The Property Practitioners Act (PPA) finally comes into force on Tuesday 1 February 2022 bringing into focus the importance of an independent home inspection report.
From a consumer point of view there are two significant aspects of the Property Practitioners Act:
- By law the estate agent, irrespective of who pays the agent’s commission, now owes both the buyer and the seller an equal “duty of care”. This places a legal obligation of fairness to both parties on the shoulders of the agent.
- Secondly, the Property Practitioners Act now makes the long-established owner’s condition disclosure a legal requirement with potential legal and financial consequences for both the seller and the agent.
The Property Practitioners Act mandatory disclosure requires every property owner to disclose in writing to every potential buyer of the property all significant defects of which the owner is “aware”.
Every estate agent (now called a “property practitioner”) is likewise compelled by the Property Practitioners Act to:
- Not accept a mandate to sell without first obtaining the mandatory owner’s condition disclosure.
- Ensure that every potential buyer receives a copy of this disclosure and signs for it.
- Ensure that any subsequent agreement of sale incorporates the owner’s mandatory disclosure as part of the legal agreement between seller, buyer and agent.
All well and good, but what about defects to the property of which the owner was unaware?
According to the Property Practitioners Act, such defects need not be disclosed by the property owner. That makes sense because no-one can be expected to disclose an “unknown”.
While the Property Practitioners Act makes clear that the mandatory disclosure does not constitute a warranty by the owner, it also states that if no disclosure is made by the seller, then the potential buyer is entitled to assume that no defect exists. I suspect that the courts will eventually have to rule on the extent that the buyer can rely on the owner’s disclosure, or non-disclosure.
The Property Practitioners Act also adds that nothing prevents potential buyers from obtaining a professional property inspection report prior to purchasing.
Let’s unpack the implications of this very careful approach by the Property Practitioners Act to the home buyer’s consumer protection. To do so, let’s call defects which exist, but of which the property owner is unaware “latent defects”.
Leaving aside for now the problem of sellers who dishonestly conceal defects of which the seller is aware, let’s analyse just how little protection the new Property Practitioners Act’s mandatory owner’s disclosure actually affords potential buyers – in the absence of a professional and independent property inspection report.
By way of illustration, the defects in the South African Parliament building (a non-functional sprinkler system and open fire doors) existed prior to the disastrous fire on 2 January 2022, but the owner’s of the Parliament building (with the possible exception of the Ministry of Public Works) only became aware of the defects when an initially small fire in the building (possibly caused by an electrical fault or a vagrant) spread and became uncontrollable despite the best efforts of the Cape Town Fire Brigade.
Here are some latent defects of which the average seller of a South African home would most probably not be aware of, and which would therefore not be included in the owner’s mandatory condition disclosure.
It should be noted that all the examples of latent defects listed below may already exist, but will probably only become apparent when triggered by an event – often a storm or the failure of a non-compliant installation.
- Wear and tear on the roof covering or the waterproofing. Few owners actually inspect their roof tops and therefore it may take the trigger event of a storm and resultant leaks into the interior of the building for the owner to become aware of roof defects. Interestingly, in the event of an insurance claim for damage following a storm, most insurance companies will refuse to pay out if the assessor identifies a badly maintained roof.
- The failure of a roof’s structural timbers, resulting in sagging of the roof covering, or roof leaks. Most South African homes built before the 1960s do not have engineered roof trusses which comply with the South African national building regulations (SANS 10400-L). Older roofs in South African homes are mostly supported by timber structures designed by carpenters on site. Many such “carpenter-designed roofs” do not conform to modern engineering principles and to the national standard for timber roof structures (SANS 10400-L). Such roof structures built by old-time craftsmen may stand for decades through countless storms, but eventually these old roof structures will begin to fail and sag, triggering roof leaks and other damage. But until the roof starts leaking, no-one will know about this potential problem, unless someone who knows what they are doing, actually inspects the roof cavity and warns of potentially dangerous conditions. A home inspector who understands the South African building codes should be able to raise a red flag and recommend further investigation.
