The NHBRC and the conveyancer

1. Housing Consumers Protection Measures Amendment Act 17 of 2007

1. The Housing Consumers Protection Measures Amendment Act 17 of 2007, amending Act 95 of 1998 (the "Act"),was put into operation by Proclamation 39 in Government Gazette 31417 of 19 September 2008.
   
   
2. The amendments are all of importance to conveyancers but the amendment to Section 21(1)(b) creates a new offence of which conveyancers should take special note.

1. Section 21(1)(b) now provides that a conveyancer who contravenes a provision of section 18 (2) (of the Act) shall be guilty of an offence and liable on conviction to a fine not exceeding R25 000, or to imprisonment for a period not exceeding one year, on each charge
   
   
2. Section 18(2) provides as follows:
   
   18 Obligations of mortgagees, conveyancers and provincial housing development boards
   (1) No financial institution shall lend money to a housing consumer against the security of a mortgage bond registered in respect of a home, with a view to enabling the housing consumer to purchase the home from a home builder, unless that institution is satisfied that the home builder is registered in terms of this Act and that the home is or shall be enrolled with the Council and that the prescribed fees have been or shall be paid.
   (2) Any conveyancer attending to the registration of a mortgage bond in favour of an institution contemplated in subsection (1) shall ensure that the home builder is registered in terms of this Act, has enrolled the home with the Council and has paid the prescribed fees in respect of that enrolment.
   
   
3. The definition of "business of a home builder" has been amended and now reads as follows (I have underlined the additions and have put the deletions in brackets):
   
   business of a home builder' means-
   (a) to construct or to undertake to construct a home or to cause a home to be constructed for any person;
   (b) to construct a home for the purposes of sale, leasing, renting out or otherwise disposing of such a home;
   (c) to sell or to otherwise dispose of a home contemplated in paragraph (a) or (b) as a principal; or
   (d) to conduct any other activity that may be prescribed by the Minister for the purposes of this definition;
   
   (but does not include-
   (i) the bona fide building of a home by any person for occupation by that person;
   (ii) the bona fide assistance to a person contemplated in paragraph (i) by a person who is not a registered home builder, in the building of a home; or
   (iii) the sale or disposal by a housing consumer of his or her bona fide home;)
   
   
4. The definition of "home builder" has been amended and now reads as follows:
   
   'home builder' means
   (a) a person who carries on the business of a home builder; or
   (b) an owner builder who has not applied for exemption in terms of section 10A;
   
   
5. It would appear that any person (excluding only one who has obtained exemption under the Act) who constructs a home for any purpose whatsoever is now a "home builder" and needs to enrol the home with the NHBRC prior to the commencing of building operations.
   
   
6. The consequences of the amendments to the Act are, as far as conveyancers are concerned, far reaching. For example: A farmer builds a new house on his farm and later sells the farm to a buyer making use of loan finance by a bank to be secured by a mortgage bond over the farm. The conveyancer registering the mortgage bond would then commit a criminal offence if he fails to ensure that the home builder (the farmer selling the farm with the house on it) is registered in terms of this Act, has enrolled the home with the Council and has paid the prescribed fees in respect of that enrolment.
   
   
7. I would be obliged to hear from other conveyancers how they intend to ensure that they do not commit the said newly created offence when registering a mortgage bond in favour of a financial institution.