received the list.”

Mohlala acknowledges that the issue concerns people’s livelihoods and that those who are compliant deserve to hold their FFCs so that can do business.

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“We are committed to ensuring that every legitimate FFC applicant is able to get his or her certificate in time and is able to operate.”

She also admits that the issue of delayed production of FFCs has been a problem at the EAAB for the past seven to ten years. However, despite the historical problems the EAAB in 2020, Mohlala says the Board delivered its “best ever performance recording on December 23, 2020”, delivering more then 33 000 FFCs. At the time, it believed that this amounted to all the compliant FFC applications.

“There was a further three thousand applications where there were outstanding documents and these applicants were communicated at various intervals in late 2020 and informed that the FFCs would not be issued until the outstanding documents were presented.”

The Board also states that, from October 2020 to date, it has issued more than 35 000 FFCs, meaning that the cases involved in the legal actions are “less than three percent of the total number of FFCs issued”.

“Further we will be registering our concern at court that we have standing meetings with Rebosa where staff of EAAB meets staff of Rebosa bi-weekly.”

Mohlala says the teams met in 2020 but notes the list of these outstanding FFCs now being presented to court “was never presented at that forum where it could have been timeously resolved”.

Nonetheless, she has established a task team that will look into this matter and give a full report and proposal to make sure that this situation “does not arise ever again”.

The EAAB is also in the process of overhauling and updating its IT system, and the service provider should be in place by the end of March.

“We believe that the overhaul of the system, which has not been changed in the past ten years, will immensely improve all areas of our performance in the course of migrating to PPRA (Property Practitioners Regulatory Authority).”

The EAABs “prevailing lack of suitable technology systems” was also cited in Rebosa’s statement as exacerbating the Board’s “inadequate service delivery”.

“The processes involved in renewing FFCs are now archaic,” Clarke said, adding: “Things like manual allocation of payments lead to huge delays and countless errors. The extent of the problem has seen the number of queries lodged with the Board peak at 80 000 in an industry with only 46 000 agents.”

He said failure to issue FFCs timeously has been a longstanding problem for the EAAB, “with extensive backlogs plaguing their operations every year”.

“We no longer believe the issue can be resolved without court action.”

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