This is the year that all estate agents are supposed to be licenced and registered, have a certificate to prove their competence and have the ability to guide people properly when it comes to making the biggest investment of their lives.
Paddy Hartdegen writes a regular column for Property24.com
By 2011 all estate agents operating in South Africa have to be properly registered and must have a Fidelity Fund certificate issued by the Estate Agency Affairs Board.
They must have also undergone a rigorous training course to prove that they know what they are doing in terms of the various property acts that govern land ownership in the country?
The real aim of this legislation is to prevent South African consumers from being ripped off by unscrupulous estate agents and property developers who quickly devise some con or other to separate people from their money.
There are hundreds of examples of these dodgy property deals all around the country – whether it is a strange outfit doing buy-back deals on properties that have been paid for or a developer who launched a development, ran out of money and skipped the country with the deposits that had been paid.
Right now there is another case before the courts involving Wendy Machanik Properties. The company’s trust funds are under curatorship because these funds had allegedly been used to keep her property company afloat.
The Estate Agency Affairs Board is attempting to prevent the company from operating by refusing to issue a Fidelity Fund certificate to it and, without that certificate, no agent or estate agency can practice.
So maybe the levels of protection for consumers are increasing – but I don’t think that this will necessarily prevent cunning schemers from trying to separate people from their money.
The new Consumer Protection Act, which comes into effect from April this year, is yet another measure that is aimed at protecting consumers from those unscrupulous rogues who operate in South Africa. There are many interesting provisions in this Act but the one that will have some direct bearing for the property market is the exclusion of the voetstoots rule.
Essentially it means that if there are defects in a property then these must be disclosed to the buyer. If these facts are not disclosed, the buyer cannot only cancel the sale but can claim damages from the seller and the seller’s agents.
Then, when it comes to other facets of the South African consumer market, the provisions of the Consumer Protection Act provide additional protection that will cover everything from motorcars to impulse buys such as a new fitness machine that will make you slimmer than a Svelte in seven days.
So I got to thinking why it is that South Africa needs such draconian laws for something as simple as buying and selling stuff?
The answer is that South Africa – more so than many hundreds of other countries around the world – is built on a foundation of unscrupulous bandits who are determined to take someone’s money and run off into the hills.
We see it everywhere – in our councils, in our bribes to police officials, in our government departments and in our street traders and small shop owners in every major centre around the country.
Unsurprisingly, perhaps, it’s not as prevalent in the smaller towns and villages where word-of-mouth quickly stops any rogues from operating. But in the big cities everyone is regarded as a potential sucker and is taken for a ride rather than given a fair deal.
I’ve been exposed to it on many different levels. From a car dealer called Schabir who runs a company called Hot Cars 4U, has a dealership with hoardings branded as Supa Cars and who buys illegal roadworthy certificates for the vehicles he sells from a runner nearby.
Schabir is supporting, willingly, an entire range of corrupt activities and is fuelling these by openly flaunting the laws. Do police do anything to close him down? Not unless some sharp policeman is tipped off. Then, maybe, something will be done about it.
You have other sharp practices like the Skyscape Aluminium who accepted money and didn’t deliver the goods; like Ashraf van Wyk, the former owner of Nationwide Property Express who took deposits worth R1,5-million for the construction of low-income houses and was jailed on 199 counts of fraud.
Do an Internet search on any subject you like and you are bound to find that someone in South Africa has cooked up a scheme to rip somebody off.
And that has two consequences: First of all, genuine traders who are selling proper products backed by the simple gesture of good faith are suffering because everybody regards them with suspicion; Secondly, cumbersome legislation has to be promulgated to prevent the rip-off rogues from fleecing people. And these rogues still manage to sleep well at night.
How is it possible to prevent these cowboys – whether it’s a used car salesmen, a high-powered property mogul, a seemingly straight-laced developer, or a dishonest retailer or service providers from fleecing us?
The answer is we don’t – at least not until we create a sense of moral decency among our people.
The South African solution, it seems, is to implement legislation to prevent thieves from thriving and this notion is valid if there is somebody to police them, like the Estate Agency Affairs Board or some other sector-specific organisation.
