In South Africa’s property sector, trust is everything. Buyers, sellers, agents, and legal professionals all depend on one another to act with integrity and in accordance with the law. However, bribes, kickbacks and unethical inducements in the conveyancing process threaten this trust. Section 58 of the Property Practitioners Act 22 of 2019 is specifically aimed at addressing these corrupt practices.

It is important for property professionals and consumers to understand the implications of this section.

Section 58 states the following:
“A property practitioner may not enter into any arrangement, whether formal or informal, in terms of which that property practitioner directly or indirectly pays any remuneration, or gives any other reward or benefit to any person in return for that person directing, referring, or influencing the conclusion of any agreement to which that property practitioner is or may become a party.”

To put it simply, this means that no property professional (including conveyancers and estate agents) may offer or receive any payment or any other incentives for referrals or services. This also includes any indirect benefits such as expensive gifts, travel or even co-marketing arrangements that hide a financial benefit.

Why is Section 58 necessary?
The conveyancing and property industry in South Africa has for a long time now been subjected to unethical referral arrangements between estate agents and conveyancers. Estate agents refer clients to conveyancers, not based on merit or the quality of service but because of incentives offered by those conveyancers to the agents for referrals, such as receiving kickbacks, commission or other financial benefits.

Estate agents are insisting that their clients use specified conveyancers, and are not even giving them a choice or informing them of their right to choose. The client trusts that the referral is based on merit, wherein fact it may be based purely on some sort of incentive offered to the agent.

It is for this reason that section 58 makes this collusion between estate agents and conveyancers both illegal and unethical.

As property professionals we have a duty to act in the best interests of our clients. The only thing that we have is integrity, and if we lose that we have nothing. By contravening section 58 not only do you risk reputational damage for your firm or agency, but it can also result in:

• Fines;
• Forfeiture of commission earned on any such transaction;
• Suspension or being struck off the role as a property practitioner; and
• Criminal prosecution if bribery can be proved.

Let us all stand together and bring integrity back into the property profession.

Complaints can be lodged with the LPC or through the PPRA website.