STBB
If that seems like a mouthful, it’s because it is. What is happening? Towards the end of 2019, the Department of Human Settlements published the Housing Consumer Protection Bill (‘the Bill’). After some amendments, the Bill was sent to the National Council of Provinces for concurrence in March 2023. When it is passed in parliament and signed into law by the President, it will repeal the Housing Consumers Protection Measures Act 95 of 1998 (‘the HCPMA’).
The issue is that some of the prominent changes introduced by the Bill imposes significant new obligations on estate agents, conveyancers and the Registrar of Deeds.
STBB has done a comprehensive anyalysis of the Bill which you can read here. For the purposes of this article this analysis has been shortened.
What does the Bill set out to achieve?
The main aim of the Bill, similar to that of the current Act, is to provide for the protection of housing consumers, in other words, those for whom homes are built. In the Bill’s preamble, its additional aims are listed, being to:
- provide for the registration of homebuilders;
- provide for the enrolment of homes in order to be covered by the home warranty fund;
- provide for the regulation of the conduct of homebuilders;
- provide for the continuance of the home warranty fund;
- provide for claims against the fund;
- to provide for the funds of the Council and for the management of those funds;
- provide for procurement and contractual matters in relation to the building of a home;
- provide for the enforcement of this Act;
- provide for the enforcement of the Act; and
- repeal the Housing Consumers Protection Measures Act, 1998.
The Bill has a wider reach than the current Act
The principal change is the pool of builders who will be required to comply with the new provisions, is extended. This is achieved by the broad new definitions of the terms ‘build’, ‘homebuilder’ and ‘home’.
One of the implications of this is the extended range of building activities which will require the builder to comply with the new provisions. Whilst the HCPMA regulates homebuilders who erect homes for ‘residential or partially residential’ purposes from the beginning, the Bill extends its application to regulate building activity which constitutes the “installation, repair, renovation, alteration or extension” of a ‘home’, the latter term including:
• a home forming part of a housing programme initiated by an organ of the state;
• a private drainage system from home to the municipal connection;
• water services in connection with the home from point of supply to point of discharge at fixtures and appliances;
• any ancillary building including but not limited to storerooms, covered walkways, garages, and common facilities;
• any retaining walls required for structural integrity; and
• any adjacent building or wall on common property that has the potential to damage the home should it for any reason collapse.
Agents, Conveyancers and the Registrat of Deeds Forced to Police Compliance
In section 18 of the current Act, an obligation is imposed on conveyancers attending to bond registrations for ‘housing consumers’ who are borrowing funds to purchase a home from a home builder (such as plot-and-plan transactions), to ensure that the home builder is registered in terms of the Act and the home enrolled. Failure to comply is an offence (section 21) and the conveyancer can be fined up to R25 000.
Clause 84 of the Bill takes this obligation further. It requires of conveyancers, both in the registration of a mortgage bond and transfer of ownership, to determine whether the home on the property being transferred or mortgaged, is a home which has to be enrolled. If it transpires that it is such a home and it is not enrolled, the conveyancer has an obligation to inform the Council and the Registrar of Deeds accordingly. The Council may report a conveyancer who does not comply with the provisions of this clause to the applicable law council. Similarly, estate agents selling homes are also tasked with determining whether the home was enrolled, and to advise the Council of a transgression.
A parallel duty is placed on the Registrar of Deeds, before he or she registers a deed, to determine whether that registration relates to a home which has to be enrolled as required in the Bill. No registration is allowed in the case of non-compliance. (In conveyancing practice this will presumably involve a new practice requirement from the Deeds Office to demand that conveyancers either certify regarding enrolment, where required; or that conveyancers provide some certification from the Council or builder to this effect.)
It appears that, inadvertently, the conveyancer will be required to police compliance with the municipal requirement to obtain approved building plans, for the benefit of the local authority and purchaser! This is likely to cause long delays in the registration process. Perhaps exemptions will in due course be made to exclude instances where the conveyancing transaction does not relate to the transfer of a newly erected home and one will watch this space.
If these parties do not comply with this duty, they may be reported to the Property Practitioners Regulatory Authority, the Financial Service Board, the Law Society or the Auditor-General (as applicable). This extends the watchdog function over home builders and developers further to also include these parties who now have an obligation to confirm compliance with the Bill.
