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Little protection for sellers of property without approved building plans

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Don’t rely on Voetstoets clause if you have no building plans

Property sellers should not rely on the “blind protection” of the voetstoets clause if they don’t have approved building plans, warns Liesel Greyvenstein, one of the directors of Greyvensteins Attorneys.

According to Liezel, there is a growing legal shift away from the protective blanket of voetstoets for second-hand property sellers with illegal or unapproved structures. “The courts now place the responsibility of ensuring that there are approved plans for the property directly on the seller,” says Liesel. She adds that while the voetstoets clause remained valid within the realms of common law and was a standard provision in sales agreements, it no longer offered blanket ‘as is’ cover, nor the guarantee of a smooth property transaction.

Tightening of legal requirements

Unapproved building plans are now the biggest headache in property transactions today owing to the tightening of legal requirements around approved plans following the promulgation of the updated SANS 10400 building regulations.

Liesel warns that there is a strict process to follow in terms of extensions, alterations and the building of all structures on a normal freehold property. “Buyers and their banks now almost always want plans of the property, without which sellers run some serious risks,” she warned. “Aside from the legal implications, getting illegal extensions approved could include lengthy delays in the transfer process. Then there is the risk of the banks withdrawing the financing of the property. The banks are less and less willing to finance property purchases unless provided with registered plans.

“If it comes to light prior to registration that there’s an illegal structure on the property, and even if the seller is genuinely unaware that there are no plans for it, the conveyancers cannot willy-nilly retain funds on registration of transfer for remedy since, by law, the full proceeds on registration are trust funds and belong to the seller. Banks are aware of the risk associated therewith, especially as the property constitutes their security. The seller could also be forced to relocate or demolish the offending structure, she continues, adding that there were potentially high costs associated with all this. Litigation is expensive and no seller wants to be the test case,” she says.

Courts finding in favour of purchasers

Citing ‘precedent-setting’ cases such as Banda and Another v Van der Spuy and Another (where the buyers successfully challenged a defective roof), and Naidoo v Moodley (where the purchaser found out that there was no certificate of occupancy, a requirement for the property to be registered), Liesel says sellers’ voetstoots arguments and assertions that they were not aware of the absence of plans or illegal constructions are now regularly being overruled by the courts.

“The trend is for the courts to find in favour of the purchasers, with the reasoning that they are entitled to assume that all legal and municipal requirements have been adhered to.”

Ignorance no longer an excuse

The introduction of a seller’s declaration by the Estate Agency Affairs Board (EAAB) in recent years means that sellers are now routinely questioned about approved plans, says Liesel Greyvenstein.

“Right up front, along with the signing of the mandate, sellers have to a complete a declaration regarding the existence or lack of approved plans. It’s also something that prudent agents investigate when they take mandates, so there’s no getting away with the excuse that they didn’t know.”

Common problems

According to Liesel, the most common problems experienced by conveyancing attorneys and estate agents today include building line transgressions, with particular reference to carports and entertainment areas built onto boundary walls, and building over servitudes. “People also regularly build over manholes, drains and gulleys, and enclose balconies in apartment blocks without the requisite permissions.” She adds that purchasers also need to watch out for sectional title units that had been extended, since approval is required from the body corporate as well as the municipality, and plans have to be registered with the surveyor general and the Deeds Office.

In circumstances where plans are not available, she continues, the parties would have to come to an agreement to have “as built” plans drafted and submitted in order for the transaction to proceed. However, she points out, the seller runs the risk of the purchaser wanting to pull out of the sale. “It will then be at the bank’s discretion as to whether to go ahead with financing or not, but it’s very likely that the bank will withdraw the financing,” she warns. If the municipality is unable to approve “as built” plans, she said remedial action would be required and the purchaser would have to be compensated with regard to the costs of relocating or replacing the offending structure.

Safekeeping of building plans

Liesel also points out that home owners are responsible for the safekeeping of their own plans. “It’s therefore in all property owners’ best interests to have municipal-approved plans which will save time and preempt problems down the line when the time comes to sell,” she advises.

As a rough guide, Liesel says the cost of approved plans for a basic three-bedroom, two-bathroom house is about R10,000, provided there are no restrictive title deed conditions. “Compare this cost with that of a failed transaction and that once a sale falls through, a property quickly gets a stigma attached to it, so the chances are it will sit on the shelf.”

“No matter which way you look at it, it makes sense to get approved building plans now,” she concludes.

Source: https://www.greyvensteins.co.za/Articles/entryid/277/dont-rely-on-voetstoets-clause-if-you-have-no-building-plans

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Elmarie Jacobs

Since 2008 I have been selling properties professionally, in simplicity and authenticity, and with an appreciation for life.

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