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Lanice Steward, Managing Director of the real estate agency Anne Porter
Knight Frank, was recently dubbed “the consumer’s friend”
by a highly satisfied client - and the reason for this was that Steward
had pointed out certain weaknesses and possible pitfalls in the developer’s
sale agreement.
“In my experience,” said Steward, “most Cape property
developers are jealous of their reputations and are ethical and professional
- but there have been, and there always will be, a few exceptions to
the rule. Anyone buying a home on a plot and plan basis therefore has
to be exceptionally diligent, particularly in checking what rights or
special conditions the developer has inserted into what appears to be
a standard contract.
“A developer can, for example, reserve the right to alter the
plans. We had a case recently where bay windows, an expensive item,
shown on the plans were not in the final product. A developer can also
reserve the right to alter (usually by downgrading) certain finishes
or he may avoid specifying finishes altogether. This can lead to the
buyer being very disappointed when he takes over the property. A good
developer will almost invariably show the buyer the specified finishes
at his showroom and allow him to make his decision upfront.
“Many developers,” said Steward, “will also avoid being
tied to a fixed handover date and this can be extremely awkward for
someone who has agreed to vacate their current home by a specified date.
“A more serious problem,” she said, “is that inexperienced
developers may fudge the date by which they agreed to confirm that the
project is in fact going ahead. Their bank financiers will usually have
insisted on a certain level of presales or prelets being achieved before
they will make their loan available and will ask for guarantees to cover
the loan.
“When these conditions are not met the project may well be aborted
- and in most cases deposits then should be immediately repaid, with
interest.
“Regrettably not only will some developers delay informing their
clients about the cancellation of the scheme, but some will also hold
onto their deposits for as long as possible.
“It is wise, therefore, to insert in the sales agreement in writing
that a start on the building – and the handover – have to
be achieved by certain dates and that clear notice of cancellation is
given by some other date. It is also wise to agree upfront, again in
writing, the interest that you will be earning on your deposit.”
Residential investors, said Steward, are sometimes slack about attending
handovers of their properties, drawing up snag lists and inspecting
the condition of their units. They often leave this to the tenant, expecting
him to relay any dissatisfaction or complaints to them via the agent.
Frequently this is not done and minor problems then grow into major
problems that can be very costly to repair. These can crop up out of
the guarantee time or the time allowed by the developer to report snags.
“Leaving the notification about complaints to the tenant,”
said Steward, “should very definitely be avoided because there
is no particular incentive for a tenant to spend time on this. Furthermore,
if repairs are supervised by the agent they are sometimes carelessly
carried out. In general, therefore, the landlord must keep an eye on
his investment, even when he has a thoroughly trustworthy agent operating
on his behalf.”
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