by Keeran Madhav, Director of Mazars Forensics Services.
Tough economic times can often lead to opportunistic people trying to make an extra buck or two. It’s therefore important to be savvy when it comes to dealing with estate agents, or people who claim to be estate agents.
This particular industry has unfortunately seen its fair share of property scams from fake listings to fictitious property developments.
Fortunately, there are some precautions you can take to make sure you are dealing with a reputable estate agent and there is legislation on your side for your protection against this type of fraud.
It’s all in the paperwork
The Estate Agency Affairs Act 112 of 1976 (EAA Act) governs the industry. Section 34 of the Act says that no remuneration can be paid to a company or an individual acting as an estate agent if they don’t have a valid fidelity fund certificate. This is the key document ensuring you are dealing with a legitimate agent, one registered with the Estate Agency Affairs Board, and you are entitled to see it. You can also verify an agent on the Estate Agency Affairs Board website (www.eaab.org.za) where all agents who are marketing properties must be registered.
Look out for con artists
It is worthwhile noting that someone selling his or her own property can’t be an estate agent. On the other hand, a person could be an estate agent if they sell property belonging to their spouse or parents. Investigate who the property belongs to as well as who is trying to sell it to you.
In addition, you should also see the property or development land in person, especially if it’s far away. Trusting a smooth salesman is all good and well until you end up buying a piece of a large fish factory that won’t actually be converting into a luxury retirement village after all.
Know the scope of estate agents by law
You might think an estate agent is simply someone who helps customers buy or sell property. However, there could be many other entities and/or individuals providing services in the property industry that may fall within the definition of an estate agent. The EAA Act defines an estate agent as any person on their own, or as part of a partnership, who directly or indirectly advertises services such as selling property (including business premises), canvassing for buyers, letting property or collecting money from lessees.
Justice should be served
If you come across a fraudulent estate agent, you must really report them to the EAAB. In fact, any person who doesn’t comply with the EAA Act is committing an offence and liable if found guilty to a fine of up to five thousand rand or to imprisonment for up to five years. Be vigilant and do your bit to protect yourself and your community from an agent acting fraudulently.