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Selling property without approved building plans

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Why a Fidelity Fund Certificate is important for you and your estate agent

“I’ve finally received my qualification to practise as an estate agent, but am still waiting for my Fidelity Fund Certificate. Some people say I can start practising as an estate agent as long as I’ve applied for my Fidelity Fund Certificate. Is this correct, and can I already practise as an estate agent?”

In terms of the Estate Agency Affairs Act (“Act”) an estate agent must have a valid Fidelity Fund Certificate (FFC) in order to receive any payment or commission arising from his or her duties as an estate agent.

In clarifying this provision it has been held by our courts that even if a FFC has been applied for, if a valid FFC was not held by the estate agent at the time of the transaction in terms of which he or she is claiming a commission or payment, the estate agent is not entitled to any commission or payment for such transaction.

The purpose of the requirement for an estate agent to have a FFC is to ensure that the public is not misled and as such the FFC is an important control measure to help reduce the risk to the public against corrupt agents.

Accordingly, a FFC will not be issued to any estate agent that, among other things:

(1) has been dismissed from a position of trust due to improper conduct;
(2) has at any time been convicted of an offence involving dishonesty;
(3) is an unrehabilitated insolvent;
(4) is of unsound mind;
(5) does not comply with the prescribed standard of training; or
(6) does not have the prescribed practical experience.

When the new Property Practitioners Bill is enacted, conveyancers may also not pay out commission, unless the estate agent has provided the conveyancer with a certified copy of his/her valid FFC. It would therefore be wise/prudent for buyers and sellers to request proof of a valid FFC before associating themselves with an estate agent or agency.

See original article.

218 35 Prevance - Bridging Finance South Africa

The Sale Of Immovable Property Without Approved Building Plans


Selling your house after making alterations or additions to the property without approved building plans might have certain legal implications. The National Building Regulations and Building Standards Act specifies the need for building plans and approval from the local authority. The local authority may approve or reject building work and renovations on all properties.

The lack of approved building plans could lead to the local authority refusing to allow any further renovations which a purchaser might have had planned. In some instances, although not too often, the local authority could order that the illegally erected structure or additions be demolished. The local authority is also entitled to levy fines on any “illegal” building work that was done without approval.

Most sale agreements contain a voetstoots clause. Essentially, this clause indicates that the purchaser accepts the risk relating to patent and latent defects existing at the time of the sale. The exceptions to this clause are instances where the seller deliberately and fraudulently conceals latent defects from the purchaser that he or she was aware of at the time. In such instances, the seller will remain liable for these defects. The purchaser will, of course, have to provide evidence that the seller knew what was wrong.

Our law considers a property with buildings erected without municipal approval as a property with a latent defect. The voetstoots clause will normally cover latent defects and a seller will not automatically attract liability if he sells a property with unauthorised building works. If the seller knows that there are no plans and he organised and did the renovations himself, and he deliberately does not disclose this fact (with the intention to defraud the purchaser), the seller cannot hide behind the voetstoots clause.
A latent or patent defect that is of a significant nature, and affects the use and enjoyment of the property, does allow the purchaser certain remedies, including cancellation of the agreement, which he is entitled to do, if he can prove that the defect is so serious that he would not have bought the property had he been aware of this. Other courses of action include a reduction in the purchase price or a claim for damages, depending on the seriousness of the defect and the specific circumstances involved.

In many cases, an offer to purchase a house will be dependent on the purchaser obtaining home loan finance from a bank or other institution. And in most instances, (although not all), the financial institution will want to see up-to-date approved plans before finance will be granted. If the plans lodged with council do not match the house as it stands, then the sale could fall through and set the seller’s plans back for quite a length of time, together with additional costs to rectify the problem.
It is therefore of the utmost importance that sellers ensure that they have municipal approved building plans before selling or marketing their property.

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