On 1 February 2022, the Property Practitioner Act 22 of 2019 (“the Act”) came into operation and repealed the Estate Agency Affairs Act 112 of 1976 in its entirety. The Act has introduced significant changes to the property sector with a focus on transforming the property practitioner sector and most notably providing greater protection for consumers and their interests.
Section 67 of the Act imposes an obligation on property practitioners (“practitioner/s”) to obtain a “disclosure form” from a seller of the property, before he or she may accept a mandate. The form, which is prescribed by Regulation 36, must be used to disclose all defects or deficiencies in the property that are known to the seller to the prospective purchaser. The seller is thus required to confirm whether he or she is aware of any defects or deficiencies relating to, inter alia, plumbing systems, electrical systems, heating and air conditioning, boundary line disputes and structural defects of the property, before the transaction is concluded.
Once a practitioner has obtained the fully completed and signed mandatory disclosure form from the seller, he or she must provide a copy thereof to the prospective purchaser of the property before the purchaser makes an offer. On the acceptance of an offer, the form must be signed by all parties and attached to any sale/lease agreement, as the Act regards it as an integral part of that agreement.
Where a practitioner has failed to comply with its obligations in terms of section 67, the agreement will be interpreted as if no defects or deficiencies of the property were disclosed or where a practitioner has accepted a mandate, without attaching a disclosure form to the mandate, the risk is that the practitioner may be held personally liable by the consumer for non-compliance. According to Regulation 38, a breach of this nature would constitute a minor contravention and carry a penalty of R15 000.00.
The mandatory disclosure form is a welcomed, consumer-focused legislative mechanism, created to protect consumers so that they may rely on the disclosure form when deciding whether and on what terms to purchase/lease property. It is thus important for all practitioners to ensure compliance with section 67.
(For purposes of this article, reference to a “seller” includes a lessor, and reference to a “purchaser” includes a lessee).
