Crooked property developers

Homeowners who had been ripped off by developers could get some redress from the National Home Builders' Registration Council (NHBRC), which was established to set minimum building requirements and standards and to provide a warranty against defects, Peter Mosalo of the council said recently.

The NHBRC has a major structural warranty scheme, which is used to pay for the repair of structural defects within the first five years.

It does not extend to the completion of an abandoned development. Here the consumer has to appoint another builder to complete the work and then claim the costs back from the original developer. This, however, is a waste of time as these lowlife developers protect themselves by setting up a new company for every development they start. These companies have no assets apart from the development.

Buyers could try to block a developer's attempt to open a new company until the first development had been completed, but this does not always succeed. Despite the best efforts of the NHBC, these practices will continue. What is needed, according to John Swan, an attorney with Lester Hall and Swan, is a legal mechanism that will come down hard on such developers.


Reader Comments:

JJ Jacobs Sandton 03/09/2004:

As far as we are aware the NHBRC. does not issue a certificate of enrolment to each and every builder who applies without checking the track record of the proprietor and or the company/CC involved. If the necessary cross checks are done and guarantees are in place the setting up of new companies will not affect home builders to the extent alleged.

Stian Dreyer 10/09/2004:

In the UK there is an act called the Director's Disqualification Act administered by the Department of Trade and Industry (DTI). The purpose of the act is to disqualify natural persons from being a director of a company (member of a CC - although they do not have this form of legal entity) and even be involved in the management of a company.

The procedure is that an insolvency practitioner or liquidator must report a company in the event that a director has prejudiced his creditors, fiscus or conducted himself in a manner that is worthy of investigation or report subsequent to a company's failure. The DTI following investigation will make application to court to have such person disqualified to a maximum of 15 years (the average granted is 5 to 8 years).

This acts as a deterrent for people to abuse legal entities and prohibit them from just setting up new entities. I believe that South Africa needs an act like this, but the question remains whether our DTI will be able to administer it.

Monica 10/09/2004:

I've had exactly such experience with 3 own title houses that I bought. It was in a development. I lost thousands of rands when the houses were eventually sold on auction. I had numerous meetings, phone calls, etc with ABSA, NHBRC, the developer, my attorney and another developer to try and sort out the problems, however everyone left me with the debt and problems. I am not impressed with ABSA and the NHBRC that throughout the whole unpleasant ordeal stood by the crooked developer.

The whole development had the same problems and as far as I know this developer has done exactly this to a few other developments. He sold most of the erfs as plot and plans, started building the houses after obviously collecting the monies for the stands first - messed up the building work and liquidated the company. The balance of the erfs were sold on auction and there was no value in the houses that we bought. ABSA backed the developer all the way. I was told by one of the most senior persons within the loan department that that the developer has been building for ABSA for the past 15 years and has a very good reputation. He might have had, but no longer and they refused to assist me as their client. I think is totally unfair that I have to bear the grunt for something that I had no hand in.

I don't believe that the NHBRC is making any effort at all. Their representative said to me: "Mrs ...., do you still want these disasters?" It was not a matter of wanting - the bank paid the developer in full and therefore I had not choice. Their report stated that the building problems were cosmetic - what the hell? Cosmetic, it still means that I did not get a complete house for which I've paid??? Obviously, I did not have money to fight the case and therefore I've lost! Their banks valuers only check if the house is there - they don't check the building quality?? I think its CORRUPTION at its best!

Ripped off 23/09/2004:

I had damage to my property, water that was a result of structural damage. However when I tried to contact the developers they refused to repair it and even the claim that was made to the NHBRC was not taken seriously. The developers are so close to the NHBRC that people like us don't even have a leg to stand on as they will go to court and who in thier personal capacity has the money for a longwinded court case which will be dragged on by developers that have loads of money!

Sammy 31/08/2006:

This does not work, we are still getting ripped off by developers, I am only two year in the "new house" I have already fixed the pipes, cracks, geyser which was not fittes according to the required standards, as I heared all those houses in the area did not pass the "inspection tests" but they have been all approved as good, everytime when you tell the developer, he tell you that you must maintain the house, all these happened before I was even 2 years in the house, there are leaks eveerywhere, toilets, taps they never stop pouring the water even if they are closed

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