What is the new Mandatory Disclosure Form and how does it affect you?

For a number of years, it has been mandatory for the sale of immovable property to include a property condition report (Landlord’s Mandatory Disclosure Form). As of February this year, it is now also required for the rental of property.

In accordance with the Property Practitioners Act (PPA), it is law for Landlords to provide new Tenants with a Mandatory Disclosure Form (MDF) on the condition of their property.

In terms of the Act this must be completed & signed by the Landlord & Property Practitioner prior to the signing of a Mandate. The MDF must certainly be filled in before any marketing of the property, as explained in this article about the increased protection provided by the PPA. This process needs to be adopted by all Property Practitioners as the mandatory condition report must be presented to prospective tenants.

Mandatory Disclosure

In completing the report the Landlord must indicate all known material defects on the property (they can’t be held liable for defects of which they are unaware). These defects are typically, but not always, latent, i.e. not easily visible upon an inspection. The items listed in the declaration would include issues such as faulty electrical installation, plumbing, pool leak, roof leak, etc.

Can prospective tenants query the MDF?

The disclosing of a defect is provided as information for the prospective tenant, enabling them to factor it into their decision on whether to proceed with an application. It does not place an onus on the landlord to remedy. The tenant is of course also entitled to have a formal inspection for material defects done at their cost. As noted in an article on the Property Practitioners Act by Schindlers Attorneys:

“The consumer [tenant or buyer] is still free, [for their] own account to have the property inspected before finalizing the transaction.”

An article on the Mandatory Disclosure Form published by Property24 further clarifies the role of an MDF in renting a property:

“This new law may falsely raise the expectations of purchasers [or renters]. Why? The definition of defects in the disclosure form is limited and the disclosure form cannot be described as complete or comprehensive in any way. Is the disclosure form a warranty or guarantee for the purchaser [or renter] that there are no other defects? No, absolutely not. Does it weaken the protection that the “voetstoots” (buying “as is” with all existing defects) clause offers the seller [or landlord]? No, assuming that the seller [or landlord] does not provide a guarantee or warranty elsewhere in the Agreement of Sale [or lease] which conflicts with the voetstoots clause.

The DF form is not a:

  • Comprehensive list of all
  • List of repairs to be rectified by the seller [or landlord] prior to change of ownership [or beginning of tenancy].
  • Substitute for a thorough inspection by the prospective purchaser [or tenant].”

The Mandatory Disclosure Form is required to be annexed to new leases – its important to note that it is separate to the ingoing inspection which is signed by the tenant on handover of the property. The ingoing inspection report records defects that are typically patent, i.e. easily visible. In terms of this inspection the tenant also has 7 days following handover to submit any further defects found.

A tenant is only responsible for damages (excl. fair wear & tear) they have brought about during their tenancy, which would not typically include items on the MDF. For example, it would be highly unlikely for a Tenant to cause a crack in the foundation or structural damage as the actions required to incur this kind of damage would not be permitted in the lease agreement.

FAQs:

Who needs to complete the Mandatory Disclosure Form?

The landlord needs to complete the property condition report.

Who needs to sign the Mandatory Disclosure Form?

The owner of the property, the agent, and the tenant.

What is the purpose of a disclosure form?

The disclosure form states the condition of immovable property before a sale or rental. This informs the next occupant of defects that may influence their decision to purchase or rent.

Is a disclosure statement required?

Yes. A property disclosure document is a legal requirement. Agents must acquire this statement before a Mandate is signed and before any marketing can take place.

How does the Mandatory Disclosure Form relate to the Property Practitioners Act?

The Property Practitioners Act states that a Mandatory Disclosure Form must be completed by the owner, and must be filed by the agent before signing a Mandate and advertising the property.

The MDF must be presented to potential tenants.