Selling or Buying a House? Make sure the Plans are up to date!
I often get asked whether you need a set of plans to sell your house here in South Africa. I also get called a lot to get illegal / 'as built' additions and buildings approved at Council. Fortunately Johannesburg Council is a lot more relaxed than elsewhere in the world and usually will only order demolition if you have built over a servitude or the building/addition is unsafe or poorly built.
Increasingly banks and mortgage lenders are making it a requirement for a seller to have a complete set of up to date plans and often an Occupation Certificate before granting a loan to the buyer.
It is a big risk to go ahead and build without planning permission, not only could this bite you when you want to sell your property, but your Buildings Insurance will only cover the part of your home/building that has Municipal Approval. Noncompliance also effects the banks that finance these buildings since this will severely impact on the income potential of the property, which is in most instances, the banks security. In the case of a Council taking action income can be lost and this situation can be even worse in the case of fire or structural collapse. It is understood that some banks are withholding final payment on new developments until the lender can present the bank with a valid occupation certificate.
Owners of buildings and their tenants will be prosecuted if they don’t have a valid occupation certificate. This is the message that is being sent out by most of the major metropolitan councils and the others are soon to follow. Any person or organization that occupies a building or a portion of a building without a valid occupation certificate is guilty of an offence that is punishable by law. The councils are taking action in terms of section 14 of Act number 103 that was already promulgated in 1977. Action taken against defaulters includes spot fines issued by the Fire Departments, termination of services and legal action that is taken in certain instances. Mr. Jeremy Rossouw, spokesperson for Building Inspection and Certification Services (BICS), said that a number of tenants and landlords that the group consulted with felt that this is, as was stated by some, “the latest money making racket of the councils”. The Metros and Local Councils are obliged to take responsibility for the safety and security of its citizens and to uphold and enforce the laws of the country.
An Occupation Certificate is compulsory for every building before occupation, as required by the National Building Regulations and Building Standards Act (1977). This is to show that all requirements have been met and to safeguard the owner.
The Occupational Certificate specifies the type of building – freestanding, terraced, cluster complex, town house complex, apartment or commercial building. The Certificate is required before water and electricity deposits can be accepted for newly built properties.
It is against the law to sell a property without 1) a full set of approved plans / planning permission from Council, 2) Occupation Certificate. An illegal / un-inspected building is not insured, this could lead to substantial losses in the event of fire / flood etc. After a month’s grace to submit building plans – property owners can be fined over to R1000 a day for not complying with the Act.
So my best advice is that before you buy a new house is to check that the building is built in accordance with the approved municipal plans. Alternatively you could include a suspensive clause in the Offer to Purchase that puts the obligation on the seller to provide up to date Council Approved Plans. I suggest that you get assistance from an Architect/Designer or Building Inspector to help you with interpreting the plans.
As Wayne Albutt (Rawson Property Group's Regional Sales Manager for the Western Cape) says
"Where a buyer accepts the transfer of a property and then discovers that it does not conform to the approved plans, he can find himself in serious trouble, and the reason for this is that, in terms of the Consumer Protection Act (CPA), if the seller is engaged in a one-off transaction (i.e. if the sale is not part of his usual day-to-day business) the Voetstoots Clause still applies, subject to any other relevant clauses agreed to in the Deed of Sale.”
This means, said Albutt, that the buyer is in effect buying the property as it is, regardless of whether it conforms to the plans or not.
The right course to follow, he said, is for the prospective purchaser to insist on seeing a copy of the approved plans before signing any sale documents and then, with the help of an architect or building inspector, to check them against the existing dwelling. Should they not comply, then the prospective purchaser has a few options: purchase as is or make it a condition of the sale that new building plans be drafted and approved according to the dwelling, at the cost of the seller.
All too often, said Albutt, South African home owners change and add on to the existing dwelling without municipal approval and in doing so they very often do not observe building regulations. In some cases, and more recently now with reputable estate agents complying more in terms of the CPA, some sellers have lost perceived asset value of their properties where built-on structures were needed to be demolished prior to the effective sale of the property due to non-compliance of municipal building regulations.
What if the owner knows the building he/she is selling does not comply with the plans but does not disclose this? Is he/she still protected by the Voetstoots Clause?
“If it can be proved in a court of law that the seller was aware of the irregularities, the purchaser will have a claim against the seller– but such prior knowledge can sometimes be difficult to prove,” said Albutt.
So where does the estate agent stand in these cases?
