Defects, deposits and other new legalities for sellers and landlords

Defects, deposits and other new legalities for sellers and landlords

Category News

Keeping abreast of legal amendments is vital for any seller and landlord and the past few years have seen a number of important new laws and amendments which are having a drastic effect on selling and leasing of property.

According to the Seeff Property Group, the new Property Practitioner's Act which was recently signed into law, replacing the 43-year old Estate Agency Affairs Act, will bring important reform of the industry as a whole and aims to improve the functioning of the sector.

Key aspects of the Property Practitioner's Act

Defining who is a property practitioner. The Act broadens the scope of legislation beyond traditional estate agents to cover commercial property brokers, bond originators, home inspectors, homeowners' associations, companies selling timeshare and fractional title, property developers and property managers, who now all fall under the Act.

Fidelity Fund Certificates. Anyone who earns a commission or brokerage from the sale or leasing of a property, needs a valid Fidelity Fund Certificate which must be produce on request from a seller or landlord. The Act tightens the regulations around Fidelity Fund Certificates beyond the current requirements to include possession of a valid tax clearance and a BEE certificate. It is also required that not just the agent/s, but the agency/business and all of its property practitioners must be fully compliant.

Property defects. This is an important element that sellers and landlords need to be aware of. While it has for some time been best practice to include a comprehensive property defects disclosure document as part of a property transfer, it is now mandatory for all property sale and lease agreements. No mandate may be accepted from a seller or landlord without this document, which will then also form part of the sale and lease agreement.

New Board of Authority. The current Estate Agencies Affairs Board will be replaced by a new governing body known as the Board of Authority. This new board will govern the property profession across the board, not just estate agents as is currently the case.

Key aspects of the Rental Housing Amendment Act (amendments to the Rental Housing Act of 1999)

Lease agreement in writing. All lease agreements must now be in writing and legally enforceable. The agreement and all provisions, duties and obligations must be explained to the tenant and clearly understood. All amendments to the lease must also be in writing.

The property must be habitable. The landlord must ensure that the rental property is in a habitable state and that it is safe and suitable for living, properly maintained and has access to basic services such as water and electricity.

Tenant may not be denied access basic services or to the property. Another important aspect is that the landlord may not cut off basic utilities such as electricity and water to non-paying tenants, only a local authority can do so. A landlord may also not change the locks or deny the tenant access to the property without a proper court order.

Defects to be recorded. A joint inspection of the property must be done at the commencement of the lease to identify any defects including those that need to be repaired by the landlord. The defects list must be attached to the lease agreement. Upon expiry, another inspection must be done to determine whether any damage has been caused during the tenant's occupancy.

Deposit must be invested and refunded. According to the Act, the deposit must be deposited in an interest-bearing account. The landlord must issue a written receipt for all payments received from the tenant, including the deposit. The deposit together with interest accrued must be paid to the tenant within seven days of the expiration of the lease. Reasonable costs incurred to repair damage may be deducted from the deposit, but subject to proof of damage and the costs.

For both sellers and landlords, the world of property has become rather challenging and complex, so be sure to work with an experienced and credible agent who can provide the right advice for your property.

Note - the above have been signed into law, but are still to be promulgated/take effect.

Author: Gina Meintjes