Concerns and Shortcomings of the Estate Agents Policy of the PHOA
- Dec 6, 2022
- 6 min read
Updated: Dec 7, 2022
Photo: Freepik
Several former residents with ties to the Real Estate sector have brought to our attention their concerns around the Estate Agents Policy and the 1% stabilization fee of the PHOA. We have decided to include the contents (to protect the writer from victimization we have removed any references containing personal details) of one of the emails to highlight the concerns that affect all property owners and tenants on the Estate. The below email extract is a common thread throughout the complaints which also reveal how the 1% stabilization fund is affecting property sales and delays in the selling process and allegations of racist exclusion of Black people from viewing choice properties that are for sale. Currently not a single Black person represents any of the Estate agencies “authorized” to operate on the Estate, a diversity issue which the new Property Practitioners Act seeks to address. Not only is the monopoly enjoyed by a select group of Estate agents reluctant to addressing past inequalities in the sector, but it also affects the valuation of properties in that it inhibits the ability of residents to obtain realistic market values of their property before it is advertised for sale.
“I wanted to raise the point of the Pecanwood HOA who is forcing the Homeowners to use only selected Real Estate Agencies that have paid to register with the HOA.
This is a major concern, and it is also against the law.
By forcing homeowners to only use agents who have been registered puts the potential sellers at risk for not achieving the best-possible sales prices for their homes in a free and open market.
The PHOA charges a yearly fee of anything between R38 000.00 - R40 000.00 per year for each agency to pay to have the privilege to sell or rent out a house.
There are "certain agents" who rule the estate and who makes it impossible for any other agent who has not paid the fee to even try and get business here in Pecanwood. I have proof of a conversation where one of the registered agents admits about the "certain agents" who run the place and causes trouble for every other agent. I've heard firsthand and have seen messages from Homeowners who explicitly said that they are "NOT ALLOWED" to work with non-registered agents. If I may? Since when does an HOA have so much power to force a homeowner to use only certain agents to their disadvantage?
It was never as bad as it is now. Certain agents blatantly tell homeowners on WhatsApp or phone calls straight-out that you (The homeowner) CANNOT use another agent because they are not registered with the estate. There’s a clique that is happening and it is absurd If you look more into this issue, you will see that it would most likely be the same people that are forcing all the "other issues" that you guys have raised.
R40000 per year to be registered and get the so-called special privileges? Why do homeowners have to walk on eggshells because they're too scared to stand up to certain agents or they don't know any better?
Please forgive me, but I mean no harm to anyone. My major concern is the homeowners and their best interests, as well as agents who are being prevented from making an honest income. I am approaching you guys because this is a really big concern. You guys are homeowners yourself. Haven't you found it weird that you are told only to use certain agents? No homeowner would investigate it further because they think it is normal when it is anything but normal and they're being forced to sell a house at a price and losing value because they're not getting the outside exposure for the real market value of their homes? There's definitely a "cult/sect" or whatever you want to call it and it needs to stop. The registered agents spread lies and false information about the non-registered agents.
Why aren't homeowners allowed to use whatever agency, agent or whomever necessary to find the best suitable price for their homes?
Above all the above, the PHOA is now forcing the homeowners to pay 1% of the sale proceeds of their house to them? I mean for what?
The levies already are exorbitant. It's above normal. It is crazy and it doesn't make any sense. There are 890 houses in the estate. Let's do a simple calculation quickly.
I’m just rounding off the amounts for the sake of this email.
890 x R6000 = R5 354 000.00 per month coming in.
Then there's the "special levy" that has come in x 890 houses.
890 x R2000 = R1 780 000.00 per month.
Anyway, this is my issue and concern. I really hope you can look at this from an outside point of view and see the harm that this is causing the homeowners of this estate as well as those who really work hard and give excellent service to help find the perfect buyer for the seller's most prime possession/investment.”
The PHOA is conceited, misinformed and fails dismally to act in the interest of the Homeowners and continues to rely on flawed and preposterous arguments that appear, at least on the surface, to be smart and logical. Time and again the flaws in their system of arbitrarily implemented policies, buried under layers of fat hubris, big words and legal jargon are exposed by residents who refuse to remain silent and to bow to the corrupt practices of the minority who rule the Estate.
The Property Practitioners Act came into effect on 01 February 2022. The Act seeks to overhaul the Real Estate Sector and to address the inequalities brought about by the Apartheid legacy and to protect Consumer Rights. According to the Act all role players involved in the sector are either Property Practitioners or Consumers. All Homeowners Associations are deemed Property Practitioners according to the Act. All Residents are deemed Consumers by the Act and enjoy the benefits of both Acts, the Property Practitioners Act, and the Consumer Protection Act.
As such the Pecanwood Homeowners Association must comply with the requirements of both Acts.
For the purposes of this article, we will touch on only a few aspects of the Property Practitioners Act. The first is “the introduction of Section 58 which places a limitation on the relationships that Property Practitioners have with other property market service providers. Section 58 provides that a Property Practitioner may not enter into an arrangement whereby a consumer is obligated or encouraged to use a particular real estate service provider, including an attorney to render any service of which that Property Practitioner was the effective cause. A person who renders services in contravention of Section 58 is not entitled to any remuneration, payment or consideration in respect of such services rendered.” *
In addition to the above prohibition the “yearly fee” referred to in the email above, which the PHOA continues to charge Real Estate agencies in return for exclusive rights to market and sell properties on the estate, is illegal.
According to Regulation 35, Section 63 of the Property Practitioners Act, charging this “fee” is specifically and unequivocally prohibited as an undesirable practice. All Real Estate Agents and agencies are now able to conduct their business without restriction on estates.
Another requirement of subsection 1 (c) and further defined in Sections 47 and 48 of the Act is that the Directors of Homeowners Associations are required to file a Fidelity Certificate with the Property Practitioners Regulatory Authority. Needless to say, the PHOA Board are also in violation of these sections of the Act.
In conjunction with the above requirements the PHOA are also obligated to display a valid Tax Clearance Certificate and its Black Economic Empowerment Certificate. Suffice to say that the status of both these is highly questionable.
Property owners of Pecanwood Estate enjoy the protection of the Act since 01 February 2022, and it will be interesting to see how many property owners sue the Estate Agents for their commissions to be returned and who will tackle the PHOA for a return of their “yearly fees” and other costs or damages because of the HOA’s violation of the Act. Of note is the implication that directors of the PHOA may be sued individually.
In closure we would like to add that the Property Practitioners Regulatory Authority falls under the Department of Human Settlements which entitles residents in community schemes to lodge complaints with our old friends, The Community Schemes Ombud Service. View our article “Is CSOS Captured?” here.
© Pecanwood Corruption Watch
With acknowledgement to https://www. generations.org
*Lethabo Mashishi: 6 Property Law Changes Coming into Effect in South Africa from February, 09 February 2022 – www.mondaq.com
Unpacking the Property Practitioners Act and what It Means for Community Housing Schemes: Bizcommunity article 28 March 2022 – https://www.bizcommunity.com/article/196/568/226399.html
You need the journalist to expose this corruption. This should be the priority. Plus, have you guys responded to their legal letter sent to you. Residents on this group need to be kept abreast of all the correspondence on the outstanding issues.