What Compliance Certificates Do I Need When Selling My House? - Real Estate

Often when we attend to property transfers we find that home owners are caught unawares of the compliance certificates that are required when selling a house and are subsequently shocked by the associated costs which they did not budget for.

A question frequently asked is whether or not these certificates are a legal requirement and in what circumstances can they be avoided?

In brief, compliance to electrical, water, gas and electric fence certificates is prescribed by law and carries penalties for non-compliance. The beetle certificate is not prescribed by law anymore but it is customary to include it in standard Offers to Purchase, especially for property situated in coastal regions. Banks also often include these certificates as requirements for a loan for the property that they are bonding in order to ensure that the property is compliant for their security purposes.

It is recommended that all sellers do a thorough inspection at listing stage, so that they know what they are in for in terms of repairs.

Below is a detailed summary of the different types of certificates of compliance and explanations as to what is required by law.

Electrical Compliance Certificate

The requirements for an Electrical Compliance Certificate are set out in the regulations to the Occupational Health and Safety Act. In general, each 'user' or 'lessor' must have a valid electrical certificate. Although regulations refer to 'user'/'lessor' and not 'owner', the description of user/lessor necessarily incorporates the owner of the electrical installation who will also be the owner of the land.

Regulations lay down many general requirements, as an example; only registered electrical contractors may perform electrical work and issue the certificates.

In respect of property transfers, the regulations prescribe as follows:

It is obligatory to obtain an electrical certificate where ownership changes; and
Save where there is a valid certificate in place that is (1) not older than 2 years, and (2) there were no alterations to the installation since the issue of the current certificate, a new certificate is NOT required for purposes of transfer. The seller can then hand the current certificate to the purchaser.

Parties may nonetheless agree that a new certificate must be provided, even where the current certificate is less than 2 years old and no alterations or additions to the installation have taken place (which is often the case in many standard Offers to Purchase).

Although the onus is on the seller to obtain this certificate and pay for the costs of repairs, this obligation can be shifted to the purchaser by way of agreement.

Beetle Certificate

Many years ago it was prescribed by law (Forest Act) that the Department of Agriculture had to be notified of the existence of certain beetles found in timber in residential homes. When beetles were found, the wood had to be destroyed due to the danger posed by these beetles to wood and to avoid the risk of spreading.

The legislation specifically required such notification for three types of beetles, which became commonly known as the so-called "notifiable beetles":

European house borer (Hyloytopus bajulus);
Longhorn beetle (Oxypleurus nodeiri); and
West-Indian drywood termite (Cryptotermes brevis).

The necessity to notify the department of such beetles found its way into sale agreements. Ever since, and despite the fact that it is no longer required in terms of legislation, standard agreements of sale, particular those in circulation in the coastal provinces (Western Cape and KwaZulu-Natal) continue to require a beetle certificate before transfer, given that these are the regions in which these beetles are most prevalent.

Always exercise caution – there are other beetles not included in this group that can cause damage to wood in a house. If parties are concerned about this possibility, it would be advisable to refer to all wood destroying beetles in general rather than to specify the type of beetle in the agreement, so as to obtain a certificate that includes confirmation that no wood destroying beetles of any nature were found in the premises.

Some noteworthy points:

The seller and purchaser can contract out of the requirement to provide a beetle certificate. However, if parties agree that no beetle certificate is necessary and the bank requires it for the purchaser's bond, then it will need to be provided at the purchaser's expense. Obviously if it is a cash deal, this does not present a problem.
The certificate is usually not required in sectional title schemes as these are generally more recent buildings with little or no timber. However, where there is a risk of beetle infection in a sectional title unit, for example where an old building was sectionalised or where you have a top floor unit with wooden beamed roofing, it may well be prudent to provide for a beetle certificate.

Electrical Fence Certificate

This is governed by the Electrical Machinery Regulations which were promulgated in terms of the Occupational Health & Safety Act. The overriding purpose of requiring an Electrical Fence Certificate is to ensure that the installation is safe.

The certificate is required where:

there is a change in ownership of a property after 1 October 2012 at which property there is an electric fence; or
there was no change of ownership but there has been an alteration or modification to an electric fence after 1 October 2012, even if it was installed before 1 October 2012.

There is no mention in the legislation of the certificate being valid for a fixed time period once issued (unlike electrical certificates) and once obtained it can be transferred from one owner to the next provided of course the agreement of sale does not specify a time period and provided there were no alterations to the installation after the certificate was issued.

With sectional title properties, the electric fence is generally situated on the common property which is deemed to be body corporate property. Every owner of a section within a sectional scheme is also a member of the body corporate and is also therefore an undivided part share owner in the common property. We are of the opinion that when a sectional unit is transferred there is also a change of ownership (even though only in part share) of the common property, and as a result of the change of ownership of property on which the electric fence is situated it will be necessary to comply with these regulations. Given that the management of common property falls within the duties of the body corporate, we are of the opinion that it is adequate for the body corporate to have a compliance certificate issued for the electric fence of the entire scheme which can be produced as and when called upon to do so. The body corporate should have a new certificate issued every time there are alterations done but it would not be necessary to have a new certificate issued every time there is a transfer within the scheme.

