A high profile Cape Town estate agent has issued a media release warning buyers of homes on a plot and plan basis to be exceptionally diligent, particularly in checking the rights or special conditions the developer has included in the contract.
Lanice Steward, Managing Director of real estate agency Anne Porter Knight Frank, says buyers should be aware that a developer can reserve the right to alter the plans and also reserve the right to alter (usually by downgrading) certain finishes or even may avoid specifying finishes in the contract altogether.
“Many developers,” says Steward, “will also avoid being tied to a fixed handover date. This can be extremely awkward for someone who has agreed to vacate their current home by a specified date.
“A more serious problem,” she says, “is that inexperienced developers may fudge the date agreed to confirm that the project is going ahead. Their bank financiers will usually have insisted on a certain level of pre-sales or pre-lettings 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 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.”
Steward says buyers should insert in the written sales agreement that a start on the building – and the handover – must be met by certain dates and that clear notice of cancellation be 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 period 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 incentive for a tenant to become involved. 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.