Picture: Marlon Shevelew, director Marlon Shevelew & Associates
An agency recently enquired about a landlord disclosure report provided to them by a certain property bureau. The disclosure report stated that it should be signed by the landlord at the same time as the mandate is signed and prior to signature of the lease by the landlord.
The agency, to its credit, did a preliminary investigation on whether the signature of such a disclosure report was required. The information which the agent found online was conflicting, with some sources stating that the disclosure form was a requirement as the Property Practitioners Act 22 of 2019 (PPA) required it. On the other hand, the agent couldn’t find the particular provisions which allegedly made the signature of the form a prerequisite to concluding the mandate and the lease. Herewith follows a discussion of the position currently.
The current position
Section 54 of the Consumer Protection Act 68 of 2008 (CPA) entitles consumers to the use of goods that are free from defects. So, the obligation is already there for landlords to ensure that a rental property is fit for purpose. And in terms of paragraph 4 of the code of conduct of the Estate Agency Affairs Act 112 of 1976 (EAAA) estate agents are obliged to inform prospective tenants of all facts concerning the rental property; the paragraph reads as follows:
4 Duty to disclose
4.1 An estate agent shall-
4.1.1 convey to a purchaser or lessee or a prospective purchaser or lessee of immovable property in respect of which a mandate has been given him to sell, let, buy or hire, all facts concerning such property as are, or should reasonably in the circumstances be, within his personal knowledge and which are or could be material to a prospective purchaser or lessee thereof; [own emphasis]
But this does not oblige the landlord to sign a disclosure form such as the one that was presented to the agent. Having said that, the disclosure form which was provided is not in conflict with the existing duties on agencies and it may be useful in safeguarding an agency against complaints by tenants regarding the condition of a property.
The position under the PPA
What caused some of the confusion is the lag between the passing of the PPA as a law and its commencement. The first thing to note is that the PPA is not in operation yet. The date of commencement of the PPA has yet to be proclaimed. So, what follows is a discussion of the position as it will be once the PPA comes into operation. Once the PPA comes into operation, it will repeal the EAAA in its entirety. It will then regulate the real estate profession. Section 67 of the PPA states as follows:
67 Mandatory disclosure form
(1) A property practitioner must-
(a) not accept a mandate unless the seller or lessor of the property has provided him or her with a fully completed and signed mandatory disclosure in the prescribed form; and
(b) provide a copy of the completed mandatory disclosure form to a prospective purchaser or lessee who intends to make an offer for the purchase or lease of a property.
(2) The completed mandatory disclosure form signed by all relevant parties must be attached to any agreement for the sale or lease of a property, and forms an integral part of that agreement, but if such a disclosure form was not completed, signed or attached, the agreement must be interpreted as if no defects or deficiencies of the property were disclosed to the purchaser.
(3) A property practitioner who fails to comply with subsection (1) may be held liable by an affected consumer.
(4) Nothing in this section prevents the Authority from taking action against a property practitioner or imposing an appropriate sanction.
(5) Nothing in this section prevents a consumer, for his or her own account, from undertaking a property inspection to confirm the state of the property before finalising the transaction. [own emphasis]
So, the form that has been provided has been provided in anticipation of the commencement of the PPA and is not required as yet.
The downsides of being overzealous
While preparation for an impending change is no doubt admirable, precipitous implementation of additional requirements on landlords can place an unnecessary burden on landlords and agents. To do so can increase costs for both aforementioned. And if a form such as the disclosure form is presented in a manner that does not make clear that it is not legally required, it can cause confusion, as it has in the present case.
And where resources such as the disclosure form are provided by a credit bureau who present themselves as experts in compliance, and it becomes apparent that said form is not in fact legally required, the result can be that there is a breakdown of trust in such compliance advice. And furthermore, if the agent had simply passed the report on to the landlord on the say-so of the credit bureau, the landlord could also become disillusioned with the guidance provided.
Accountability and transparency
What should be taken away from this instance is two-fold. Persons in all spheres (landlords, agents, tenants) need to hold those who advise them and provide services accountable for advice given and demand an accurate representation of the law as it stands. And secondly those providing services and guidance need to do so with transparency. Where a precaution is anticipatory it should be clearly presented as such. And where there is uncertainty regarding a position it should be pointed out.
About the author: Marlon Shevelew is the director of law firm Marlon Shevelew and Associates Inc. Shevelew is a well-known expert authority on residential property law in South Africa.