Consumer protection in respect of construction contracts

The Consumer Protection Act No. 68 of 2008 (the “CPA”) has been in effect since 2011, however, long before this Act, there have been other legislation around to protect consumers in the building and property law industry. One of these pieces of legislation in construction law in South Africa  is known as the Housing Consumers Protection Measures Act No. 95 of 1998 (hereinafter the “Act”), and prescribes, among other things, that no person shall construct a home or receive any consideration in terms of any construction contract with a housing consumer for doing so, unless that person is a registered home builder.

Furthermore, the home builder may not demand a deposit for the construction unless the home builder and housing consumer have entered into a construction contract, nor may the builder receive any other consideration unless the home builder has enrolled the home with the National Home Builder Registration Council (hereinafter the “NHBRC”) in accordance with section 14 of the Act. The builder may only commence with building works if the NHBRC has issued a certificate of enrolment to the home builder.

In the 2014 Constitutional Court decision of Cool Ideas v Hubbard and Another, it was clarified that both the property developer and the builder subcontracted by it to construct a home, must be registered as home builders in terms of the Act before construction begins. If only the sub-contractor is registered, the property developer will be barred from receiving consideration in terms of the building contract.

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