- PPRA and LPC warn against unethical incentive deals between estate agents and conveyancers.
- “Arrangements” like vouchers, rent payments, and pre-filled forms deemed illegal.
- Offenders face suspension, fines of up to R200 000 or being struck off the roll.
In South Africa’s bustling property sector, it’s not unusual for a real estate agent and a conveyancer to work closely together to close a deal. But when those relationships involve secret perks and under-the-table agreements, regulators say the line between professional collaboration and unethical conduct gets dangerously blurred.
In a joint statement, the Property Practitioners Regulatory Authority (PPRA) and the Legal Practice Council (LPC) have declared war on what they call a “widespread” practice: kickbacks in property transfers.
The message is unequivocal; such conduct is now in the crosshairs. “Conveyancers buying their work from property practitioners is not only unethical, but it may also amount to bribery,” the regulators warn.
According to the PPRA and LPC, these arrangements, often disguised as marketing support or professional goodwill, include petrol vouchers, tuition fees, holiday perks, office rent payments, or even “thank you” gifts after instructions are received.
What might seem harmless, or even helpful, is now being clearly defined as a contravention of professional codes, and, in many cases, a violation of the law.
Legal lines crossed
Section 58 of the Property Practitioners Act makes it illegal for property practitioners to formally or informally encourage clients to use a specific attorney or service provider. Conveyancers who go along with such deals, or initiate them, are equally at risk.
Critically, any person receiving payment in violation of this rule must refund the client, with interest, upon request. A failure to do so within one month constitutes a criminal offence.
The LPC reiterated that conveyancers who offer rewards for referrals, whether monetary or otherwise, are in breach of their Code of Conduct. An LPC circular issued in March this year underscored that these practices not only compromise integrity but can also distort the property market itself.
And the list of what qualifies as a “benefit” keeps growing. Among the red flags are pre-filled offer-to-purchase forms with a specific conveyancer’s name; payment for marketing unless branding is equally split; and direct or indirect contributions toward personal expenses of an estate agent.
“Any benefit received will be interpreted as an improper arrangement, unless proven otherwise,” the statement reads.
Harsh consequences
The consequences are severe: property practitioners may face fines of up to R200 000 and lose their Fidelity Fund Certificates, which are required to operate legally. Conveyancers risk disciplinary proceedings, suspension, or even being struck off the roll.
The PPRA and LPC have committed to a zero-tolerance approach and encouraged the public to report suspected cases of kickbacks in property transfers.
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