Understanding importance of NHBRC Certificates

© Lane Erickson – 123RF.com

In terms of section 10(1) of the Act, no person can carry on business as a homebuilder or receive payment in terms of an agreement for the sale or construction of a home, unless he is a registered homebuilder. The NHBRC will issue him with an NHBRC registration certificate when registered.

This means that it is unlawful in terms of the Act to build a home if you are not a registered homebuilder. Such a person can be convicted of an offence in terms of criminal law and be fined or imprisoned for up to a year.

It is also unlawful for an unregistered homebuilder to receive any compensation in terms of any building agreement in respect of any home and any person who has already paid such a homebuilder can apply to court to have the money refunded. Homeowners should never utilise the services of any builder to build a home, if that builder is not registered with the NHBRC, as they will not be entitled to compensation if a structural defect is discovered in the home in the 5-year period from occupation onwards.

NHBRC enrolment certificates

Section 15 of the Act requires that all homes must be enrolled at least 15 days before construction begins. Not all builders will take on the responsibility of enrolling a home, because an enrolment fee is payable, and so any homeowner who is building a home must check with the builder whether the builder, or the homeowner will be responsible for enrolling the home.

It commonly happens that homeowners are caught unawares when they expect their builders to enrol the home for them, only to find out years later that the builder's building contract did not include this obligation and the builder was not responsible for doing this.

NHBRC enrolment certificates are valid for five years from the date of occupation. The date of occupation is the date on which the housing consumer first acquiring the home accepts the home as reflected in a document confirming such acceptance. If this document is not available, or if the NHBRC for any reason cannot determine the date, the date reflected on the certificate of occupancy issued by the city council will be the date of occupation.

Importance of NHBRC certificates

Only the owners of homes built by registered homebuilders and enrolled with the council are entitled to the remedies under the Act.

When a homebuilder is registered with the NHBRC and the home is enrolled, the NHBRC will inspect the home and ensure it meets with the NHBRC technical requirements, which in turn ensures homes that are built are of a high standard and good quality. If the council is of the opinion that the homebuilder is not complying with the Act, it can impose a penalty and may apply to court to direct the homebuilder to comply, stop construction or grant assistance appropriate in the circumstances.

The NHBRC will compensate a homeowner for certain types of damage in certain instances:

1. There is a major structural defect in the home as a result of the homebuilder not complying with the NHBRC technical requirements within 5 years of the date of occupation, and the housing consumer has notified the homebuilder of the defect within those 5 years; and

2. The home was constructed by a registered homebuilder, the house was enrolled with the NHBRC, and was still enrolled at the date of occupation; and
   
3. The homebuilder is in breach of the building agreement with the homeowner inasmuch as he has failed to rectify the defect, or the homebuilder no longer exists or cannot meet his obligations.
   

NHBRC certificates and bonds

Section 18(1) of the Act states that a financial institution cannot lend money to a person to purchase a new home from a homebuilder if:

1. the homebuilder is not registered with the council;

2. the home has not been enrolled with the council; and
   
3. the relevant fees have not been paid to the council.
   

In light of the aforesaid, it is a normally stipulated by the banks that a requirement for the registration of the bond is that the conveyancers must obtain the necessary NHBRC certificates before registering the bond, where the building on the property is less than five years old.