Author : Millers Attorneys

Housing Consumers Protection Measures Act 95 of 1998

1. One of the purposes of the Act is to make provision for the protection of housing consumers. It also creates the NATIONAL HOME BUILDERS REGISTRATION COUNCIL (NHBRC), whose objects are, amongst others, to represent the interests of housing consumers by providing warranty protection against defects in new homes and to provide protection to housing consumers in respect of the failure of home builders to comply with their obligations in terms of this Act.

2. A housing consumer is a “person who is in the process of acquiring or has acquired a home and includes such a person`s successor in title”. In other words, for those periods that the “original” homeowner is covered by whatever warranty may be applicable in terms of this Act, such a warranty remains in place irrespective of a change of ownership. Any action that has been taken by the original owner is thus also transferred to, and enforceable by, the new owner – provided the original owner took the steps in accordance with the Act. (You will see that depending on the nature of the defect, different time frames apply.)

3. For purposes of this article, the business of a homebuilder is defined as meaning to construct or to undertake to construct a home or to cause a home to be constructed for any person or to construct a home for purposes of sale or otherwise disposing of such home.

4. It does not include the bona fide building of a home by any person for occupation by that person; or the bona fide assistance to such a person, by a person who is not a registered home builder; or the sale or disposal by a housing consumer of his or her own bona fide home. I.e. if someone builds himself a home, lives in it and later on sells it, the mere fact that the house is still new does not suddenly mean that for purposes of this Act, the seller of that house suddenly becomes a homebuilder.

5. Occupation of a home (in terms of this article and for purposes of the Act) means either the date upon which the housing consumer who first acquires the home, accepts it as is reflected in a document confirming such acceptance (also known as a “happy letter”, often required by banks before they will pay out the loan on a bond that was registered for a new home), or the certificate of occupancy issued by a local authority in terms of the National Building Regulations and Building Standards Act of 1977. (In other words one is dealing with occupation of a finished home)

6. It seems to therefore indicate that you do not actually have to physically move in, but merely accept the house, to occupy it for purposes of the Act.

7. Very importantly, the Act also states that no person shall carry on the business of a home builder, or receive any consideration in terms of any agreement with a housing consumer in respect of the sale (where it was intended for re-sale) or construction of a home, unless that person is a registered homebuilder.

8. Before anyone may therefore start to build, or accept any payment of any kind for that purpose, s/he MUST first be registered with the NHBRC.

9. Put simply, even if a builder has finished your entire house for you, you don`t need to pay him/her a cent if he/she is not registered with the NHBRC.

Warranties and Setting the standards:

10. Section 12 of the Act provides for the publication of a “Home Building Manual” containing the NHBRC Technical Requirements and guidelines prescribed by the Council with which registered homebuilders must comply.

11. The Home Builders Manual consists of three chapters and provides specific warranties that are deemed to form part of every such agreement to build, irrespective of whether or not the agreement actually contains it or not. The Act expressly provides that this Manual forms part of the Act and it is therefore a statutory document.

Protection of the Housing Consumer:

12. Section 13 is extremely important. It provides that a homebuilder must ensure that the agreement concluded between the homebuilder and a housing consumer for the construction or sale of a home by that homebuilder, is in writing and signed by the parties. It must set out all material terms, including the financial obligations of the housing consumer; and must have attached to the written agreement as annexures, the specifications pertaining to materials to be used in construction of the home and the plans reflecting the dimensions and measurements of the home, as approved by the local government body: Provided that provision may be made for amendments to the plans as required by the local government body.

13. Furthermore, the agreement must specifically include warranties (and if it doesn`t expressly make reference, then it will be deemed to include such warranties by law) enforceable by the housing consumer against the home builder in any court:

(a) that the home, depending on whether it has been constructed or is to be constructed, is or shall be constructed in a workmanlike manner;

(b) that it is or shall be fit for habitation;

(c) that it is or shall be constructed in accordance with the NHBRC Technical Requirements to the extent applicable to the home at the date of enrolment of the home with the Council and the terms, plans and specifications of the agreement concluded with the housing consumer. (I.e. if, once the house has been registered with the Council, the technical specifications should change, the builder only has to comply with the requirements as they were on date of registration of the house, with the Council).

14. Furthermore, the homebuilder must undertake, and if it does not state this, the law will require him, on his own expense, and upon demand by the housing consumer, to rectify certain defects. Here we must distinguish between the following types of defects:

(a) A “major structural defect” is one which gives rise to, or is likely to give rise to, damage of such severity that it affects or is likely to affect the structural integrity of the home and require complete or partial rebuilding or extensive repair work. A home builder is required by law to rectify such defects if they have been caused by the non-compliance with the NHBRC Technical Requirements, provided that:

i. they occur within five years as from the occupation date, and

ii. it has been brought to the attention of the home builder by the housing consumer, within that period.

iii. The home builder has 21 calendar days from receipt of the report within which to react, i.e. to accept liability or not, and if he does, to also state when he intends to commence work and how long it should take.

(b) Any non-compliance with or deviation from the terms, plans and specifications of the agreement or any deficiency related to design, workmanship or material, notified to the home builder by the housing consumer, provided it was brought to his attention within three months as from the occupation date, must also be attended to by the homebuilder at his own expense. (Sub paragraph iii. above also applies here).

(c) Roof leaks attributable to workmanship, design or materials occurring and notified to the homebuilder by the housing consumer within a period of 12 months as from the occupation date must also be attended to by the builder at his own expense. The builder has seven days to respond to such a report.

15. Unfortunately the Act is not clear on how much time the builder will actually have to physically attend to the defects. It simply says that he must respond to a complaint within a certain time frame. This can mean that he must reply in writing and acknowledge that he will attend to the work, but that does not mean he will actually repair it within that time.

16. I submit that if one looks at the intention of the Act, one would imagine that wherever reasonably possible, the builder must start to work on the problem within that time, if he can, or at least as soon as is reasonably possible.

17. Most importantly the Act also stipulates that any provision in an agreement which either has the effect of excluding any of these rights, or wherein provision is made that the housing consumer waives any of these rights shall be null and void, i.e. if a builder tries to get out of his obligations by relying on the fact that he sold you a brand new home “voetstoots”, he will be wasting his time.

18. A homebuilder may not demand or receive from a housing consumer any deposit for the construction or sale of a home unless an agreement between the homebuilder and the housing consumer has been concluded, as provided above. He may also not receive any other consideration unless:

(a) the home builder has submitted the prescribed documents, information and fee to the Council in the prescribed manner;

(b) the Council has accepted the submission and has entered it in the records of the Council; and

(c) the Council has issued a certificate of proof of enrolment in the prescribed form and manner to the home builder. The homebuilder must then also provide a copy of this certificate to the consumer.

19. Where a dispute arises between a housing consumer and a homebuilder as to whether the homebuilder should be required to respond to a complaint, either of them may refer the matter to the Council, who then shall investigate such complaints, and attempt to mediate a solution.