Cynthia Nashandi
The Ministry of Industrialisation, Trade and SME development through the agency of the Namibia Estate Agents Board (NEAB/the Board) intends to revamp the Namibian real estate industry with the introduction of the Property Practitioners Bill (the Bill). The Estate Agents Act 112 of 1976 (prevailing Act) has governed the practice of real estate agents (Agents) for over 40 years. However, the advancement of the industry calls for legislation to catch up. The new Bill is consumer centric and aims to retrieve the integrity of a profession that has long been marred by the misdeeds of registered agents and persons purporting to be registered agents; as well as strengthen the regulation of market participants, thereby minimising vulnerability and enabling the public to guard itself against exploitation. This piece identifies the key differentiators between two legal instruments, the present and formulated future.
Application of the Bill
The Bill extends the purview of the law to regulate not only real estate agents but also, real estate developers, property managers, auctioneers, property trusts and other industry players who may not be explicitly identified but, perform the following activities in the course of their business operations on behalf of others -
1. Sell, purchase, manage or publicly exhibit for the sale of immovable property.
2. Lease, hire or publicly exhibit immovable property for hire.
3. Undertake to negotiate, canvass or offer to canvass a lessee, lessor, purchaser or seller in respect of immovable property.
4. Collect or receive funds payable on account of an immovable property or the lease thereof.
5. Provide, procure, facilitate, secure or otherwise obtain or market financing for or in connection with the management, sale or lease of an immovable property.
6. Act as an intermediary or facilitator with the primary objective of concluding a sale or lease agreement between parties.
The Bill has coined the term “Property Practitioners” to collectively identify persons and entities that perform the activities listed above. The Bill specifically assigns the term to directors and members of companies or close corporations that are property practitioners, employees of property practitioners specifically exercising the duties listed above, a trustee/s of a trust that is a property practitioner and all partners constituting a partnership that is a property practitioner.
Fidelity Fund Certificates
A Fidelity Fund Certificate (“FFC”) certifies the legitimacy of an agent and grants agents the permission to practise under the authority and regulation of the Board. The NEAB issues FFCs on an annual basis subject to approval and a mandatory application submitted by agents.
The Act dictates who may practise as an agent. In addition to the list outlined in section 27 of the Act, the Bill precludes the NEAB from issuing FFCs to the following category of persons (juristic and natural):
1. Non-Namibian citizens – including persons who are not lawful residents of the Republic.
2. At the time of intended issuance, persons who in the preceding five years have been convicted of contravening the Bill (as an Act of Statute), the Estate Agents Act or any similar law in any other jurisdiction.
3. Persons who have been convicted and sentenced to imprisonment for any offence within or outside the Namibian jurisdiction, including fraud, professional misconduct and breach of fiduciary duties (position of trust).
4. Persons who fail to produce a tax clearance certificate.
5. Persons who have been prohibited by any legislation enacted in Namibia or elsewhere from practising as a property practitioner or from occupying a position of trust.
6. Persons who do not have the requisite practical experience to operate as property practitioners as determined by the NEAB.
Property Practitioners are required to possess an FFC for purposes of conducting the stated activities encompassing their respective business objects.
While the prevailing Act forbids practising without an FFC, the Bill takes the prohibition further by denying a property practitioner the right to claim compensation for work performed without holding a valid FFC. Hence, consumers may withhold payment upon the knowledge of such a deviation. Accordingly, the Bill renders any agreement concluded with such unauthorised persons invalid and unlawful.
Trust accounts
Trust accounts hold funds received on behalf of others; the recipient retains no proprietary claim over such funds. The recipient receives funds for a designated purpose in accordance with instructions relayed by the client. The recipient performs the requested service/s as instructed and issues an invoice for services rendered. The standard practice and accompanying legal obligations dictate that at the completion of the recipient’s mandate or the conclusion of the business undertaking, the recipient must repay excess funds (money not earned/invoiced/otherwise held) to the depositing client.
Similarly, the prevailing Act and the Bill regulate the procedure outlined above. In that regard, property practitioners are compelled to open separate trust and business banking accounts to cater for receipt of the varying categories of funds.
However, the Bill introduces an unprecedented onus on banking institutions that manage trust accounts. Section 49 (4) requires banks to report to the Board all interest accrued on the trust accounts of property practitioners. A responsibility previously solely assigned to the property practitioner and corroborated by annual audit reports.
The Bill addresses four new subject matters discussed below, namely interns, franchising, mandatory disclosure and complaints.
*The Property Practitioners Bill is available for perusal on the Excellist Real Estate facebook page at @ExcellistProperty and on the Namibia Estate Agents Board website at www.neab.co.na. Members of the public are encouraged to submit their written comments and suggestions to the Namibia Estate Agents Board.
* Cynthia Nashandi is a Real Estate professional.