The Effect of Unforeseen Events in Property Transactions - Absence Of Approved Building Plans

It goes without saying that there are various unexpected events that can arise at some point within the transfer of property.  Unfortunately, a lot of these unexpected events are far beyond our control. 

This article is about the absence of approved building plans and the effect it will have on a sales agreement. In order to explain the issues at hand in more detail, the following 7 topics will be discussed:

1. Explanation of the unforeseen event

2. What are building plans

3. Is it an inherent condition of the sale?

4. What if seller does not want to obtain approved building plans?

5. The four steps in obtaining approved building plans?

6. The effects of the unforeseen event

7. How to ensure that this does not happen to your sale

 

1. UNFORESEEN EVENT:

 

Most Agreements for Offer to Purchase does not make provision for the providing of Approved Building Plans but rather makes provision for the Seller to warrant that to the best of his knowledge there are approved plans. However, it may be inserted as an additional condition to the Agreement for the Seller to provide approved building plans

 

So what happens when approved plans are to be provided? Or what happens if there are no plans?

 

2. WHAT ARE BUILDING PLANS

 

Building plans are a graphical representation showing the size, height and location of the building on an Erf. 

An architect, draughts man or technologist who is registered is appointed to draw up these plans and thereafter submit them to the Municipality for approval.

The Municipality thoroughly assesses the plans to ensure that all contemplated building works comply with minimum construction standards and specifications in order to ensure that these regulations are complied with.

These standards and specifications are laid down in the National Building Regulations and Building Standards Act, 103 of 1977.  

 

3. WHETHER OR NOT PROVIDING OF APPROVED BUILDING PLANS IS AN INHERENT CONDITION OF SALE?

 

If the providing of approved plans is a condition of sale then it would be compulsory for the Seller to provide such plans at his cost to the Purchaser prior to registration, which is a reasonable term.  The bank may also require approved building plans prior to the issuing of guarantees even if this is not a condition of sale. If it is not a condition of sale the Seller is not obligated to provide such plans to the Purchaser. There is no obligation created in law for the Seller to provide such plans prior to transfer of his/her property. More often than not the Municipality will advise that such approved building plans cannot be located at the Council, which will create an unforeseeable delay. Thus, it is imperative that the agent tackles this before the sale agreement is concluded and ensures that there are approved plans, especially if it is a condition of sale.

 

4. WHAT IF THE SELLER DOES NOT WANT TO OBTAIN APPROVED BUILDING PLANS?

 

Case Law: Haviside v Heydricks and Another (AR27/13) [2013] ZAKZPHC 53: 

 

The seller had bought a property with a double garage.  Upon investigation into the building plans of the property, it was discovered that there were no approved plans for the double garage and that the garage had not been built in accordance with the specific regulations as per the National Building Regulations and Building Standards Act. Thus, the double garage was an illegal building. 

 

The following test was used by the court to establish the seller’s liability: 

1. Whether the seller knew of the latent defect and did not disclose it; 

2. Whether the seller deliberately concealed it with the intention to defraud?

 

The purchaser has an obligation to prove if he wants to avoid the consequences of a voetstoots sale, the onus is on him to show the above two questions. In this case, the Court found no liability on the part of the seller as the answer to the above two questions was “no”.  The Supreme Court of Appeal dismissed with costs. 

 

5. THE FOUR STEPS IN OBTAINING APPROVED BUILDING PLANS

 

5.1  An architect, technologist or draughtsman will need to be appointed by the seller to draw up the building plans for the property.  The seller will need to be quoted by the relevant person appointed and pay the quote.

5.2  The architect, technologist or draughtsman will then draw up the plans which can take a few weeks or months depending on the size and nature of the building. 

5.3  Thereafter, once the building plans have been completed, the relevant person appointed will submit these to the Municipality for approval. 

5.4  This can take from 3 - 6 months or even more depending on the Municipality. 

 

6. THE EFFECTS OF THE UNFORESEEN EVENT OF HAVING TO OBTAIN BUILDING PLANS 

 

The transfer of the property will be delayed by 3 to 6 months if plans have to be drawn up. Bond guarantees will be delayed for the Purchaser. Should this only come to light at a later stage during the transfer the Seller might have to pay additional rates and taxes.

In the case of Sectional Titles a unit may not be improved by more than 10%. If this has been done and no plans has been approved, the consent of all bondholders in the Scheme will have to be obtained at an additional cost of more or less R 3,000.00 per unit with bondholder. 

 

7. HOW TO ENSURE THAT THIS DOES NOT HAPPEN TO YOUR SALE

 

Ensure that you ask the Seller whether he has building plans AND that they are approved.  Familiarize yourself with the Offer to Purchase and the specific conditions requested by the Purchaser. If you are aware that there are no Building Plans and that this is a condition of sale refer this to your transferring attorney as soon as possible.

 

Source – STBB Attorneys