Housing Consumer Protection Bill

A Bill, replacing the Housing Consumer Protection Measures Act 95 of 1998 (the Act), was published for comment. It includes considerable changes to definitions and also entirely new sections dealing with a home, a developer, and the builder. A brief summary is included below highlighting the most salient points and differences between the Bill and the Act.

A. The Definition of a home has been greatly expanded by the bill and now includes:

1. A structure for residential purposes;

2. A section in a scheme;

3. A unit in a retirement scheme;

4. A home, being part of a housing scheme by the state;

5. A private drainage system from home to the municipal connection;

6. Water services in connection with the home from point of supply to point of discharge at fixtures and appliances;

7. Any ancillary building including but not limited to storerooms, covered walkways, garages, and common facilities;

8. Any retaining walls required for structural integrity; and,

9. Any adjacent building or wall on common property that has the potential to damage the home should it for any reason collapse.

The definition in the Bill differs from the Act in that the Act just refers to any dwelling unit constructed or to be constructed by a home builder, after the commencement of the act, for residential purposes or partially for residential purposes including any structure prescribed by the Minister for the purposes of this definition or the purposes of any specific provision. One possible reason is that in many cases the original definition was not considered wide enough or broad enough to contend with a changing market and building standards.

The Bill greatly expands upon the Act, and the points below are a brief summary of the Bill.

B. The definition for a major structural defect remains substantially the same, except that now there is no limitation of qualifications that the Minister may prescribe. These limitations will be included in regulations to be published.

C. The Bill includes a definition of a person which includes Trusts as well as the meaning in terms of section 2 of the Interpretation Act 1957 (act 33 of 1957). This expands the definition of a homeowner and possibly a developer and or home builder. The definition of a "person" is an entirely new definition in the Bill that is not replicated in the Act.

D. In terms of clause 28, even unregistered home builders are still liable to the Bill for any and all liabilities and obligations that the Bill may prescribe.

E. Clause 31 is a new provision, that should a home builder fail to enrol the house or structure with The National Home Builders Registration Council (NHBRC) that they must then immediately cease construction. This provision is not in the Act and could constitute a severe delay in building projects. Will certificates have to be issued before construction can commence?

F. Clause 32 is an entirely new provision focused on Subsidy Housing projects and includes a section that can hold a Member Executive Council (MEC) liable for misconduct. The question is whether this now means that the MEC must now personally be involved in all state sponsored housing projects?

G. Clause 39 to be read with clause 35 (the Home Warranty Fund) envisions that establishment of an NPO which will act as a form of insurance for the industry and consumers alike. Little is further mentioned about this NPO, will it be further insurance and what will its ultimate purpose be?

H. Clauses 40 - 44 deal extensively with the claims, liabilities and how claims are to be lodged with the Building Council. This is different from the Act in that the act deals with claims and recourse under section 17.

I. Chapter 6 of the Bill has compulsory clauses that must be part of any contract before construction starts. These include warranties and also prohibitions on payments should the home builder fail to register or enrol the property. There also seems to be a possibility of delictual liability built into the entire chapter. This is especially evident in clause 49. The Home Builder may also in terms of the Bill suspend building due to non-payment, a term not found under the Act.

J. Clause 49(3) states that should a housing consumer having already taken occupation of the home and then a major structural defect is detected and has to vacate the home and move into suitable accommodation, then according to the section:

1. the homebuilder or developer, as the case may be, is liable; or

2. in the case where the homebuilder and the developer are involved, both are jointly and severally liable for the reasonable cost of that relocation and       accommodation.

K. Clauses 64 and 65 now include not only what constitutes an offence but, also what will happen to the home builder for failure to remedy the offence.

L. Clauses 66 - 69 deal with Alternative Dispute Resolution, appeals from decisions of the council and also the power of the council to settle a dispute. It should be noted that this is administrative law and as such is subject to the Promotion of Administrative Justice Act and the Court.

M. The Bill in clauses 70 - 71 again provide for inspectors, but at clause 72 state that inspectors will be personally for any negligence of the duties.

N. The Bill at clause 73 - 79 provides for criminal offences for the Inspectors, but this is for the sharing of private information, hindering the performance of this bill and other offences that would cause harm to the consumer. These other offences will likely be included in regulations.

But, by far the most far-reaching changes are found under Chapter 8

O. Clause 80 provides for the liability of an agent of any agency found under this Bill. This could be inspectors, members of the council and or even external contractors?

P. Clause 81 provides for the liability of the Home Builder for failures under this Bill. The builder must ensure that The National Home Builders Registration Council (NHBRC) has issued all certificates prior to handing the home over to any developer or purchaser. Failure to do so will result in complaints being lodged with all regulatory bodies against the home builder.

Q. Clause 82 now provides that an Estate Agent has a duty, prior to the negotiation of a sale to take reasonable steps to ensure that the property must be enrolled in terms of this Bill if that property is covered in terms of definition in the Bill. If not he or she must inform the council and any potential purchaser. The Council may also refer the agent who fails to do so to the EAAB.

R. Clause 83 provides that no financial institution may issue mortgage finance to a potential purchaser if a home is not enrolled as it is meant to in terms of section 1 of the Bill. Or covered by the Home Warranty Fund and must establish this prior to processing any home loan application. If not covered or enrolled, then the bank must suspend all functions regarding the mortgage loan and must report the property to the Council.

S. Clause 84 states that a conveyancer may not finalise a transfer, and prior to finalisation establish that the Home is to be enrolled and or covered by the Home Warranty Fund. There is a duty to determine that it is a home to be enrolled and if it is not then the conveyancer has a duty to report this to the Council and the Registrar of Deeds. Failure to do so results in action being taken by the council against the conveyancer and a complaint being lodged with that conveyancer's particular law society.

T. Clause 85 required that the Registrar of Deeds be satisfied that the property is one of those referred to in terms of clause 1 of this Bill and that the Registrar may not register the transfer till so satisfied. Again, failure here will result in a complaint to the relevant authority. The failure will also mean a rejection in the Deeds Office and substantial delays.

It is this of utmost importance, should the Bill become law, that both the Seller and the Buyer are kept informed about any certificates and who must pay for them.

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