More Protection for Consumers in Property Transactions.

The right to private property ownership has always been entrenched under section 25 of the Constitution of the Republic of South Africa, which right offers protections to all sellers during property transaction; in that they may not arbitrarily be deprived of their property. There have however been very few legislative authorities promulgated that provides protection of the purchaser in property transaction. In transactions that were concluding during the ordinary course of business the purchasers where to a certain extent protected by the operation of the Consumer Protection Act no 68 0f 2008 (‘CPA’ hereinafter), provided that the transaction was between a “service provider” and a “consumer” as defined in terms of the CPA. In most property transactions still, the parties involved are both “consumers”, and not afforded the necessary protection that is provided under the CPA. Instead, property transactions are oftener governed by a voetstoots clause, meaning the property is sold as is, regardless of any defects. The consequence hereof is that purchasers are often liable for any defects in the property that were not repaired prior to the property registering in their name.

From the 1st of February 2022, the Property Practitioners Act no 22 of 2019 (‘PPA’ hereinafter) will commence and bring about important changes that have bearing on property transactions. The most substantial change being the protection afforded to Purchasers relating to defects in a property. While it has been common practice that the parties disclose all defect to one another, it has now become mandatory that a comprehensive disclosure document, setting out all defects in the property, must be signed by the parties prior to concluding a sale or lease agreement. The mandatory disclosure form will have to be completed before the agent may accept a mandate to sell or lease the property. This significant change will hopefully provide more clarity when it comes to the questions regarding liability of defects in a property, protecting both the seller and purchasers. Although the signed disclosure document will not be regarded as a guarantee, the prospective purchaser can use the information to decide whether they want to purchase the property.

In terms of the PPA various changes will be effected and it is essential that every person who carries on a business, profession, or trades as a property practitioner, as well as developers, sellers, and purchasers or otherwise, familiarises themselves and understands the legal responsibilities and obligations placed on them in terms of this new legislative framework. The following important changes will also be introduced by the PPA:

• The scope of the legislation is broadened by defining Property Practitioners to include, agents, property brokers, bond originators, homeowners’ associations, companies selling timeshares and property managers. All of which will now be further regulated by the PPA.
• The PPA also makes the requirement of a Fidelity Fund Certificate more stringent, and anyone earning a commission or brokerage fee, as well as any other property practitioner must be fully compliant and produce such a Fidelity Fund Certificate on reasonable request.
• Every property practitioner must keep a trust account, appoint an auditor, report to the Property Practitioners Regulatory Authority, and keep accounting records to be audited.
• A new Estate Agencies Affairs Board to be known as the Property Practitioners Regulatory Authority will be established to govern all Property Practitioners, and not just estate agents, and ensure their compliance with the PPA while implementing measures to transform the property sector.
• New complaints procedures will be established whereby property practitioners can be reported to the Property Practitioners Regulatory Authority and claims lodged against the Fidelity Fund.

We at Liddle & Associates Inc. are adamant that both the seller and purchaser should have peace of mind when it comes to the buying and selling of property.  We do our utmost to keep all parties in the transactions we deal with updated regarding the most recent developments in law and we endeavour to make all parties involved in the transaction aware of their rights and responsibilities when concluding an agreement of sale.
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We always encourage any questions or comments, so that we may grow together in a meaningful and informed way. Feel free to comment with any questions, concerns, or suggestions.