Do I need to register with the PPRA? Code of Conduct Part 2

The College of People Management and Development_Do I need to register with the PPRA_Summary_Code of Conduct Part 2

Do I need to register with the PPRA? Code of Conduct Part 2

Last week we started discussing the Code of Conduct and in particular the duties applicable to all PP’s, which are contained in Regulation 34.2.  This week, we turn our attention to Regulation 34.3, which is interestingly entitled: Duties applicable to estate agents.


A summary of Regulation (Reg) 34.3 follows below:


  1. Reg – as a PP, you may not offer any property for sale or to let or negotiate in connection therewith, if you do not have a mandate to do so from the seller or lessor. As an example, you cannot take photos of a property, list the property and then take an offer from a prospective buyer, unless you have a mandate from the seller to do so.  It would however be acceptable to contact a seller to let them know that you have qualified buyers who may be interested in their property, but you may not do this, if the seller has given another PP a sole mandate already.
  2. Reg – a PP may not accept a sole mandate unless the mandate is in writing and signed by the client. The expiry date of the mandate must be indicated as a calendar date, for example, the mandate expires at 5pm on 31 May.  You cannot say that the mandate expires within 30 days of date of signing the mandate.
  3. Reg 34.3.14 – a PP may not accept a sole mandate which contains a provision giving the PP an option to extend the sole mandate for a certain period of time after expiry of the mandate or to continue to render the same service after expiry of the sole mandate. In other words, a PP cannot put a clause in their sole mandate which gives an automatic extension to the sole mandate when the sole mandate expires.  The PP would have to negotiate a new sole mandate.
  4. Reg – as a PP, you may not accept a sole mandate, which also gives the PP a power of attorney to act on behalf of the person giving the mandate, unless the effect of the effect of the power of attorney is fully explained in the sole mandate document. The reason for this, is to prevent the PP from agreeing to a transaction and/or signing any documents without the client knowing that the PP has the power to do so.  Imagine a scenario where the PP phones the client to say, “Good news, property has been sold, you need to move out on Friday”.  Of course, a good reason for a client to agree to a power of attorney being included in the sole mandate, is where the client is residing in a different country and it makes practical sense for the PP to be able to sign all the documents relating to the transaction.
  5. Reg – as a PP, you cannot have a clause in an agreement of sale or lease which says that the PP is automatically given another sole mandate to sell or let the property, when the same property is re-sold or re-let in the future.
  6. Reg – a PP cannot accept a sole mandate, if the PP’s interest in the property would compete with his obligations towards his client, without first disclosing such interest in writing, to the client. As an example, if the potential buyer is the PP’s brother, this fact needs to be disclosed in writing to the client.
  7. Reg – this is an EXTREMELY IMPORTANT In terms of this Regulation, a PP may NOT, knowingly or negligently, make a material misrepresentation regarding the likely rental or selling price of a property, in order to obtain a mandate.  Hence, it is a contravention of this Regulation, to provide an inflated estimate of the potential rental or selling price, in order to secure a mandate and block competing PP’s from potentially getting the mandate and then, over time, price counselling the landlord or seller to reduce the price towards a market related rental or selling price.  The best way to ensure that you comply with this Regulation, is to provide your landlord or seller with a comprehensive comparative market analysis, which clearly indicates how you have arrived at your estimate of rental or selling price.
  8. Reg – a PP may not accept a sole mandate, unless the PP has explained two things, in writing to the client. The first thing that needs to be explained, is what the legal implications are should the client sell or let the property during the term of the sole mandate, without the assistance of the PP or through the intervention of another PP.  In other words, it is important for the client to understand that one of the implications of a sole mandate, is that the PP who has been given the sole mandate, would still be entitled to commission if the client sells the property or uses another PP to sell the property.  Secondly, the PP also needs to explain what specific marketing obligations the PP undertakes in order to perform the mandate.


Next week we will discuss the PP’s duty of disclosure and duty not to make misrepresentations.


Click here to view the Code of Conduct:


For more information on all of CPMD’s courses, click HERE