The Property Practitioners Act came into effect in February 2022, bringing with it a host of changes when buying or selling a house in South Africa.
According to legal firm Cliffe Dekker Hofmeyr, one of the key changes can be found in Section 67 of the Act obliges property practitioners to obtain a ‘disclosure form’ from a seller or lessor before concluding a mandate, and to provide it to a purchaser or lessee before making an offer.
The section states that a property practitioner must:
- Not accept a mandate unless the seller or lessor of the property has provided him or her with a fully completed and signed mandatory disclosure in the prescribed form;
- Provide a copy of the completed mandatory disclosure form to a prospective purchaser or lessee who intends to make an offer for the purchase or lease of a property.
- The completed mandatory disclosure form signed by all relevant parties must be attached to any agreement for the sale or lease of a property, and forms an integral part of that agreement, but if such a disclosure form was not completed, signed or attached, the agreement must be interpreted as if no defects or deficiencies of the property were disclosed to the purchaser.
- A property practitioner who fails to comply may be held liable by an affected consumer.
The disclosure form is a standard template document prescribed by the Act and must be signed by all parties and attached to the sale or lease agreement.
Furthermore, a property practitioner must retain all mandatory disclosure forms relating to financing, sale, purchase or lease of property for a period of five years.
What if no disclosure form is attached to a sale or lease agreement?
“Section 67(2) is clear in respect of the effect on a property agreement where there is no disclosure form,” Cliffe Dekker Hofmeyr said.
“If no disclosure form is signed and attached, the Act provides that the agreement must be interpreted as if no defects or deficiencies of the property were disclosed.”
What if no disclosure form is attached to a mandate?
Circumstances may arise where a seller or landlord lives abroad and may, on this basis, refuse to complete such a form, as the condition of the property is simply not within their knowledge.
“The language of section 67(1)(a) is clear. It says that the property practitioner must not accept a mandate unless they have received the duly completed and signed disclosure form,” Cliffe Dekker Hofmeyr said.
“Regulation 38 states that a breach of section 67(1) constitutes a minor contravention which carries a penalty of R15,000. The bigger issue, however, is the potential personal risk for the property practitioner in terms of liability for defects in the property.”
The most significant risk posed is in respect of property sales. If no disclosure document is attached to the mandate and the property practitioner nevertheless accepts the mandate and thereafter brokers a sale, the sale agreement is read as if no defects or deficiencies in the property were disclosed, the firm said.
“The risk is that if there are such defects or deficiencies which were known to the seller but not included in the sale agreement, the property practitioner could potentially be held liable by the purchaser.”
- Commentary by Justine Krige and Muhammad Ziyaad Gattoo of Cliffe Dekker Hofmeyr.