The second problem with this solution is that it’s dependent on whistle-blowers to draw attention to one or other malpractice. So this legislation is only of value if someone is prepared to spill the beans.
So what does that say about the morality of the people who are the foundation of South Africa’s future? What does it say about the future of this country?
The tried and tested cry among all these shady, dodgy crooks continues to resound: “If I don’t get caught, I’ve committed no crime.”
But in the harsh light of reality, there is absolutely nothing moral about the Schabirs, the Ashrafs, the Vermeulens or any of the thousands of others who set out in the morning to fleece somebody. And they do so with a smile on their immoral faces.
Ideally they should be put out of business. Blacklisted, prevented from trading and relegated to sweeping streets or cleaning the public toilets because then they can’t rip someone off.
These people are not a part of the South Africa that I would like to build: they’re a part of South Africa that I – and thousands like me – would like to eliminate.
And I don’t care what their religious persuasions might be; I don’t care how much they might give to the local school charity and I don’t care how many flashy cars, fancy houses or slick suits they might own either.
Immoral people are just that: immoral.
And they don’t deserve to share in the benefits of a stable, solid society – they deserve to be excluded from it. Like lepers who were once locked outside the city gates.
South Africa needs to build itself on a foundation of people who do the right thing every day of their lives. For it is these people who will make our country great.
And it’s the shady, dodgy operators who are ruining it right now.
*Hartdegen writes a regular column for Property24.com. The content of his columns constitutes his personal opinion and doesn’t pretend to be facts or advice. Contact him at paddy@neomail.co.za.
Readers' Comments Have a comment about this article? Email us now.
I recently vacated a house and my deposit was not given back. In fact I had done some investigations about the owner and found out that the last 3 tenants had not received their deposits back either. The owner then charges the tenant for the faults on the previous tenants fault list. He is a scammer and has a few properties in Kempton Park, bet he is doing this to all of the tenants. He owes me R6875.00 plus interest (almost 7 months interest). He is coining it, getting rich on other peoples money. - Carol
As a property consultant who operates a company with over 30 years experience in the South African property market, it is sad to have to admit that Paddy is right. It also seems to be getting worse over time. A fact that underwrites Paddy's point of moral decay that needs reversing.
As a service provider one has a huge responsibility to one's clients and to one self to ensure that you are serving to the best of your ability. For this reason we are welcoming the upgrade of professionalism in our industry. It is and remains however a bur under the saddle to hear of operators in our industry that just put their greed before anything else, making it difficult for the ethical consultants to gain the trust of their clients.
It becomes even worse when the clients turn out to be as unscrupulous as the consultants that are being complained about. - Paul
Hi, thank you for an excellent article on rogue estate agents. I have discovered an individual who is operating as an "estate agent". This person is not qualified, has not done her candidate year, does not have a fidelity fund certificate and does not have a trust account in which to deposit clients money. I have reported this matter to EAAB and to date have not received any satisfaction. I am at a loss as to understand how they can stop Wendy Machanick from trading and yet allow this person to trade. I fully support any action the EAAB takes against rogue agents but there should be a rule for one and all. Please could you advise me whatto do next and how to take this matter further. - Elaine
I would venture to suggest that Paddy is missing a couple of points. The reason that many people get away with various illegal acts is not because any legislation is lacking, it is because current legislation is not enforced. Maybe Paddy exceeds the speed limit when driving, the only reason he does is that the enforcement is not strong enough.
Estate Agents have always had to be registered, that is nothing new, it is only the requirements that have been upgraded. If the EAAB do not enforce and SUCCESSFULLY prosecute agents operating (and there are plenty of them) without a Fidelity Fund Certificate then all the new requirements are totally irrelevant.
The issue currently in the press over Trust Fund issues is nothing new, but has always been covered up as the very agents that are representatives on the EAAB are now being shown to be less than clean.
