Buyers & Sellers Beware - Do Not Make Or Accept an Offer To Purchase A Property Without A Mandatory

The new Property Practitioners Act will become effective on 1 February 2022. One of the best real estate practices this law has made part of the South African property market, is the introduction of a Mandatory Disclosure Form to be used by all property practitioners (previously known as estate agents).

No property practitioner may in future accept a for sale or to let mandate without this form, as per Section 67 of the Act.

Mandatory disclosure form 67. 

(1) A property practitioner 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. 

(4)     Nothing in this section prevents the Authority from taking action against a property practitioner or imposing an appropriate sanction. 

(5)     Nothing in this section prevents a consumer, for his or her own account, from undertaking a property inspection to confirm the state of the property before finalising the transaction.

The form must be presented to the purchaser and attached to the Deed of Sale, so presumably it must be signed by all parties involved for the transaction to be effective. It is further a potential offence if the property practitioner fails to have this form signed and attached to the offer.

An interesting caveat is sub-section 2, where it is stated that, should such form not be signed by any party, then it must be taken as if the property is sold or leased as if no defects were disclosed to the purchaser / tenant. According to ESI Attorneys, it would then be seen or interpreted as if the purchaser has seen the form and accepted it and the house is thus sold as is or "voetstoots". This may lead to issues after transfer or occupation when defects crop up and there is no form signed. Who is then to blame?

It should be noted that Regulation 38 states that the breach of section is a minor offence with a  R15 000,00 penalty. Albeit minor, a few of these infractions can add up to a substantial amount.

Further, Regulation 37 of the Property Practitioners Act adds no help except to give us the format that the form must take - this has been included for your benefit.
 

IMMOVABLE PROPERTY CONDITION REPORT IN RELATION TO THE
SALE OF ANY IMMOVABLE PROPERTY
 

1 Disclaimer 

This condition report concerns the immovable property situated at [insert deeds office and physical description] (the "Property"). This report does not constitute a guarantee or warranty of any kind by the owner of the Property or by the property practitioners representing that owner in any transaction. This report should, therefore, not be  regarded as a substitute for any inspections or warranties that prospective purchasers may wish to obtain prior to concluding an agreement of sale in respect of the Property. 

2 Definitions In this form -

2.1 "to be aware" means to have actual notice or knowledge of a certain fact or state of affairs; and

2.2 "defect" means any condition, whether latent or patent, that would or could have a  significant deleterious or adverse impact on, or affect, the value of the property, that  would or could significantly impair or impact upon the health or safety of any future  occupants of the property or that, if not repaired, removed or replaced, would or  could significantly shorten or adversely affect the expected normal lifespan of the Property. 

3 Disclosure of information 

The owner of the Property discloses the information hereunder in the full knowledge that, even though this is not to be construed as a warranty, prospective purchasers of the Property may rely on such information when deciding whether, and on what terms, to purchase the Property. The owner hereby authorises the appointed property practitioner marketing the Property for sale to provide a copy of this statement, and to disclose any information contained in this statement, to any person in connection with any actual or anticipated sale of the Property. 

4 Provision of additional information 

The owner represents that to the best of his or her knowledge the responses to the statements in respect of the Property contained herein have been accurately noted as "yes", "no" or "not applicable". Should the owner have responded to any of the statements with a "yes", the owner shall be obliged to provide, in the additional information area of this form, a full explanation as to the response to the statement concerned.

6 Owner's certification 

The owner hereby certifies that the information provided in this report is, to the best of the owner's knowledge and belief, true and correct as at the date when the owner signs this report.
 
7 Certification by person supplying information 

If a person other than the owner of the property provides the required information that  person must certify that he/she is duly authorised by the owner to supply the information  and that he/she has supplied the correct information on which the owner relied for the purposes of this report and, in addition, that the information contained herein is, to the best of that person's knowledge and belief, true and correct as at the date on which that person signs this report.

8 Notice regarding advice or inspections 

Both the owner as well as potential buyers of the property may wish to obtain professional advice and/or to undertake a professional inspection of the property. Under such circumstances adequate provisions must be contained in any agreement of sale to be concluded between the parties pertaining to the obtaining of any such professional advice and/or the conducting of required inspections and/or the disclosure of defects and/or the making of required warranties.

9 Buyer's acknowledgement 

The prospective buyer acknowledges that he/she has been informed that professional expertise and/or technical skill and knowledge may be required to detect defects in, and non-compliant aspects concerning, the property. The prospective buyer acknowledges receipt of a copy of this statement.

10 Signatures

Signed at____________________________on_____________________________

Signature of owner_____________________________________

Signature of purchaser__________________________________

Signature of property practitioner__________________________(intern) (if applicable)

Signature of property practitioner__________________________(full status)