Developers: Register or Regret

developersResidential property developers need to note the recent Constitutional Court judgment confirming that you must register with the NHBRC (National Home Builder’s Registration Council) before you conclude a building contract or commence building – if you don’t (or if you register late) you cannot enforce payment.  In fact you commit a criminal offence just by accepting any payment.

It is not enough that whichever building contractor/s you use to do the actual construction is/are registered – both you as developer and your contractor/s must be registered.

Don’t get this wrong!

The developer in question only registered with the NHBRC after the contract was concluded and building had started (in fact, only after it had applied to the High Court to enforce an arbitration award in its favour).  That, held the Court, disentitled it to receive any consideration for building the house.  It was irrelevant that the actual builder was properly registered and the house properly enrolled.

So the developer loses everything –

  • The R1,228,522 construction price, plus
  • Substantial interest since 2007, plus
  • Legal and other costs.  These are no doubt very substantial indeed, the case having dragged on through arbitration, the High Court, the Supreme Court of Appeal and the Constitutional Court.

Homeowners – consider this…..

Check upfront that both the developer and the contractor/s are registered and that your home is enrolled with the NHBRC.  That’s the only way you can access statutory safeguards such as vetting of builders, warranties as to the quality of construction, and access to a compensation fund for any defective work should the developer or builder fail to meet its obligations to you.

Link to the case: Cool Ideas 1186 CC v Hubbard and Another (CCT 99/13) [2014] ZACC 16; 2014 (4) SA 474 (CC); 2014 (8) BCLR 869 (CC)

Ashersons Attorneys

Ashersons Attorneys

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