Court strikes down BEE certificate requirement for estate agency licences
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The North Gauteng High Court has declared unconstitutional the section of the Property Practitioners Act that made a valid BEE certificate a condition for issuing Fidelity Fund Certificates to estate agents and agencies.
Lobby group Sakeliga has secured a major legal victory against strict black economic empowerment rules in the property sector after the North Gauteng High Court declared unconstitutional the requirement that estate agencies hold a valid BEE certificate in order to obtain operating licences. The judgment was handed down this week.
Sakeliga took the matter to court in 2024 after the Property Practitioners Regulatory Authority refused to issue operating licences, formally called Fidelity Fund Certificates, to businesses unless they met a stated BEE compliance level of 40 points or more, equivalent to BEE Level 8. The regulator walked back the requirement last year, but Sakeliga continued to challenge the validity of the rules as a whole.
In her judgment, Judge Elmarie van der Schyff said the difficulty was not merely one of interpretative complexity. She said Section 50(a)(x) makes possession of a valid BEE certificate a condition for the issue of a Fidelity Fund Certificate, but that neither the Act nor the applicable statutory framework identifies with reasonable certainty what document is required, from whom it is required, or what substantive standard must be satisfied for the document to be valid. Section 50(a)(x) of the Property Practitioners Act was therefore declared inconsistent with the Constitution and invalid, and the first respondent may not refuse to issue a Fidelity Fund Certificate solely by reason of that section.
The court also partly agreed with Sakeliga that the definition of property practitioner in the Act is irrational and overbroad. That means private owners, certain advertisers, and persons dealing with specified property interests outside the ordinary course of business are no longer regarded as property practitioners. Sakeliga said in a statement that the constrained definition means several categories of persons engaged in property-related business now enjoy freedom from government overreach, though it added that it is assessing further legal options because it did not obtain the full narrowing of the definition it had sought.
Because the judgment concerns findings of unconstitutionality of an Act of Parliament, it will be referred to the Constitutional Court for confirmation. If confirmed, Parliament will have 24 months to correct the defects.