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Fund certificate, they are not legally allowed to receive any commission,
remuneration or payment in respect of or arising from the sale or lease of any
property, and will also be guilty of an offence which could lead to a fine or BEE
imprisonment if convicted - serious consequences for not having a Fidelity Fund
certificate, which will now also be linked to having a BEE certificate.
The Bill does not specify the specific requirements or level for the BEE certificate,
so it can be assumed that a valid BEE certificate meeting the minimum level of
BEE compliance will be sufficient to meet this requirement.
But, to meet the minimum level of BEE compliance and get a valid BEE certificate,
an estate agent or agency will have to comply with the targets and requirements
as set out in the Property Sector Code for BEE. The only exemption is where the
estate agency’s annual turnover is less than the threshold set for Exempt Micro
Enterprises (“EMEs”), in which case the estate agency will be exempt from
having to comply with the scorecard elements of the Property Sector BEE Code
(“Property Code”) and will qualify the estate agency as an automatic Level 4
contributor to BEE.

Although this sounds like good news given that many estate agencies are
relatively small, it must be noted that the thresholds in the Property Code
applicable to estate agents are much lower than that of the Amended Generic
BEE Codes (“Amended Codes”). The threshold for EMEs under the Property
Code is set at R2,5 million turnover per year as opposed to R10 million per year
under the Amended Codes.
This limits the impact of the exemption to the smallest estate agencies which
have an annual turnover of less than R2.5 million. The threshold for QSEs under
the Property Code is also lower than under the Amended Codes and set at
between R2.5 million and R35 million, with estate agencies with an annual
turnover of R35 million or more, having to report under the Generic scorecard of
the Property Code. The turnover of an estate agency will be based on income or
commission received by the estate agency and not the sales values of property
being sold.

More than a year has passed since the publication of the draft Property
Practitioners Bill for comment, and to date there is still no clear indication of
when it will be formally adopted. That said, it would be dangerous for any estate
agency to become complacent. Should the Bill be passed and your annual
turnover is above R2.5 million you have to undergo a formal BEE verification audit
in order to obtain a BEE certificate. Such verification audit is usually based on
your latest completed financial year and if your BEE planning is not in place with
the necessary initiatives undertaken, you may be caught off guard in the event
of the Bill being finalised and not be able to renew your Fidelity Fund certificate.
The Bill then determines that this may require you to repay any commission, fees
or remuneration received from the sale or lease of a property, failing which you
could be guilty of an offence.

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