Are you following the correct procedure when accepting a mandate from a landlord, and is your template documentation for landlords to disclose defects in their properties up to scratch?
In a practice note issued by the Property Practitioners Regulatory Authority (PPRA) last month, the PPRA provided guidance on mandatory property condition disclosures to property practitioners who render services other than residential property sales. The practice note recommends that certain property practitioners (such as rental agents) create their own mandatory disclosure form and that they apply for exemption from using the defective prescribed form.
This practice note seeks to address deficiencies identified in the implementation of Section 67 of the Property Practitioners Act read with Regulation 36. Although the Act refers to “the seller or lessor of the property”, as well as “a prospective purchaser or lessee of the property”, thereby including both property sales and rentals, the Regulations and its template mandatory disclosure form refer only to the sale of immovable property.
The intention of the legislator was also to reduce litigation in relation to the non-disclosure of defects of the property by the landlord, and to ensure that the property practitioner assists the contracting parties by ensuring that all defects are not only declared, but also documented properly. It is therefore imperative for rental agents to obtain a duly completed and signed mandatory disclosure form, which is applicable to the property rental sector, from a landlord before assisting in the rental of the property.
This mandatory form must disclose any defects in the property, and must then be provided to any prospective tenant prior to signing, and finally also attached to the lease agreement, as it forms an integral part of the agreement. If such a disclosure form was not completed, signed or attached, the agreement must be interpreted as if no defects or deficiencies of the property were disclosed to the tenant.
A property practitioner who fails to comply with these obligations may be held liable by an affected consumer, while the PPRA may also take action against such property practitioner or impose an appropriate sanction.
What should agents do now?
The guidance suggests that rental agents should develop their own mandatory disclosure forms. However, they must apply for exemption from using the prescribed mandatory exemption form using Form E1 – ‘Application for exemption from provisions of the Property Practitioners Act, 2019’.
