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When things don’t go according to plan: the building plan conundrum in the sale of property transactions

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Published Date: June 5, 2024

When dealing with the sale of property transactions, focus is often placed on the essential terms of the contract of sale i.e. the capacity of the parties, the property description, and the purchase price. There is however another crucial aspect which is often not addressed in the contract of sale and that is the production of approved building plans prior to the transfer of ownership of the property.

The law regulating the requirement of approved building plans.

The National Building Regulations and Building Standards Act, No. 103 of 1977 (“the Act”) prohibits the erection of any building without prior written approval from the municipality. This requirement is so severe that any person who erects a building in contravention of the Act is guilty of an offence and is liable on conviction to a fine. The absence of approved building plans will however not prohibit the transfer of ownership of a property. If the purchase price for a property is secured by the registration of a mortgage bond, the banks may impose a condition that the purchaser must produce approved building plans before the mortgage bond can be registered.

The voetstoots clause and lack of approved building plans.

In its simplest form, a voetstoots clause is a clause in a contract which stipulates that the property is sold in its current form and subject to all existing defects. These defects can be classified into two categories i.e. patent defects and latent defects. Patent defects are those defects which are visible on the property without the need for further inspection. Failure by the seller to disclose patent defects to the purchaser does not warrant a claim by the purchaser against the seller for material non-disclosure. Should the purchaser notice the existence of patent defects after entering into a contact of sale, the seller can rely on the voetstoots clause to avoid liability for the non-disclosure of the patent defects. Latent defect are those defects on the property which are hidden and should be disclosed by the seller to the purchaser. The seller cannot raise the voetstoots clause to escape from the liability for non-disclosure of latent defects provided that certain conditions are met as will be highlighted below. The lack of approved building plans has been held by our courts to constitute a latent defect, and the seller will not be able to raise the presence of the voetstoots clause in the contract of sale in an attempt to escape liability.

It must be noted that the mere fact that a property was sold and registered without approved building plans will not necessarily result in liability for the seller. This was the crux in the case of Haviside vs Heydricks and Another 2014(1) SA 235 (KZP). In this case the seller unknowingly sold a property without approved building plans and the purchasers discovered that there were no approved building plans for a garage and a carport on the property, and consequently, the structures were illegal. The court confirmed that the absence of a statutory approval of such building plans is a latent defect. However, in this instance the seller was not aware of the latent defect and successfully relied on the voetstoots clause. This decision emphasises the fact that the purchaser must prove that the seller knew about the defect and deliberately concealed it with the intention to defraud the purchaser.

A layer of protection.

Until recently, it was not a legal requirement for the seller to disclose knowledge of the absence of approved building plans in a contact of sale. The seller would have been liable if the purchaser could prove that the seller had knowledge of the absence of approved building plans and deliberately concealed this with the intention to defraud the purchaser. The Property Practitioners Act, No. 22 of 2019 offers a layer of protection to the purchaser by imposing an obligation on property practitioners to obtain and attach a mandatory disclosure form completed by the seller to a contract of sale for signature by the parties. The mandatory disclosure form contains a declaration by the seller confirming whether the seller is 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.” This wording is broad enough to cover the requirement for approved building plans. Unfortunately, this layer of protection is only available when the property is being sold through a property practitioner and not when the property is sold privately by the seller. In closing, sellers are encouraged to disclose the status of approved building plans to the purchasers when selling their properties to avoid potential lawsuits for failing to disclose this important aspect of a transaction.

Donald Mokgehle
Partner | Attorney, Notary and Conveyancer

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