C&A Friedlander Attorneys

On 1 February 2022, the Property Practitioners Act 22 of 2019 (“the Act”) repealed the Estate Agency Affairs Act 112 of 1976 in its entirety. This marked a significant transformation in the property industry. One of the main, consumer protection-focused changes is the inclusion of the Mandatory Disclosure Form, more commonly known as a condition report.

The Act obligates property practitioners to:

  • obtain a fully completed disclosure form from a seller or landlord before accepting any mandate to sell or rent on their behalf;
  • provide a copy of the form to all prospective tenants or buyers; and
  • ensure a copy of the form is attached to the sales or rental agreement and is signed by both parties.

Given the aforementioned conditions, it is important that the prospective buyer/tenant and seller/landlord fully comprehend how this form impacts them.

The disclosure form outlines any defects in the property of which the seller/landlord or property practitioner is aware. It usually references electrical or plumbing defects, structural defects, faults with any fixtures or fittings, etc. The form must be completed and signed by the seller/landlord and then presented to the prospective purchaser/tenant for signature, upon acceptance of the agreement. A disclosure form can somewhat be seen as a purchaser’s due diligence. Therefore, it is imperative that all parties involved in a sale or rental understand the importance of providing and obtaining a detailed and accurate form.

The form enables the purchaser/tenant to make informed purchasing/rental decisions by providing them with the opportunity to inspect specific/technical features of the property in detail. This latitude is crucial, as in the event of a prospective purchaser/tenant identifying unacceptable conditions, they can opt to reject the sale/rental agreement. Furthermore, the disclosure form could also afford the purchaser/tenant the advantage when negotiating the purchase price/rental. The conditions form can be used to leverage the terms in the agreement and ultimately allow the purchaser/tenant to negotiate a lower purchase/rental price. Based on the conditions form, sellers/landlords may also agree to make certain repairs to the property, on their account, in return for the purchaser’s/tenant’s acceptance of the sale. As a result, a fully completed, accurate disclosure form can help ease some strain on a prospective buyer’s/tenant’s pocket.

However, if the disclosure form is either incomplete prior to the mandate being signed or is not attached to the sale/rental agreement, the Act states that it will be accepted that no defects were disclosed to the buyer/tenant. In this instance, a seller/landlord could stand the risk of being exposed to defect claims for which they may not have a legislative defence. Furthermore, property practitioners who fail to follow the rules set out in the Act can be held liable for damages, in their personal capacity, in the event of either party experiencing any resultant loss.

This section of the Act aims to protect consumers by establishing complete transparency between all parties involved in the sale or rental of property. Therefore, it is vital that both the seller/landlord and buyer/tenant request a disclosure form before commencing the transaction.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

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