19/07/2022
Avoid these common pitfalls when buying or selling property-
“Caveat emptor” (let the buyer beware) is a well-known phrase from contract law that often applies in property transactions. Buyers find themselves in a position where they know less about a property than the seller, and the onus has been on them to inform themselves of the true state of the property they are about to purchase.
It can cost the purchaser of the property tens of thousands of rands to rectify electrical and other such faults to get their new property to reach the correct level of compliance.
While the Consumer Protection Act has gone some way towards protecting buyers, and the new Property Practitioners Act goes further, buyers still have to beware.
Here are some tips to help buyers, but sellers would do well to cover the same ground before they list their property as it could save them a great deal of money, and even the sale of their property down the line.
Currently, to avoid liability for damages, the seller and their agent are required to inform the buyer of all defects or potential defects.
The new regulations make it mandatory for sellers to attach a disclosure form to the agreement of sale (or lease).
Buyers should always insist on a copy of such a document before signing an Offer to Purchase (OTP).
The seller is required to provide an electrical compliance certificate, electrical fence certificate, entomologist’s certificate and, if relevant, a gas compliance certificate. In Cape Town, a certificate of plumbing compliance is also required. Certain banks (such as FNB) require a compliance certificate for properties with asbestos.
Consumer watchdogs are encouraging buyers to ensure all certificates supplied by sellers are legitimate, and to undertake extensive inspections of homes they plan to buy.
Transfer of the property cannot proceed without these, and will be delayed until such certificates are issued.
A reputable agent will advise sellers of these requirements and put them in touch with a suitably qualified property inspector and property compliance specialist.
Even the most scrupulously honest seller and their agent may not be suitably qualified to pick up all defects.
As a result, consumer watchdogs are encouraging buyers to ensure all certificates supplied by sellers are legitimate, and to undertake extensive inspections of homes they plan to buy.
To ensure your compliance certificates are legitimate, include the following in your offer to purchase:
- Add the proviso that the property passes a home inspection before to transfer, and that if any defects are found that these be repaired to your satisfaction before to transfer.
- Add the condition that ‘the home passes a due diligence investigation’.
What do these mean?
The verified electrical certification clause for instance, means that the local provincial electrical inspection authority will be asked to recheck the entire installation. If any faults are found, the authority will require the electrician who issued the certificate of compliance to sort out the faults at the contractor's expense. Any costs to remedy the installation would be for the seller, who is responsible for providing the certificate.
The home inspection is payable by the purchaser, who should also choose which professional home inspection company to use.
Such an inspection would look for defects such as:
1. Poor drainage
Does storm water flow away from the house properly? Does the roof need new gutters and downpipes? Is there a danger of water ponding seeping under the foundations?
2. Faulty electrical, plumbing and gas installations
Wiring, DB boards, hot water geysers, plumbing pipes, gas lines and sanitaryware are all checked.
3. The roof
Leaking roof, whether from poor flashing, blocked gutters or aging roof coverings.
4. Insulation
Defective or non-existent insulation.
5. Maintenance
Poor maintenance, e.g., DIY plumbing and electrical fixes.
6. Structural damage
Structural damage due to a settling or weak moving foundation, which means roof structures, doorways, walls and support beams become unstable.
7. Water seepage through windows and doors
Re-caulking windows and doors, adding weather-stripping or other more extensive repairs may be necessary.
8. Rotten wood
Rotten window and door frames, timber floors and roofing timbers could be an indication of borer beetles, termites and wood-destroying fungi.
9. Poor ventilation
Poor ventilation can lead to structural damage and health hazards.
10. Hazardous materials
Hazardous materials such as lead-based paint, asbestos materials and unhealthy levels of potentially toxic moulds.
Home buyers informed of home defects in these inspections will then decide on how to proceed with the home buying process - they may request that repairs be completed or that the major repair costs be covered by the seller.
A due diligence investigation would include title deed conditions, servitudes and confirmation that the structures on the property have been approved by the local authority.
Good practice is to add a clause in your offer to purchase, under ‘Special Conditions’, that states a copy of approved municipal plans must be provided by the seller prior to registration of the property.
As much as this is good advice for buyers, it is just as important that sellers do the same homework, even before listing their property. It can save a great deal of heartache, stress and expense down the road.
Putting matters right can be expensive. There are cases of sellers having to pay out tens of thousands of rands to rectify electrical faults and plumbing improvements to reach compliance. This goes to show how important it is to keep up with the maintenance needs of your home.
Mike White – 0818486920 – [email protected]
