IEASA aims to outlaw ‘accreditation’ by homeowners’ associations

31 March 2009

The Institute of Estate Agents (IEASA) is taking on the practice of “accreditation” which gives selected agents exclusive property marketing rights in some security complexes and estates.

This stands to affect thousands of South African homeowners who have to date not been at liberty to choose their own agents when buying or selling units in certain developments.

In terms of the so-called accreditation schemes, the homeowners’ association (HOA) in a complex or estate will confer exclusive marketing rights for that complex on selected agents – usually in return for an annual fee.

The practice was recently reviewed by the Competition Commission, which found it did not constitute anti-competitive behaviour because all agents are still free to work in the residential areas surrounding particular complexes or estates.

However, Dr Willie Marais, national president of IEASA, says the organisation has decided to take the matter further and is calling for input from its members as well as non-members in the real estate industry. (See www.ieasa.org.za Survey: Accreditation Required By Home Owners Associations - closing date 3 April 2009)

“We have also obtained legal advice on the matter and have been advised that the practice is unlawful. Our advisers have indicated that accreditation is, on the one hand, an unfair business practice in terms of the Consumer Affairs Act of 1988, as well as being in contravention of key provisions of our Constitution.

“Section 22 of the Constitution protects both the right to choose a profession and the right to practise the chosen profession and “accreditation” infringes this right.”

Marais points out that estate agents are not opposed to registration with HOAs for security purposes. “However, the current practice smacks of a smokescreen for creating mini-monopolies, while there is no quid pro quo for the fees – sometime exorbitant sums – that agents have to pay for the privilege of practising their profession in these developments.”

He says the principle of accreditation means that recognition is given to a certain standard. However, estate agents are already regulated by legislation that requires certain standards to be met before agents can be registered. Additional “accreditation” is therefore a misnomer.”

“What is more, restrictions on the number of agents active in an estate may influence the market value of properties, which infringes property owners’ constitutional rights in terms of Section 25.”

Marais adds that IEASA is also concerned about the implications of “accreditation” for property consumers. “The practice limits property sellers’ and buyers’ rights to choose an agent to represent them in property transactions. Accredited agents might, for instance, not be consumers’ first choice, based on considerations such as experience and expertise.

“We do not question the responsibility of estate agents to know the rules and regulations of such security estates, which is an obligation placed on them the by the EAAB Code of Conduct, but will hopefully be able to meet soon with an HOA representative body to try to prevent some HOA’s from continuing to raise crippling annual fees, and limit the number of agencies working in their complexes, before we have to take legal action.”

Issued by the Institute of Estate Agents of SA

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