The High Court in Pretoria has declared unconstitutional and invalid a provision that made possession of a “valid BEE certificate” a condition for property practitioners to obtain the Fidelity Fund certificate (FFC) required to operate lawfully.
The Court granted Sakeliga NPC all the relief it sought against the BEE certificate provision but rejected most of its wider challenge to the expanded definition of “property practitioner”, finding only limited applications of the definition irrationally broad.
The Property Practitioners Act (PPA), which replaced the Estate Agency Affairs Act in February 2022, regulates a broader range of property-market activities. Its objects include consumer protection, broader participation in the property market, and transformation.
Sakeliga challenged section 50(a)(x), which prohibited the Property Practitioners Regulatory Authority (PPRA) from issuing an FFC to a person who did not possess a “valid BEE certificate”. It also challenged paragraphs (a)(iv) to (e) of the definition of “property practitioner”, arguing that they irrationally extended the Act’s regulatory reach to people and activities that lacked a sufficient connection to its purposes.
Sakeliga relied on the constitutional requirements of rationality and legal certainty, as well as section 22 of the Constitution, which protects the freedom to choose a trade, occupation, or profession.
Competing views on the BEE requirement
Sakeliga argued that an FFC was concerned with regulating property practitioners and protecting consumers, whereas possession of a BEE certificate served a materially different purpose. It contended that there was no rational relationship between the BEE certificate condition and the purposes served by an FFC.
The PPRA disputed that the certificate regime was confined to consumer protection. It relied on transformation as one of the legitimate purposes of the PPA and contended that section 50(a)(x) formed part of the Act’s attempt to transform the property sector.
The Court accepted an important part of the PPRA’s position.
In the judgment delivered on 8 September 2026, Judge Elmarie van der Schyff found that the Fidelity Fund and the FFC regime were related but not identical. The FFC was the statutory gateway to lawful practice, and the grounds for withholding one were not confined to risks associated with trust money or claims against the Fidelity Fund.
There was nothing inherently irrational about using the FFC regime to advance other legitimate objectives of the Act, including transformation. The question was whether the particular condition Parliament enacted had an ascertainable legal meaning and was capable of being applied coherently.
No clear meaning for ‘valid BEE certificate’
The Court found that section 50(a)(x) did not meet this requirement.
The PPA did not define “valid BEE certificate”, and the applicable broad-based black economic empowerment framework did not supply a single meaning for the expression.
The Amended Property Sector Code recognises different forms of proof of B-BBEE status for different categories of enterprise. Depending on the circumstances, proof may take the form of an affidavit, a certificate issued by the Companies and Intellectual Property Commission (CIPC), or a verification certificate.
However, natural persons were not excluded from section 50(a)(x). Regulations 41.20 and 41.21 instead deemed a natural person applying for an FFC to have applied for an exemption, which the PPRA was required to grant by default. The Court said this was an exemption mechanism, not an indication that natural persons fell outside section 50(a)(x).
The Act did not specify which of these instruments was required, nor did it identify from whom the document was required or whether an applicant had to achieve a particular B-BBEE level for it to qualify as a “valid” certificate.
The PPRA itself advanced different interpretations. In its answering affidavit, it described the required document as a certificate issued by an accredited agent and valid for the period stated in it. In its heads of argument, however, it submitted that an affidavit recognised under the B-BBEE framework could also satisfy the requirement.
The PPRA’s administration of the provision further illustrated the uncertainty.
The judgment records evidence that the regulator said at a compliance webinar in March 2024 that natural persons were exempt. It subsequently rejected applications that were not accompanied by certificates issued by SANAS-accredited verification agencies and treated certificates reflecting a status below Level Eight under the Property Sector Scorecard as invalid for the purposes of section 50(a)(x).
In August 2024, the PPRA informed industry bodies that it was reviewing its position after being advised that “valid” did not mean “compliant”.
The PPRA’s administrative conduct was not under review, and the Court did not decide whether these actions were lawful. The differing approaches were relevant because they illustrated the uncertainty in the legislation.
The Court found that people affected by the provision, as well as the authority responsible for administering it, could not determine with reasonable certainty what the law required. Section 50(a)(x) therefore failed the requirement of legal certainty inherent in the rule of law.
Because an FFC is required for lawful practice, the Court also found that the uncertain condition negatively affected the freedom protected by section 22 of the Constitution and had not been justified under section 36.
The Court could not cure the defect by deciding that a verification certificate, affidavit, or CIPC certificate would suffice. It would also have had to identify the people covered by the requirement and decide what B-BBEE standard, if any, they had to meet.
