BREAKING NEWS: Most estate agents and managing agents are acting illegal 1

[QUINN]

Pretoria - Estate agents and sectional title managing agents must be registered as debt collectors before they can collect rental arrears, the council for debt collectors said on Wednesday.

"If they do so they are acting illegally and are contravening the Debt Collectors Act," chairperson Jasper Noeth told a media briefing in Pretoria.

He said on June 6, a council committee made a landmark ruling that estate agents and sectional title managing agents cannot collect arrears without being registered as debt collectors.

He said it was pointed out that when estate agents and sectional title managing agents recover rentals and levies in arrears, they were collecting debts as defined by the Debt Collectors Act.

They were thus acting as debt collectors and must be registered with the council for debt collectors.

The ruling means agents would be subjected to the council's prescribed fees.

"This decision will undoubtedly safeguard the public against any possibility of exploitation of fees asked."

He said it has been found that exorbitant fees were being charged and the public was exposed to abusive practices.

"The prescribed fee, as stipulated in the Debt Collectors Act, for a letter of demand is R12.60," he said, mentioning a case in which amounts of R175 to R250 were charged for letters of demand.

He said during the past financial year the council had received numerous complaints about debt collecting and had acted on these matters in a fair and responsible manner.

In one case the council found that 287 false emolument attachment orders were issued and no files existed at the magistrate's court where the orders were supposedly issued.

An emoluments attachment order is issued by a court to a debtor's employer directing that a specific amount of the employee's salary be paid directly to the creditor.

The debt collectors concerned were found guilty and would be sentenced soon. The total amount to be collected in terms of these orders, over a period of time, amounted to more than R3.6m.

"In various disciplinary matters it was found that the public had been overcharged with fees.

"In these cases the disciplinary committees of the council ordered a repayment of the amounts overcharged to the debtors concerned. The amounts to be repaid varied from R30 000, R25 000, R10 000 and numerous smaller amounts."

The council for debt collectors was created by Parliament to protect and inform the public about their rights in terms of the Debtor Collectors Act.

The council exercises control over debt collectors in their interaction with the general public.

About time
Another matter I found interesting, the moment you charge late payment fees or interest on arrears accounts I am of the opinion that you have to be registered in terms of the national credit act. This practice falls under incidental credit agreements and as such subject to the act.
THERE ARE HUNDREDS OF COMPANIES ACTING IN CONTRAVENTION OF BOTH THESE ACTS. CAN YOU JUST IMAGINE THE REFUNDS THAT ARE DUE.
If you have ever been charged for late payment or charged interest and the claimant is not registered you can claim a refund.

Also see:

Incidental Credit under the National Credit Act

Despite all the hype and media attention around the National Credit Act, there still appears to be a degree of confusion out there about the implications of the NCA, particularly with creditors and whether they should be registered with the National Credit Regulator or not. It appears that some “credit consultants� out there are advising every man and his dog to apply to register as credit providers.

A very large percentage of the creditors that I have come into contact with fall under the definition of incidental credit providers.


A central element in the NCA is the definition of credit agreement. If an agreement falls under the definition set out in Section 8, then there are various elements of the NCA which apply to that agreement and if the credit provider has more then 100 credit agreements (as defined) or the total value of the credit agreements is over R 500 000.00, then that credit provider has to apply to register as a credit provider with the National Credit Regulator.

But tucked away in the Section 8 definition of credit agreement, under S8 (4) definition of credit transaction is an incidental credit agreement, Section 8(4)(b) . The definition of incidental credit is defined under Section 1 as:

“.an agreement, irrespective of its form, in terms of which an account was tendered for goods or services that have been provided to the consumer, or goods or services that are to be provided to a consumer over a period of time, and either or both of the following conditions apply:

(a) a fee, charge or interest became payable when payment of an amount charged in terms of that account was not made on or before a determined period or date; or
(b) two prices were quoted for settlement of the account, the lower price being applicable if the account is paid on or before a determined date, and the higher price being applicable due to the account not having been paid by that date;�

Now this section has to be read with Section 5(2) which reads as follows:

“The parties to an incidental credit agreement are deemed to have made that agreement on the date that is 20 business days after -

(a) the supplier of the goods or services that are subject of that account, first charges a late payment fee or interest in respect of that account; or
(b) a pre-determined higher price for full settlement of the account first becomes applicable,

unless the consumer has fully paid the settlement value before that date.�

So based on this definition a large number of credit providers are actually incidental credit providers as defined in the NCA. Even a large portion of consumer retailers who provide interest free credit for a specified period before charging interest on their accounts, fall under this definition of incidental credit provider.

Now importantly for those who fall under this definition of incidental credit is the exclusion of various sections of the NCA being applicable to them in terms of Section 5 of the NCA .

The sections which are excluded from being applicable to an incidental credit agreement include the following:

- Pre-agreement disclosures
- The form and contents of agreements
- Unlawful agreements and unlawful provisions in agreements
- Reckless credit (Sec. 80 to 84)
- Registration requirements
- Marketing practices
- Surrender of goods
- The consumer cooling-off right; and
- The dispute settlement mechanisms of the NCA

These are some of the most onerous and controversial sections of the NCA, including registration as a credit provider.

So if you are not charging interest from the inception of your credit granting and only upon your debtor defaulting in their payment terms, the chances are that you fall under the definition of incidental credit and the major provisions of the National Credit Act do not apply to you. However there are some of the provisions of the Act which apply to you and we suggest you consult an attorney well versed in credit law in this regard.

I can see a whole new business forming in my head...........