Consumer Act – changes for real estate?

25 June 2009

The newly proclaimed Consumer Protection Act is likely to introduce changes in the real estate industry.

But to what extent is still unclear says Dr Willie Marais, national president of the Institute of Estate Agents (IEASA). “We are in the process of determining the practical implications of the Act, which was proclaimed at the end of April,” he says.

The Act aims to create a strong culture of consumer rights and responsibilities, as well as to promote a fair, efficient and transparent market place for consumers and business.  A system of product liability and improved redress will be established in terms of the Act to achieve this objective.

Marais notes that such a system would seem to mirror the duties of the existing Estate Agency Affairs Board, which serves as an avenue of redress for property consumers who wish to lodge claims against property practitioners.

“However, the Board has come under severe criticism recently and is widely held to be ineffective, not only in terms of consumer protection, but also in terms of timely registration of agents and issuing of fidelity fund certification.

“In principle, IEASA would not be opposed to including the property consumer’s right to protection under the umbrella of the new National Consumer Commission - which has to be established by the end of April next year in terms of the Act - on condition that effective action will be taken on behalf of consumers.

“It would benefit the estate agency industry as a whole and increase its stature if consumers could confidently expect action against unscrupulous agents,” he says. 

He adds that the practical implications of several sections of the Act have yet to be clarified. “For instance, Section 55 gives a buyer the right to return defective goods and since immovable property is included in the definition of goods, this may sound the death knell of the ‘voetstoots’ principle where buyers purchase property ‘as is’. 

“We also still have to clarify the implications of Section 79, which regulates compulsory registration of business names,” he says. 

“This is particularly relevant to franchise holders, who in terms of franchise regulations, may not be permitted to register a business name that includes reference to the franchise brand name. Currently, many franchisees register a business name and exercise the option to ‘trade as’ another entity – but it would seem that this option will not be legal in future.

“And exactly how restrictions in terms of Section 11 will apply to estate agents is also not yet clear. The section places restrictions on direct marketing and it could lead to restrictions relating to which days and at which times prospective clients may be contacted,” he says.