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- General Duty to Protect the Public’s Interest
In terms of Property Practitioners’ general duty to members of the public and other persons or bodies, a Property Practitioner –
Code:
2.1 shall not, in the conduct of his business, do or omit to do any act which is or may be contrary to the integrity of Property Practitioners in general;
Discussion:
This clause lays down the general standard of conduct expected of a Property Practitioner where such conduct is not specifically regulated elsewhere in the Code. The clause is restricted to actions or omissions on the part of a Property Practitioner in the conduct of his business. A Property Practitioner can therefore never be found guilty of improper conduct because of his conduct in his private life or in a business other than his Property Practitioner business.
Dishonest or corrupt conduct, recklessness in business affairs, and indifference to duty constitute some of the contraventions contemplated by this clause.
Code:
2.2 shall protect the interests of his client at all times to the best of his ability, with due regard to the interests of all other parties concerned;
Discussion:
This clause imposes a general duty on a Property Practitioner to protect his client’s interests to the best of his ability, with due regard to the interests of all other parties concerned.
Examples of the general duty under this clause are as follows:
– A Property Practitioner given the mandate to sell or let property must use his best endeavours to perform the mandate. Unless specifically arranged with his client, he cannot simply sit back and not attempt to market the property. What is expected of him will depend on the circumstances of each case. Every Property Practitioner must decide for himself the most effective way to market a client’s property, taking into account special circumstances, such as marketing costs and location of the property.
– A Property Practitioner given the mandate to sell a property is obliged to try and find a buyer for the property on the best possible terms and at the best price for the seller.
– When holding a show-house day or introducing prospective purchasers to a property, a Property Practitioner should take all reasonable precautionary measures to ensure that viewers do not damage the property or remove items therefrom. The nature of these measures will depend on the circumstances of each case. A **Property Practitioner** should therefore make a risk assessment and finalise security arrangements with the seller of the property before holding a show-house day.
– A Property Practitioner is naturally not obliged to protect a client’s interests at all costs. For example, a Property Practitioner cannot be expected to lie, cheat, steal or participate in fraudulent schemes to perform his client’s mandate.
Clause 2.2 places no obligation on a Property Practitioner to protect the interests of a non-client, although he must still have due regard to such person’s interests.
Code:
2.3 shall not, in his capacity as a Property Practitioner, willfully or negligently fail to perform any work or duties with such degree of care and skill as might reasonably be expected of a Property Practitioner;
Discussion:
2.3 A Property Practitioner must maintain high standards of professional conduct at all times. Although not a registered valuer or a lawyer, he must apply his mind when expressing an opinion on a property’s value or completing standard contract documents (such as an Offer to Purchase). A Property Practitioner may well be found guilty of improper conduct if a contract document completed by him is later found to be null and void because it had been incorrectly completed. Other possible contraventions of this clause are:
– A Property Practitioner completes a pre-printed sale agreement form but fails to incorporate a clause in the contract that was, in the circumstances, clearly necessary to protect the interests of the seller and/or the purchaser, such as, for instance, a suspensive condition that the sale is subject to the purchaser obtaining loan finance.
– A sale agreement is subject to the condition that the purchaser obtains a loan from a financial institution on or before a certain date. The Property Practitioner completes the loan application form, but because this is done incorrectly, the application is refused. The time limit for fulfilment of the suspensive condition expires, and the sale falls through. Had the Property Practitioner completed the application correctly, the loan would have been granted and the sale finalised.
Code:
2.4 shall comply with both the Act and the regulations promulgated thereunder;
Discussion:
2.4 Non-compliance with the Property Practitioners Act 112 of 1976 and the regulations framed thereunder not only constitutes a criminal offence but also constitutes improper conduct. For example, if a complaint is lodged against a candidate Property Practitioner and it appears that he failed to comply with the regulations governing candidate Property Practitioners (for example, he did not act under the supervision and control of his principal), disciplinary steps may be taken against him by the Property Practitioners Regulatory Authority.
Code:
2.5 shall not, through the medium of a company, close corporation or third party, or by using such company, close corporation or a third party as a front or nominee, do anything which would not be permissible for him to do if he were operating as a Property Practitioner.
Discussion:
2.5 The purpose of the clause is to prohibit a Property Practitioner from using companies or close corporations (or other nominees) as fronts to achieve objectives that would constitute improper conduct if he were acting in his own name.
Code:
2.6 shall not deny equal services to any person for reasons of race, sex, or country of national origin;
Discussion:
This clause prohibits a Property Practitioner from discriminating against any seller or prospective purchaser of a property on the grounds of such person’s race, creed (including religious beliefs or political opinions or principles), sex, or country of national origin. This means that a Property Practitioner may not, of his accord, deny his services to any person at a lower standard than he normally provides. Practical examples would be:
– A Property Practitioner is instructed by a seller to market his property. The Property Practitioner may not refuse the mandate because of the seller’s race, creed, sex, or country of national origin. He may, however, refuse the mandate on other grounds, such as the seller’s asking price being too high or marketing expenses being excessive in relation to the Property Practitioner’s remuneration.
– A prospective purchaser contacts a Property Practitioner and asks to view properties that the Property Practitioner has for sale. The Property Practitioner may not refuse his services to such a person because of his race, creed, etc. Any refusal to undertake services that would put the Property Practitioner in a position of supporting discrimination will constitute a breach of this clause.
– A seller informs the appointed Property Practitioner that he will not sell the property to a person belonging to a certain race or religious/political group. The Property Practitioner may accept the mandate on the stipulated condition. In other words, a Property Practitioner may refuse to introduce a prospective purchaser to a seller’s property if the seller has prohibited this. Clearly, the Property Practitioner is not, of his own accord, denying equal services to the purchaser – he is simply carrying out the seller’s instructions.
(This example is subject to the likely introduction of a Bill of Rights in South Africa, which may outlaw such conduct by a seller and place an obligation on the Property Practitioner to refuse a mandate in such circumstances).
Code:
2.7 shall not discriminate against a prospective purchaser of immovable property because such purchaser will not, or is unlikely to, make use of financial assistance made available by any specific person or financial institution and which the Property Practitioner offers to arrange on his behalf.
Discussion:
The philosophy underlying this clause is that every debtor is entitled to choose his creditor. Take the following examples:
– A Property Practitioner has a sole mandate on a property. A prospective purchaser approaches him to view the property, but the Property Practitioner informs him that unless he is willing to take up a loan with a specific financial institution, he (the Property Practitioner) will refuse to introduce him to the property.
– A Property Practitioner prepares an Offer to Purchase for a prospective purchaser. The document used contains a standard clause stating that the offer is subject to the suspensive condition that the purchaser obtains a loan from a specific financial institution on or before a certain specified date.
– The purchaser requests the Property Practitioner to change the name of the financial institution, as he would prefer to take up a loan with another institution. The offer provides that commission is payable by the seller, but the Property Practitioner has an arrangement with the financial institution named in the document that commission will be paid by the institution as an advance to the Property Practitioner on the conclusion of the agreement of sale.
The Property Practitioner now informs the purchaser that should the name of the institution be changed, he (the purchaser) will have to pay commission after the contract. This action on the part of the Property Practitioner amounts to a punitive measure against an innocent purchaser, who merely wishes to obtain loan finance from the financial institution of his choice.
On the above specific facts, the Property Practitioner will be guilty of contravention of clause 2.7.