Four things you simply must know about FFCs

Four things you simply must know about FFCs

As a consumer of real estate services - whether you are buying, selling or renting any kind of property - you need to know about the Fidelity Fund Certificates (FFCs) that are issued by the Property Practitioners' Regulatory Authority (PPRA) for your protection.

So says Barry Davies, COO of the Chas Everitt International property group, who notes that it is a requirement of the Property Practitioners Act, which became effective in February this year, for every person acting as an estate agent to have a valid and current FFC.

 "This includes intern agents who are acting under the supervision of qualified agents and the letting or managing agents of rental properties and sectional title complexes, as well as agricultural property agents, developers' agents, commercial and industrial property brokers, business brokers and even showhouse sitters."

 In addition, all estate agencies and other property companies, and their owners, managers and principals must also have valid FFCs.

Secondly, he says, the Act stipulates that FFCs must be displayed in the offices of estate agencies and brokerages, and that all mandate documents and sale or rental agreements must contain certain wording which warrants that the agent and agency handling the transaction have valid FFCs. 

"This is very important from the consumer point of view, because it is your guarantee that the agent or broker you are dealing with has the necessary training, knowledge and qualifications to protect your interests in the property transaction - and that you will also have the right to claim compensation from the PPRA if you suffer any monetary loss due to the theft or misuse of trust money by that agent or their agency."

The third important thing consumers need to know about FFCs, Davies says, is that agents or brokers who are operating illegally, without valid and current FFCs, can be found guilty of a criminal offence in terms of Section 48 of the Act.

 "What is more, they will not be entitled to any commission or any other form of remuneration, and anyone who mistakenly paid them a commission or a fee will be entitled to reclaim it."

To underline this provision, he says, the Act also states that any property attorney who may be holding an agent's commission on a sale or lease must first obtain a certified copy of the agent's FFC before releasing that money. If they don't do this, they could also be subject to criminal proceedings.

 "However, the fourth thing for consumers to know about FFCs is arguably the most important, and this is that you can and should ask anyone that represents themselves to you as an estate agent or broker to show you an FFC in their name* that has been issued in the current year."

 Unfortunately, says Davies, there are many bogus, unregistered agents and agencies currently operating in the marketplace who can of course not obtain valid certificates - and prevention is always better than cure.

 "As a real estate buyer, seller, landlord or tenant, it is really very risky to deal with someone who has not obtained the necessary qualifications to be able to register as an agent and obtain an FFC. Even if they don't abscond with your money, they could easily land you in legal hot water by contravening one of the many laws that apply to property transactions, or cause you financial damage by failing to represent you properly in negotiations.

"Consequently, it is vital for real estate consumers who want peace of mind as well as the full protection of the Act to ensure that they deal only with legitimate agents or brokers who do have a valid FFC. It is also essential for the trustees of sectional title schemes and the directors of homeowners' associations to do this, because they have a fiduciary duty to their members." 

*You can also check whether an agent or an agency is currently registered with a valid FFC on the PPRA website. (https://theppra.org.za/)