Estate agents now owe sellers and buyers an equal “duty of care”
By John Graham, founder of HouseCheck
The new PPA will compel agents to be fully transparent
Estate agents, soon to be known as “property practitioners” in terms of the new Property Practitioners Act (PPA), are usually paid their commission by the seller of the property. Now the new PPA will compel agents to be fully transparent and ensure that prospective buyers have all the information available in order to make informed buying decisions.
Section 69 (2) of the PPA states: “A property practitioner owes a buyer and a seller a duty of care”.
A “duty of care” is a legal term in South Africa relating to the “law of delict”. The law of delict refers to the liability of one person for harm caused to another someone else. The purpose of delict law is to provide compensation to those who have suffered losses or injuries because of the wrongful conduct of others.
Chapter 10 of the PPA describes exactly the duty of care which the property practitioner owes to every buyer – despite the fact that the agent’s commission is being paid by the sellers.
This is how the PPA law compels the agent to show care to every prospective buyer.
- In terms of this new law, owners will be compelled to make a written disclosure to every potential buyer regarding all of the significant defects to the property of which the owner is aware.
- The agent may not accept a mandate from the buyer without first obtaining from the buyer this written disclosure of the property’s condition.
- The agent must supply every potential buyer with a copy of the owner’s signed disclosure.
- The agent must attach the disclosure, signed by all parties, as an integral part of any agreement of sale.
- The agent must inform potential buyers that, in addition to the owner’s disclosure, a professional inspection may be required to determine significant defects or areas of non-compliance of which the owner may have been unaware.
Once the PPA comes into force, property practitioners who fail to follow the law and show the now legally required “duty of care” to buyers, will be liable for sanction by the new Property Practitioners Regulatory Authority and will also open themselves to potential claims for damages by aggrieved buyers who feel that they were not treated fairly by the agent and were not provided with the required information by law.
HouseCheck is keenly aware that the vast majority of agents are honest people who would like to make a full disclosure to potential buyers – both in the interests of fairness and transparency and also to avoid the possibility of unpleasant future comebacks which may result in expensive legal proceedings.
In order to assist property sellers and their agents to comply with the new PPA law and to build bridges of trust and transparency with prospective buyers, HouseCheck has developed a “Vital inspection report” whereby a seller, or their agent, can get a professional inspection report at a lower cost to HouseCheck’s usual Comprehensive report. This HouseCheck Vital report can be used by both the seller and their agent to comply with the law and make a fully transparent disclosure on the condition of the property to potential buyers.
The PPA will come into force once the minister’s regulations regarding the PPA have been finalised and published in the Government Gazette. The period of public comment on the regulations expired on 20 November 2020.
The draft regulations require the owner to disclose in writing the owner’s knowledge of defects or non-compliance regarding all areas of the property. The HouseCheck Vital report mirrors the mandatory disclosure format and provides a professional assessment of significant defects and areas of non-compliance regarding:
- The roof
- Electrical systems
- Plumbing systems
- Swimming pool (if any)
- Heating and air conditioning systems
- The drains (and other sanitary disposal systems)
- Cracks and damp in the property, including the foundations and basements.
- Structural defects anywhere in the property
- Any boundary line disputes, encroachments or encumbrances
- Whether alterations or refurbishments have affected the structural integrity of any buildings
- Unapproved additions or improvements
- Whether the property has been named a heritage site.
The prospective buyer must also acknowledge in writing that “he/she has been informed that professional expertise and/or technical skill and knowledge may be required to detect defects in, and non-compliance aspects concerning, the property”.