Those were legislative choices. Supplying the missing details would have required the court to create a new compliance mechanism rather than interpret the provision Parliament had enacted.
Section 50(a)(x) was consequently declared invalid in its entirety.
Most of the expanded definition survives
Sakeliga’s challenge to the definition of “property practitioner” succeeded only in part.
Its case was that the previous Estate Agency Affairs Act regulated a recognisable intermediary relationship in which a person acted for gain on another person’s mandate. Although the principal part of the new definition retains the requirement that a person act on the instructions of or on behalf of another, some of the additional provisions apply without that qualification.
Sakeliga argued that the definition could extend the Act’s licensing and regulatory consequences to people without a sufficient connection to its purposes. Its examples included private owners selling units, sections, or other specified property interests, developers marketing their own developments, advertising platforms, and people performing various property-related functions.
The PPRA maintained that the Act was deliberately broader because the property sector was no longer limited to traditional estate agents involved in sales and lettings on behalf of others. It argued that the wider definition was connected to the Act’s regulatory, consumer-protection, market-participation, and transformation objectives.
On most of these provisions, the Court substantially accepted the PPRA’s position. It held that extending regulation beyond the former estate-agency model was not inherently irrational.
It upheld the provisions covering specified property-financing activities, intermediaries and facilitators, services that may be specified by the minister, remunerated property management, trusts conducting property-practitioner business, and specified people associated with regulated businesses for limited statutory purposes.
The Court found that these categories had a rational connection to one or more of the Act’s purposes. It also rejected Sakeliga’s argument that the challenged provisions were generally void for vagueness.
Where paragraph (b) went too far
The Court reached a different conclusion about certain applications of paragraph (b) of the definition.
Paragraph (b) includes any person who sells, markets, promotes, or advertises a part, unit, or section of a property or property development, or rights or shares in such property. Unlike the principal definition, it does not require the person to act for gain, on behalf of another, or in the ordinary course of business.
A developer marketing units in its own development participates directly in bringing property interests to market, even though it does not act on behalf of another person. The Court found a rational basis for regulating this type of commercial activity.
It found no rational basis, however, for treating a private natural-person owner as a property practitioner merely because the asset being sold was a sectional-title unit, share, or other interest listed in paragraph (b), when the same consequence did not attach to a private owner selling a freestanding property.
The paragraph could also apply to a natural or juristic person or trust disposing of such an interest outside the ordinary course of business.
A further problem arose where a person’s involvement went no further than carrying, hosting, publishing, or disseminating an advertisement placed by someone else. The Court distinguished between someone who participated substantively in marketing a property interest and someone who merely provided the medium through which another person’s advertisement was communicated.
Paragraph (b) was declared invalid to the extent that it included these three categories in the circumstances specified by the Court and where the person would not otherwise qualify as a property practitioner under the Act.
The reading-in leaves paragraph (b) applicable to developers, promoters, and others substantively engaged in the commercial sale, marketing, promotion, or advertising of the listed property interests.
Apart from the limited invalidity of paragraph (b) and the successful challenge to section 50(a)(x), the application was dismissed.
What the judgment did not decide
In a statement following the ruling, Sakeliga said the judgment freed property practitioners from “compulsion to participate in BEE” and represented a setback to attempts to make BEE a condition for economic activity.
The Court’s order was narrower. It did not declare the Broad-Based Black Economic Empowerment Act or the Property Sector Code invalid, nor did it rule that transformation could not be advanced through licensing. It invalidated the particular condition in section 50(a)(x) because the legislation did not define sufficiently clearly what was required, and because the resulting limitation of occupational freedom had not been shown to be reasonable and justifiable.
Constitutional Court confirmation required
Both declarations of invalidity concern provisions in an Act of Parliament and therefore require confirmation by the Constitutional Court.
Pending its decision, the PPRA may not refuse to issue an FFC solely because an applicant does not possess the BEE certificate contemplated in section 50(a)(x). Paragraph (b) must meanwhile be read as excluding the three categories identified by the High Court.
If the Constitutional Court confirms the invalidity of paragraph (b), the declaration will be suspended for 24 months from the date of confirmation, during which the High Court’s reading-in will apply, to give Parliament an opportunity to correct the defect.
If Parliament does not correct the defect during that period, the reading-in will continue until constitutionally compliant legislation comes into force.
Section 50(a)(x) was treated differently. If its invalidity is confirmed, the declaration will operate prospectively from the date of confirmation and will not affect FFCs already issued.
