At STBB, our experienced team of property law attorneys are often tasked with determining whether a seller is legally obliged to provide a purchaser with approved building plans. For Director and experienced real estate lawyer, James Phillipson, understanding when and why approved building plans are required is vital to a dispute-free property transaction.
The statutory framework
Under section 4(1) of the National Building Regulations and Building Standards Act, obtaining building plan approval from the local authority in writing before proceeding with any building, renovation, or home extension is mandatory. ‘The underlying purpose of this legal requirement is to ensure a building’s structure has integrity and to prevent its collapse,’ says Phillipson.
Section 2 of the Alienation of Land Act sets out the statutory requirements for a property sale agreement, namely it must be in writing and signed by the parties or their duly authorised representatives. Phillipson, however, notes that this Act makes no mention of building plans. ‘It is accordingly not a legislative requirement for the conclusion of a valid sale agreement,’ contends the Cape Town-based conveyancer.
A contractual requirement
Depending on the terms of the sale agreement, the seller may nevertheless be contractually obligated to provide the purchaser with approved plans. In this case, the purchaser may include a clause that requires the seller to supply the purchaser with Council-approved building plans prior to transfer. ‘In practice, the clause may stipulate that the seller warrants that they are in possession of updated and approved building plans,’ remarks Phillipson. Alternatively, the agreement may be subject to the suspensive condition that the seller provides the purchaser with approved plans – at their own cost – within a defined period, failing which the agreement will lapse.
Approved building plans: A condition of mortgage bond approval
Often, a sale agreement is subject to the purchaser obtaining finance from a bank or other financial institution. Philipson notes that financial institutions will typically make it a condition of mortgage bond approval that approved building plans are obtained before the loan is granted. ‘As immovable property is a significant financial asset, this requirement is aimed at mitigating risk and ensuring legal compliance,’ he says.
Notably, if the sale agreement does not stipulate that approved building plans are to be supplied by the seller, it is not the seller’s responsibility. Instead, the onus falls on the purchaser to obtain approved plans at their own expense and to submit them to the relevant financial institution timeously. The impetus for this is clear: As the purchaser requires a bond to finance the purchase of the property, they are mandated to comply with the conditions of bond approval. ‘If it transpires that the building plans are outdated, the bank won’t consent to the registration of the bond, which will inevitably delay transfer,’ cautions the Cape Town-based real estate attorney.
Does the Immovable Property Condition Report require building plan approval?
Section 67 of the Property Practitioners Act obliges an estate agent marketing a property to procure a signed and completed Immovable Property Condition Report (‘the report’) – also known as a disclosure form – from the seller. Intended to discourage fraudulent or misleading representations by the seller or agent, the report must be provided to an interested purchaser before the parties conclude the sale agreement.
Crucially, a clause in the report prompts the seller to disclose whether they are aware of any additions and/or improvements or erections made on the property and, if so, whether they have obtained the requisite approval to do so. The seller is obligated to answer this question honestly. If they are unaware of any qualifying changes to the property or did not secure approved plans, the lack of such approved plans will be deemed a latent defect, i.e. a defect not easily discoverable on a reasonable inspection of the property. In this instance, ‘the property is sold voetstoots or “as is”, with all patent and latent defects included,’ notes Phillipson. Although this may influence the price offered for the property, it places no further obligation on the seller to obtain approved building plans.
However, if the seller confirms that approved plans were obtained, and it later transpires that there were unauthorised additions or improvements to the property, a damages claim may arise. ‘This will ultimately depend on whether the seller was aware of such additions or improvements, and they deliberately failed to disclose this fact to the purchaser,’ finds the real estate lawyer. As such, the voetstoots clause will not protect them from liability for losses suffered by the purchaser. In practice, proving fraudulent non-disclosure of a latent defect is, however, difficult.
It is also worth mentioning that if a seller unknowingly purchased the property without approved building plans in good faith from a third party, the purchaser will struggle to hold them liable for consequential damages.
Practical guidance
In reality, many purchasers either assume that they will receive approved building plans on or before transfer, or don’t enquire into their existence. For Phillipson, ‘it is sensible to insert a clause in the sale agreement that expressly deals with obtaining building plan approval.’ The inclusion of this clause, however, becomes an important financial factor the seller must consider when accepting any potential offers as obtaining approval involves a cost – and may delay transfer. ‘This is especially apparent where the purchaser intends to renovate post-transfer and requires the current approved plans to commence this process,’ he says.
For sellers, purchasers, and estate agents alike, understanding when and why approved building plans are required is integral to a stress-free property transfer.
For all your property requirements contact Sandra Green 082 308 8222 or email
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