When is the EAAB going to do anything about Price Loading? This has been brought to their attention numerous times but is still not investigated and dealt with. The problem is that the very people who are supposed to uphold the law i.e. attorneys are implicit in the practice. This is the point if no enforcement takes place it does not matter how many laws are passed!!!!! - Tony Penfold
In Richards Bay we have a smooth talking con artist. He jumps from business to business and steals everybody's money. He is a liar, a cheat and a thief. - Anonymous
Regarding the countrywide audit of thousands of estate agents and their trust accounts: I have been in the property business for 20 years and have NEVER deposited client's money in my trust account. It goes directly to the conveyancing attorney. Estate agencies have no need for trust accounts and the expensive annual audits required by the EAAB. If trust accounts were eliminated, people like Wendy Machanik would not be able to fiddle the funds. - Helene
As I understand from my conveyancer, the exclusion of the voetstoots rule will only apply to new developments. That is an important point not made in Paddy's column.
Re the comments by Tony Penfold and Elaine - efficient application of the law is what's needed. But while we're stuck with the present Estate Agency Affairs Board it will never happen. The EAAB is a towering monument to misinformation and perpetual obstruction - a useless, inefficient, top-heavy, excuse for a governing body and "upholder of standards and practices in the property industry", one that will never be able to regulate the industry until the entire organisation is streamlined and reorganised from the top down. And that's not going to happen.
As an agent for one of the biggest groups, I had it on the best authority that there are at any given time, hundreds of my fellow agents operating without licences through no fault of their own - I was one of them. I spent three years , countless frustrating hours on the phone, writing endless letters, and sending and re-sending whole libraries of supporting documentation, and numerous cheques, to the Board, trying to get myself relicensed after my Fidelity Fund Certificate was not renewed thanks to their extraordinary internal inefficiency and eternal lack of communication.
Although I now finally have my FFC through miraculously hooking up with the one efficient and helpful soul in the entire organisation, it will probably take another year to retrieve my money, if ever. The year 2008 was particularly bad. The board was "restructured!" Licences were not sent out, thousands of agents were paying, and re-paying, their annual fees, and begging for licences and still not receiving them. I doubt if they've caught up with the backlog even today. While the EAAB is quite rightly taking action against Ms Machanik's mismanagement of her trust funds, I'd like to challenge them to an audit of their own.
During my desperate attempts to get my FFC back I wrote to Wendy Machanik who was still a member of the Board in December 2009. My letter of appeal to her was bounced straight back to the chairman of the board - or some other such dignitary - who berated me " it is disturbing that you are currently practicing without a valid fidelity fund certificate......a criminal offence". As if I didn't know it! Neither she nor Ms Machanik had bothered to read my history of three years of inefficiency within their own organisation - or else, had ignored it. By having Ms Machanik to hold up as an example, the Board would now like to give an impression of efficiency and integrity. Don't believe it for a minute.
Get onto their website and do a search for some of the agents you know - and don't be surprised if half of them do not appear in the lists of registered agents. And in most cases, it's not their fault. They are peope like me who have to invest months of what could otherwise be productive time, trying to extract their licences from the Board!
I won't even begin to discuss the countless numbers of people who are openly practising as estate agents without ever having applied for a Fidelity Fund Certificate or written an exam. It is even more frustrating when those illegal agents do sales and take commissions, taking the bread out of the mouths of registered legal agents who are battling to earn a living in an extremely tough market. - Helene
I bought a property from a so called estate agency which while in the process of buying and waiting..went on auction...the owner and agent called on me to say he(the owner) bought it back but needs a deposit in cash to pay the Sherriff of the Court. Not being familiar with auctions ect I gave the deposit..which was paid, but the rest pocketed by him (them)I had to take over property immediately...After many payments for repairs and delays (rezoning,plans,interest,bond and transfer fees..)...I was receiving regular rental money each month until last year April..whereas the owner of this agency took it upon herself to place this rental money every month into a Trust Fund without informing me. After evasive phone calls ect I asked a bank lady to call her, at this stage I didn’t even know about a Trust Fund as no one was giving straight answers. The owner said she is keeping the money there until registration (in about 7 days) in case of back taxes or interest to do with the previous owner owing. I actually believe she is just saying this because she wants the commission for the sale which was before the auction story. I have now seen a lawyer to help sort this out as the amount will now exceed R45 000 that she has kept from me and there is many repairs I am still in the process of doing on this property. This really seems like fraud to me and am just wondering what her story will be on registration!! - Amanda
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