“Here,” said Albutt, “the situation becomes very tricky because under the Consumer Protection Act, the agent is facilitating the sale of the property in the course of his normal day-to-day business and could be held accountable for not carrying out typical issues expected of the agent; this would include educating and informing the seller and purchaser of the potential liability of not ensuring municipal building compliance.
So if I buy a property and find out later that it does not comply with the approved plans what could I do to rectify matters?
“It is essential at this point to bring in an architect or draftsperson to draft the plans of the house as it is now and then to submit the “as built” plans to the municipality for approval. The new owner could be liable for a fine imposed by the municipality for owning a dwelling that does not comply with the approved building plans or may have to demolish parts of the dwelling that are not approved in order to ensure compliance.”
The Offer to Purchase in most instances includes a Voetstoets Clause. Essentially this clause indicates that the purchaser accepts the risk relating to defects existing at the time of the sale, patent or latent (but not visible). The exceptions to this clause are instances where the seller deliberately and fraudulently conceals latent defects from the purchaser, that he or she was aware of at the time – in which case the seller will remain liable for these defects. But of course the purchaser will have to provide evidence that the seller knew what was wrong.
Note that the position is somewhat altered if the Consumer Protection Act applies to the agreement between the parties, e.g. where the seller is a developer.
Our law takes into account that any property with buildings erected without municipal approval is a property with a latent defect. The voetstoets clause will normally cover latent defects and a seller will not automatically attract liability if he sells a property with unauthorised building works. But if the seller knows that there are no plans and he organized and did the renovations himself, and he deliberately does not disclose this fact (with the intention to defraud the purchaser), the seller cannot hide behind the voetstoets clause.
Not having approved plans will almost certainly mean that Council will refuse to allow any further renovations a purchaser might have planned and in some cases Council could order that the illegally erected structure or additions be demolished.
A (latent or patent) defect that is of a significant nature, and affects the use and enjoyment of the property, does allow the purchaser certain remedies. The most far-reaching of these is cancellation of the agreement, which he is entitled to do, if the purchaser can prove that the defect is so serious that he would not have bought the property had he known this. Other courses of action include the reduction in purchase price or a claim for damages, depending on the seriousness of the defect and the specific circumstances involved.
So where does the Estate Agent who facilitated the sale of the property stand?
According to Bill Rawson (of the Rawson Property Group) private once-off sellers are not governed by the Consumer Protection Act (CPA) and are therefore entitled to sell their properties voetstoots, which effectively passes the risk of unapproved plans from the seller to the buyer on transfer.
However, Rawson says the situation is much trickier for estate agents who are governed by the Consumer Protection Act because they facilitate the sale of the property in the course of their normal business. He says agents could be held accountable for not educating and informing the seller and purchaser of the potential liability of not ensuring municipal building compliance.
Rawson says prospective buyers should insist on seeing a copy of the approved plans before signing any sale documents and should use an architect or a building inspector to check the plans against the existing buildings.
John Graham, CEO of HouseCheck says that unapproved plans are only one of the serious risks which effectively pass from seller to buyer with a voetstoots property sale. The defects in the house structure – roof leaks, damp or cracks for instance or unsafe or illegal geysers or electrical or plumbing or gas installations also effectively become the buyer’s problem once a voetstoots sale has gone through.
It's best to make sure that the plans for your house are up to date before you sell or buy it. It's very hard once the sale has gone through to go back to the previous owner and get restitution for getting unapproved structures approved at Council. in fact if the seller has bought the property with no plans from a previous owner then it's unlikely that you will succeed.
If you need assistance with getting any 'As Built' / Illegal building work approved in Johannesburg, please give me a call.
Call Claire - 011 025 4458
I love Architecture. I think it's vital to talk about all aspects of Architecture - whether it be planning, construction, design or green building. I have written 3 E-Books & over 110 articles. Please feel free to let me know if you have any queries regarding architecture, planning & construction & I will assist you.
I am originally from the UK and moved to South Africa in 1999. I started Blue Designs in 2004 after working as a driver for Avalon Construction on a luxury home in the Featherbrook Estate. In my spare time I am an artist and writer.
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Other Articles I have written include :-
There is more on the “Voetstoets Clause” and the CPA (Consumer Protection Act) here: the-consumer-protection-act/the-cpa-the-voetstoets-clause
The Consumer Protection Act :-
The Housing Consumers Protection Act :-
The National Building Regulations and Building Standards Act (1977)