How to disclose approved building plans in an Immovable Property Condition Report

28 Oct 2024

A home seller has been asked by their estate agent to complete an “Immovable Property Condition Report” in relation to the sale of their property. The seller states that one of the items in the condition report asks of them to disclose whether or not there are approved building plans for all buildings on the property. The seller is unsure and wants to know what to do as well as the legal position of a request like this?

Tarryn Gravenor, attorney and conveyancer at Herold Gie Attorneys respond: 

Answer:

In South Africa, selling a property without approved building plans can be a complicated process, and it may not be advisable to do so. Building plans are typically required for the construction, extension, or alteration of any building on a property. When selling a property, having approved building plans can provide assurance to potential buyers that the structures on the property are legal, safe, and comply with local building regulations.

From a contractual law viewpoint, property is generally sold “voetstoots” which means as it stands and with all its defects. A patent defect is one which may be seen upon a careful inspection, whereas a latent defect is a hidden defect. Sellers would be well advised to disclose to their estate agent (who will disclose to a prospective purchaser) all latent defects in the property of which the Seller is aware. If the Seller is unsure if a defect is latent or patent, the best advice would be that he/she disclose it just to be on the safe side.

The significance of taking the time and effort to diligently complete such a disclosure exercise lies in this: If a seller is aware of a latent defect and does not disclose it, this may result in a claim by the purchaser against the seller for:

• a reduction in the purchase price, or
• a cancellation of the sale, and/or
• a claim for damages.

In terms of Section 67 of the Property Practitioners Act No. 22 of 2019 (“the PPA”) the estate agent assisting the Seller with the sale of his/her property would be duty bound to, in essence, assist the Seller in complying with his/her common law duty to disclose defects as described above by ensuring that the Seller completes and signs an Immovable Property Condition Report along the lines of the prescribed report contained in Regulation 36 issued under the PPA.

Sections 67 reads as follows:

“(1) A property practitioner (including but not limited to an estate agent) must-

(a)   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; and

(b)   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.

(2) 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.

(3) A property practitioner who fails to comply with subsection (1) may be held liable by an affected consumer. …….”

The item on the prescribed Immovable Property Condition Report dealing with building plans in particular provides that:

“I am aware that any additions or improvements made to or any erections made on the property, have been done or were made, only after the required consents, permissions and permits to do so were properly obtained – Yes / No / N/A”

The owner is further afforded space in the report to insert additional comments regarding the state and attributes of the property.

In conclusion, while it is technically possible to sell a property in certain municipal jurisdictions in South Africa without approved building plans, it is generally not recommended due to the legal risks and potential issues that may arise. It is advisable to ensure that all necessary documentation and approvals are in place before selling a property to avoid complications in the future. And in any event, Sellers would be well advised to disclose to the estate agent (who will advise potential buyers) the fact that building plans are, to the best of their knowledge, lacking, or, in the case where the Seller himself/herself is uncertain of the facts, disclose as much to the estate agent and potential purchaser.

In summary, here are some points to consider:

Legal Compliance: Selling a property without approved building plans may lead to legal complications. Municipalities in South Africa may require building plans to be submitted and approved before the sale of a property can be completed. Selling a property without approved plans could result in fines or delays in the transfer process.

Buyer Concerns: Potential buyers may be hesitant to purchase a property without approved building plans as they may be concerned about the legality and safety of the structures on the property. This could make it harder to sell the property or reduce the selling price.

Property Value: Having approved building plans can add value to a property as it demonstrates compliance with regulations and allows for potential future developments or renovations.

Process for Obtaining Building Plans: If you do not have approved building plans for your property, you may consider applying for them through the relevant local authority. This process can involve submitting detailed drawings and documentation for review and approval. The services of a reputable architect could also be enlisted to assist with the process.

Consult Professionals: It is advisable for property owners to consult with a conveyancing attorney to understand the legal requirements and implications of selling a property without approved building plans. A conveyancer would be well placed to furnish comprehensive legal advice and draft or vet an appropriately structured Agreement of Sale  – before the Seller puts pen to paper –  to ensure that the Seller’s interests are adequately protected and that risks of comebacks from the purchaser after the property is sold and/or transferred, are minimised. Purchasers are likewise advised to seek professional legal advice and assistance and to ensure that they are furnished with a duly completed and signed Immovable Property Condition Report and that they have performed proper due diligence exercises to satisfy themselves in all respects as to what exactly they are buying, before making their Offer to Purchase immovable property which, once accepted, becomes a binding and legal contract.

* Disclaimer: The articles on these web pages are provided for general information purposes only. Whilst care has been taken to ensure accuracy, the content provided is not intended to stand alone as legal advice. Always consult a suitably qualified attorney on any specific legal problem or matter.