Conveyancing attorneys and estate agents can tell many stories of dodgy electrical certificates. These are confirmed by horror stories told at dinner parties about the quagmire of buying a new home. By law, an electrical certificate of compliance (COC) has to be provided when buying a house. The problem is where that responsibility lies and the opportunity for fraudulent behaviour.
According to Neels Oosthuizen, conveyancing attorney of Lazzara Leicher Inc, in terms of the standard clause in the deed of sale does not specify who must obtain the COC. However, a convention has developed that it is the seller’s responsibility to do so. However failure to do so does not automatically negate the agreement, but can cause delays in transfer if the purchaser takes the point that the seller is in breach of the agreement. Secondly, if there are problems with the electrical system, it does not necessarily mean that the seller is obliged to have it repaired at his cost, although this is dependant on the wording of the sales agreement says Oosthuizen.
This is where lawyers are seeing a great deal of problems. For example, a buyer has recently bought a house and discovers that the house has numerous electrical problems despite the fact that the seller provided a valid electrical COC. The buyer approaches the seller and confronts him but he refuses to have the defects repaired, claiming that the house has been bought voetstoots.
If the seller can show that he is entitled to rely on the provisions of the voetstoots clause, there is very little the buyer can do to the seller. Oosthuizen says there is recourse to the Electrical Contracting Board to lay a complaint with that body against the electrician who issued the COC. They will then, for a fee of R250, inspect the installation and if indeed there are defects, they will compel the electrician to repair the installation at his own cost. If he fails to do so, he will be charged by that body and fined. Oosthuizen says this is an effective channel and knows electricians who have been fined up to R5 000 for fraudulently issuing certificates.
Oosthuizen says that the buyer cannot, however, refuse to allow the transfer to proceed as this could lay him open to a cancellation of the agreement and being sued for damages by the agent and the seller and lose the deposit. “This may be a solution where the seller can be bullied to do the right thing, but in a rising market it could be an out for the remorseful seller and a very bad idea for the buyer. Definitely not to be recommended,” says Oosthuizen.
While in this case the seller may have been aware of the false COC there are plenty of cases of electricians using COCs to make a quick buck. People have been faced with bills of R25 000 or more to “get their homes compliant”. In a rush to meet the sale requirement the seller forks up the cash without getting a second quote.
Electricians may also work with the buyer. Oosthuizen has seen cases where the buyer decided to do major renovations and sees an opportunity to hold the seller to ransom. The buyer gets his electrician to “work in” the cost of the work they want to do and challenges the seller’s COC. The buyer then threatens the seller with legal action unless he pays and now the seller is in a quandary — he is averse to litigation, does not seek legal advice and coughs up the amount demanded. There are procedures (see “Preventing short circuits”) in place to protect both parties.
Preventing short circuits
Ensure that the agreement contains a clause which stipulates that: “All fixtures and fittings of a permanent nature in or on, attached to the property, which the seller warrants are fully paid for and owned solely by the seller and which the seller further warrants are in good working order and condition as at date of sale.”
Neels Oosthuizen, conveyancing attorney of Lazzara Leicher Inc, says this negates the voetstoots clause insofar as electrical installations are concerned and the buyer can hold the seller liable. Remember, the voetstoots clause can apply to electrical installations as well. But if you have included the new clause, and the buyer picks up that there are problems, the buyer can then legally place the seller in breach and will then have a strong case to stop the transfer pending the repairs.
To play it really safe, one should spend the R250 to R300 an electrician charges and get another electrician in to check compliance.
The seller should get a second opinion if there is a fancy bill for repairs.