The troublesome marketing agreements between Home Owners Associations (HOA) and some estate agents has been given a conditional nod by the Estate Agency Affairs Board (EAAB). However, commotion around these controversial (sometimes exclusive) agreements may just be beginning.
The EAAB issued a practice notice on the 5th of September 2014 which purports to clarify acceptable behaviour around the matter.
The notice declares that notwithstanding every home-owner’s freedom of choice to appoint an estate agent of their choice for the marketing, selling or letting of their property, the marketing agreements between HOAs and estate agents is permissible under certain conditions. The conditions include that any fees payable constitute a reasonable cost recovery for services rendered by the HOA for things like:
Supply of security access cards;
Supply/erection of advertising boards;
Supply of maps/directions to properties; or
The EAAB notice further states that “An estate agent acting in any way in contravention of the ethical provisions of the Code of Conduct may be subjected to a disciplinary process which may result in him/her being sanctioned, upon a guilty finding, by a Committee of Enquiry of the EAAB”.
The CE of Real Estate Business Owners of SA (REBOSA) Jan le Roux said the EAAB’s intervention was welcomed.
It means that “Under certain conditions the conclusion of marketing agreements between estate agencies and homeowners associations (HOA’s) are lawful,” said Le Roux.
He added that the practice of paying fee’s to HOA’s can be justified if fair and equitable in relation to the services being rendered, and as now stipulated by the EAAB. REBOSA however does not support the exclusion of all other estate agencies to carry out business within HOA’s.
Le Roux added that “We operate in a free market system and therefore, no seller or buyer should be refused permission to use an estate agent of their choice. Preventing other estate agencies from effectively entering and competing within HOA’s goes against our industry ethos and could have long term detrimental effects on our sector. We therefore welcomed the revised notice and continue to cooperate with the board and other industry stakeholders. Although not perfect the latest notice brings more clarity. ”
The practice under question has come under fire from different directions in recent times. The main concern is that the practice festers to unfair and uncompetitive behaviour.