Page 58 - Q&A 2019/2020

Why a Fidelity Fund Certificate is important for
you and your estate agent

Natalie Steenkamp
February 2019
“I’ve finally received my qualification to practise as an estate agent, but am still
waiting for my Fidelity Fund Certificate. Some people say I can start practicing
as an estate agent as long as I’ve applied for my Fidelity Fund Certificate. Is
this correct, and can I already practise as an estate agent?”
In terms of the Estate Agency Affairs Act (“Act”) an estate agent must have
a valid Fidelity Fund Certificate (FFC) in order to receive any payment or
commission arising from his or her duties as an estate agent.

In clarifying this provision it has been held by our courts that even if an FFC
has been applied for, if a valid FFC was not held by the estate agent at the
time of the transaction in terms of which he or she is claiming a commission
or payment, the estate agent is not entitled to any commission or payment for Property
such transaction.

The purpose of the requirement for an estate agent to have an FFC is to ensure
that the public is not misled and as such the FFC is an important control
measure to help reduce the risk to the public against corrupt agents.
Accordingly, an FFC will not be issued to any estate agent that, amongst other
things:

1. has been dismissed from a position of trust due to improper conduct;
2. has at any time been convicted of an offence involving dishonesty;
3. is an unrehabilitated insolvent;
4. is of unsound mind;
5. does not comply with the prescribed standard of training; or
6. does not have the prescribed practical experience.
When the new Property Practitioners Bill is enacted, conveyancers may also not
pay out commission, unless the estate agent has provided the conveyancer
with a certified copy of his/her valid FFC. It would therefore be wise/prudent for
buyers and sellers to request proof of a valid FFC before associating themselves
with an estate agent or agency.

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