What happens within a gated estate that is not sectional title but free-standing erven where part of the fence is on the erf transferred (commonly referred to as home owners' associations)?

As discussed above, the compliance with the regulations is triggered when there is a change in ownership of property on which an electric fence installation exists. Technically where there is a change in ownership of property within a home owner's association on which an electric fence exists (typically your perimeter properties) then a certificate would need to be issued or be in place. It does however seem unfair that all of the members of a home owners association benefit from an electric fence, but only those properties on which the actual fence is built would need to have the certificate issued. As a result, our view is that as in sectional schemes it would be more practical for the home owner's association to have a certificate issued for the entire electric fence installation which can be produced as and when required in transfers.

Water Installation Certificate

In 2011, the City of Cape Town Municipality passed a new water by-law which requires that, with effect from 18 February 2011 onwards, all sellers of properties within its jurisdiction must furnish a Water Certificate (which has loosely and in our view incorrectly been called a Plumbing Certificate) to the municipality before transfer of ownership.

Note that:

This requirement is only applicable to properties that are situated within the jurisdiction of the City of Cape Town Municipality.
The certificate is required for both freehold and sectional title properties.
It is not a full plumbing check and fix! Please ensure the buyer understands this. The requirements of what needs to be certified in a Water Compliance Certificate are very specific and limited (as listed below) and it is for this reason we believe that calling these certificates "Plumbing Certificates" is misleading as it may lead purchasers to believe that a comprehensive plumbing check is being conducted and certified.
Although the by-law does not specifically say that the certificate must be provided to the purchaser, it has become commonplace to include such a provision in the Offer to Purchase. It safeguards the purchaser who then knows that his property at least complies with the requirements of the City's water by-law – and the seller is in any event obliged to lodge it with the City BEFORE transfer.

What does the Water Installation Certificate say?

This Certificate (only!) confirms that:-

The water installation conforms to the National Building Regulations.
The property's water meter is registering.
There are no defects that can cause water to run to waste.
No rainwater leaks into the sewerage system.

The intention of the legislation:-

Manage water resources and water loss.
Protect the buyer from latent defect claims and high water bills due to leakages.
Health and safety (not allowing a cross connection between storm water and sewer).
Ensuring water meter accuracy.
Provide an opportunity to gradually eliminate the increasing number of storm water connections into our sewers that are putting capacity pressures on our sewerage network and treatment capacity and are illegal.

The plumber attending at the property basically does the following:-

Checks that the water meter is standing still when all taps are closed (this means there are no leaks on the property).
Checks the roof gutters / storm water drains and the sewerage manholes (to ensure the rain water flows into storm water drain and the sewerage in the sewerage drain and no cross connection).
Checks that the geyser is up to SABS standards.
Checks pipes under basins / sinks.
Checks that all external pipes are bracketed properly.In respect of all other plumbing works or sanitaryware which is not working properly, this may fall under either a latent or patent defect and is a matter to be resolved between the seller and purchaser, bearing in mind the principles applying to voetstoots clauses.

Gas Certificate

Pressure Equipment Regulations were also promulgated under the Occupational Health and Safety Act (effective October 2009), which brought gas appliances installed in properties more or less in line with electrical installations.

From 1 October 2009, it is required that any person installing a liquid gas appliance at a property must have a Certificate of Conformity issued in respect thereof.
The certificate may only be issued by an authorised person registered as such with the Liquified Petroleum Gas Safety Association of Southern Africa (LPGAS), after he has inspected the installation and is satisfied that it is safe, and leak free.
Gas installations for which certificates of conformity are required would include built-in gas fires or braais, gas stoves, hot water systems and the like.
Furthermore, in terms of Regulation 17(3) of the Pressure Equipment Regulations, the law speaks of a certificate being required after any installation, alteration, modification or change of ownership of property which necessarily implies that a certificate would need to be in place or issued upon the transfer of a property.
The parties cannot contract out of it – it is required in respect of all properties where there is a gas installation, whether the owner lives there, rents out the property or whether it is vacant or stands empty for most of the year.
Unlike electrical certificates, there is no mention of how long the certificate is valid for once issued in the legislation although many standard offers to purchase will put a time frame on how old the certificate that is provided may be (usually two years).
Ordinarily in terms of the offers to purchase there will be an obligation placed on a seller to obtain the certificate prior to transfer for delivery to the purchaser after transfer. As with the other certificates, it is always better for the inspection and any remedial work to be carried out prior to the date of occupation by the purchaser and even earlier due to bank and bond requirements, as mentioned before.

It is always recommended that sellers do their inspections at the listing stage and then they will know what they are in for in terms of repairs. In addition, although it is usually required that the seller should provide the purchaser with the certificate by no later than the date of transfer, it is best that the inspection and remedial work is at least done before occupation by the purchaser and better still even earlier, as most banks now request a copy for purposes of clearance of the bond for lodgement.

Originally published September 19, 2019

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.