Bilaal Dawood Attorneys have received a number of queries related to Patent and Latent Defects from Contractors who have been querying what they are and what are they liable for. The objective in this write up is to provide some clarity as to what these are, when they arise and highlight some exclusions.

A patent defect is a defect that is discovered after a reasonable inspection at handover whilst a latent defect is a defect that cannot be discovered by a reasonable inspection and may only become apparent later, sometimes after a few years. Patent defects are usually found on inspections for practical completion and examples include inter alia; skewed doorframes, broken windows or window frame handles, incorrectly fitted materials etc. As mentioned above, a latent defect only becomes apparent later and is usually discovered after settlement, for example, cracking in a building due to settlement as a result of a structural defect in the foundation, inadequate wind-posts causing movement or damage to walls, etc.

It is a feature of construction contracts to have a defects liability cycle within which the Contractor is held liable for latent defects found after final completion. These are usually defined in the construction contracts but are sometimes (in certain types of works within the construction contract) adjusted through agreement and recorded accordingly.

The influx of queries relates primarily to Housing projects. These projects are governed by the NHBRC and statutory mandatory provisions which we shall now focus on. The primary legislation that governs the contractual relationship in home building projects is the Housing Consumer Protection Act 95 of 1998. This legislation provides for inter alia the following relating to the subject matter of defects:

“The agreement between a home builder and a housing consumer for the construction or sale of a home shall be deemed to include warranties enforceable by the housing consumer against the home builder in any court, that -

 (a)     the home, depending on whether it has been constructed or is to be constructed -

 (i)     is or shall be constructed in a workmanlike manner;

 (ii)    is or shall be fit for habitation; and

 (iii)   is or shall be constructed in accordance with -

 (aa)   the NHBRC Technical Requirements to the extent applicable to the home at the date of enrolment of the home with the Council; and

 (bb)   the terms, plans and specifications of the agreement concluded with the housing consumer as contemplated in subsection (1);

 (b)     the home builder shall -

 (i)     subject to the limitations and exclusions that may be prescribed by the Minister, at the cost of the home builder and upon demand by the housing consumer, rectify major structural defects in the home caused by the non-compliance with the NHBRC Technical Requirements and occurring within a period which shall be set out in the agreement and which shall not be less than five years as from the occupation date, and notified to the home builder by the housing consumer within that period;

 (ii)    rectify non-compliance with or deviation from the terms, plans and specifications of the agreement or any deficiency related to design, workmanship or material notified to the home builder by the housing consumer within a period which shall be set out in the agreement and which shall not be less than three months as from the occupation date; and

 (iii)   repair roof leaks attributable to workmanship, design or materials occurring and notified to the home builder by the housing consumer within a period which shall be set out in the agreement and which shall not be less than 12 months as from the occupation date.”

Therefore, from the above it is clear that the mandatory structural defect period is five years and the period of roof defects is 12 months. However, it is prudent for the parties to look at the contract and establish whether these limitations apply. The housing project cannot provide less favourable terms than the legislation, however, the parties may establish more favourable terms.

The terms of the latent defects provided for in the Housing Consumer Protection Act are not without limitation. The General Regulations relating to Housing Consumer Measures (GN R1406) provide for certain limitations, qualifications and exclusions which states as follows in Regulation 14:

“The limitations and exclusions contemplated under section 13(2)(b)(i) of the Act in respect of which a home builder is not liable for loss, damage, destruction or threat of collapse are -

 (a)     willful acts or willful omissions of the housing consumer or persons residing in the home;

 (b)     fire, explosion, lightning or damage caused by a third party;

 (c)     storm, flood or earthquake or any other convulsion of nature;

 (d)     structural alterations, repairs, modifications or alterations to the home as originally constructed and which affected the original structure of the home;

 (e)     inadequate maintenance or abnormal use of the home or the imposition of any load greater than that for winch the structure of the home was designed or the use of the home for any purpose other than that for which it was designed.,

 (f)     subsidence or landslip from any cause not related to non-compliance with the NHBRC technical requirements;

 (g)     any change in colour, texture, opacity or staining or other ageing process;

 (h)     pressure waves caused by aircraft or other aerial devices travelling at sonic or supersonic speeds or the impact of aircraft or other aerial devices or articles dropped or falling therefrom; destruction of or damage to the home or any loss of expense arising therefrom, or any liability of whatsoever nature related to ionising radiations or contamination by radioactivity from whatever cause or from nuclear weapons material; war, invasion, act of foreign enemy, hostilities (whether declared or not), civil war, revolution, rebellion, insurrection or military or usurped power, strike, riot civil commotion;

 (k)     loss of damage to any finishes unless they must be repaired or replaced due to a major structural defect in the residential structure;

 (l)      wear and tear, deterioration caused by neglect or damage occasioned by the failure of the housing consumer timeously to notify a home builder of any defects;

 (m)    any costs, loss or liability for which compensation is provided by other legislation;

 (n)     anything which is of a petty nature which any reasonable home owner or housing consumer could be expected to rectify him or herself,

 (o)     misuse or abnormal use of private drainage system.”

These exclusions must be borne in mind in addressing latent defects. It is important to note the exclusions relating to finishes, change in colour of materials and wear and tear. Often, these items are raised as latent defect items. Some of the exclusions are wide enough to be open to interpretation, for example Regulation 14(n) which provides for anything which is of a petty nature which any reasonable home owner or housing consumer can be expected to rectify. These must be decided on a case by case basis.

Bilaal Dawood | Bilaal Dawood Attorneys