EAAB Board Dissolved (The Bugle)

Who governs the Governor? In a dramatic intervention from the highest level of government, the Minister of Human Settlements Tokyo Sexwale last week announced that the Estate Agents Affairs Board (EAAB) would be placed under administration and that the board of directors had been dissolved. Sexwale had resolved to address the pressing allegations of mismanagement at the EAAB at the anticipated sector summit in September. However the resignation of Ina Wilken, the EAAB board chairperson, soon after her appointment, must have precipitated some decisive action. Sexwale referred to “shenanigans” that had taken place, possible criminal charges that could follow the full investigation he has called for by the Special Investigating Unit, and allegations of improper conduct, fraud and abuse of the EAAB’s fidelity fund. Sexwale reportedly referred to the EAAB’s “house being in disorder” and the “windows breaking from the inside”.

The role of the EAAB is to provide protection to the public at large in their dealings with estate agents. As an insurance scheme, all estate agents make contributions to a fidelity fund and are issued with an annual fidelity fund certificate. This fund provides resources to compensate members of the public in the event that they fall foul to fraudulent activity by an estate agent. It is illegal for any estate agent or estate agency business, even those “in-house” sales people of master developers of large estates, to conduct business without a valid fidelity fund certificate. 

The real estate industry has been through a battering over the past few years. The EAAB put Wendy Mechanik Properties out of business overnight, by withholding their fidelity fund certificates after allegations of trust fund mismanagement became evident. The implosion of Auction Alliance followed active media interrogation of their activities. The need for an industry regulator with strong leadership, a clear mandate and hopefully representation on its board by members of both government and industry is evident. Having spent my working career to date within KZN, it is the norm for estate agents here to always have the appointed transferring attorney handle deposit funds directly and not the estate agency. It was therefore surprising for me to learn that in other parts of the country the estate agent often holds funds received from a Purchaser in a property sale transaction in their own trust accounts. In light of potential mismanagement, it could be instructive for the rest of the country to take a leaf out of KZN’s common practice book.