- Free-standing boundary walls over 1.8m in height must be designed by an engineer with adequate foundations, wall-thickness, piers (support pillars) and expansion joints. A municipality is not allowed to approve plans for such high boundary walls without proof of design by a competent person. Brick walls which have not been properly designed and installed may collapse in a storm. A home inspector who has compared the “as-built” structures with the approved plans should be able to raise a red flag and recommend further investigation.
- Where a residence is joined to a garage, SANS 10400-T requires compliance with certain fire-prevention measures. These legal requirements include a compliant brick fire wall, between the garage and the residence, extending from the floor of the garage to the underside of the roof covering. A self-closing solid fire door (30 minutes fire resistance) between the garage and the home is also a legal requirement. But no-one will know about a defective fire wall in the roof cavity unless a competent home inspector actually inspects the roof cavity and warns of potentially dangerous conditions.
- A failed hot water geyser installation in the roof cavity flooding into the house, can cause massive damage to the property and even physical harm to the occupants. But few geyser installations give the owner any early warning of imminent failure. The lack of a properly installed drip-tray and overflow system, a slowly-rusting geyser casing, or non-compliant electrical and/or plumbing can all be triggers of geyser failure. But no-one will know about this danger unless someone who knows what they are doing, actually inspects the geyser within the roof cavity and warns of potentially dangerous conditions.
- Dampness: South African building regulations require a damp-proof course (DPC) to be installed 150mm above ground level in exterior walls to prevent rising damp. However, over the years, landscaping and installation of paving may have resulted in the outside ground level being raised above the DPC. Water may then find its way into the walls, resulting in extensive brick, plaster and paint damp damage. Deteriorated or faulty seals around windows and doors, and unprotected parapet walls may also trigger damp damage.
Estate agents who state that the Property Practitioners Act does not make home inspections compulsory are correct.
Nowhere in the world are home inspections mandatory, but in most advanced countries home inspections are standard practice in the real estate industry. Estate agents, in most countries which respect the consumer rights of home buyers, routinely recommend independent home inspections to their sellers and their buyers. Agents do this to protect both themselves from reputational risk and the buyer and seller from possible post-sale litigation.
This is the spirit of the new Property Practitioners Act, which highlights an independent inspection as a sensible precaution for all parties in a real estate transaction.
Many buyers of expensive homes ask HouseCheck for a Comprehensive inspection report – which may cost anywhere between R4,000 and R10,000, depending on the size of the property. Buyers of upmarket homes often make a satisfactory home inspection report a condition of the sale. Savvy buyers love HouseCheck Comprehensive reports which list all defects (major and minor) and which also provide estimates of the costs of repairing or replacing defective items.
The HouseCheck Comprehensive Report is relatively expensive (because it is time-consuming to prepare) and not all buyers and sellers need, or can afford, such an extensive report.
The South African home-buying market is increasingly dominated by women and younger first-time buyers – often buying homes priced between R800,000 and R2-million. Such buyers, who may not be able to afford a HouseCheck Comprehensive report, also need the consumer protection of an independent home inspection report.
To meet this need in the marketplace and in anticipation of the Property Practitioners Act, HouseCheck has redesigned and re-launched its VITAL inspection report as a lower-fee inspection product. The VITAL report only documents and provides cost of repair/replacement for VITAL defects.
- A VITAL defect is a significant defect which may trigger structural, or significant functional damage to the building or installation, or which may pose a risk to human safety.
HouseCheck VITAL reports have been priced between R2,500 and R4,500 to make VITAL affordable to most buyers, in particular buyers of smaller sectional title units.
- The HouseCheck IPCA report (Independent Property Condition Assessment) is a VITAL report offered exclusively to estate agencies and their sellers.
In exchange for an agreement with the estate agent to recommend IPCA to sellers, to be used as a tool to supplement the information in the owner’s mandatory disclosure form, HouseCheck is willing to negotiate commercial agreements with estate agencies (and their sellers) whereby payment of the IPCA inspection fee will be deferred until the property is sold and transferred.
A sample HouseCheck IPCA report is available for download here.