Agent accreditation in community schemes
By Zerlinda van der Merwe (Paddocks)
In our consulting department, we are often instructed to review the governance documentation of community schemes, especially in light of the changes introduced by the Sectional Titles Schemes Management Act 8 of 2011, and the Community Schemes Ombud Service Act 9 of 2011. When undertaking these instructions, we often advise our clients, as scheme executives, managing agents and members, that should their governance documentation include rules or provisions, regulating and restricting the estate and rental agents (“agents”) operating within their community scheme, these rules and provisions need to be substantially amended or deleted in its entirety.
During the course of February 2014, the Estate Agency Affairs Board (“EAAB”) issued a Practice Note in order to “prohibit unlawful practices and promote an acceptable standard of conduct within homeowners’ associations in the rendering of estate agency services”. Despite this notice, many community schemes continued, and still continue, to regulate and restrict agents operating within these schemes, in terms of their governance documentation.
In this regard, the practices raised, and prohibited, in terms of the notice was the practice of requiring these agents from paying accreditation fees in exchange for being allowed to exclusively market units or erven within the schemes; the practice of restricting owners to the appointment of only accredited agents, and imposing penalties for non-compliance; and the practice of claiming a percentage of the commission earned by agents relating to units or erven within these schemes.
Let us take a look at some of the provisions that we have come across when reviewing the governance documentation of community schemes that attempt to regulate and restrict agents in schemes. The governance documentation of a community scheme:
- must not prohibit the appointment of certain agents by its members, or dictate which agents are allowed to operate within a scheme;
- cannot interfere with the contractual relationship between an owner, as seller or landlord, and an agent, dictating the contents of the agreements entered into between the parties, or the termination thereof;
- cannot regulate the contents of an agreement of sale or lease, or vet any potential purchasers or tenants;
- must not attempt to impose penalties on agents, or require any form of payment from them in exchange for any benefit offered, such as exclusive marketing within the scheme.
It is not the responsibility of the scheme executives to ensure that agents operating within their schemes are registered with the EAAB, and have valid Fidelity Fund Certificates. This responsibility, and any potential risk associated with same, is reserved for their clients, namely owners, as sellers or landlords.
Should you have any queries on this topic, contact us at Paddocks on 021 686 3950 or email@example.com.