It is generally known by developers and builders of their obligation to register and enroll an intended building project with the National Home Building Registration Council (‘NHBRC’). This obligation has been created in terms of the Housing Consumers Protection Measures Act 95 of 1998 (“the Act”), with the intention to provide protection to consumers from substantial building work.
Link to the Housing Consumers Protection Measures Act 95 of 1998.
Link to the Housing Consumers Protection Measures Amendment Act 17 of 2007:
NHBRC REGISTRATION REQUIREMENTS AND THE CONSTITUTIONAL COURT JUDGMENT
The NHBRC registration requirements were dealt with in the Constitutional Court in Hubbard v Cool Ideas 1186 CC (590/12) [2013] ZASCA 71 (28 May 2013), the details of the case are set out below.
The Act requires all home builders to be registered with the Council (Section 10 of the Act).
A home builder is defined as, amongst others, a person who carries on the business of a home builder, which, in turn, means to construct or undertake to construct a home or to cause a home to be constructed.
The construction of a home can be for the purposes of sale, leasing, renting or otherwise deposing of such a home and to sell or otherwise dispose of such a home as a principal.
The Act enforces the registration requirements by stipulating that no person shall carry on the business of a home builder or receive any consideration in terms of any agreement with a housing consumer in respect of the sale or construction of a home, unless that person is a registered home builder.
In 2006 and pursuant to a written building agreement, the appellant, Ms Hubbard, appointed the respondent, Cool Ideas 1186 CC (hereinafter Cool Ideas), to construct a residential dwelling unit. Cool Ideas was not registered with the NHBRC at the time. Cool Ideas enlisted the services of a building construction company, Velvori Construction CC (“Velvori”), which was registered as a home builder with the NHBRC, to undertake the construction of Ms Hubbard’s home.
The building works completed in 2008, Ms Hubbard complained about various structural aspects of the construction and claimed an amount to cover the costs of what she claimed to be the remedial work required to be performed to her house. Cool Ideas opposed the claim and instead claimed payment of the outstanding balance for the work already performed as well as interest on that balance.
The arbitrator made an order in favour of Cool Ideas including a costs order. Ms Hubbard was unable to fulfill the arbitrations order which led to Cool Ideas applying to the High Court in terms of section 31 of the Arbitration Act 42 of 1965 for the arbitrator’s award to be made an order of the court.
Ms Hubbard opposed the application on the basis that Cool Ideas had not been registered in terms of the Act. In terms of section 10 of the Act, Cool Ideas was not allowed to carry on the business of a home builder or to receive any consideration in terms of any agreement with a person defined as a housing consumer. Ms Hubbard further stated that making the arbitration award an order of the court would amount to an order of the performance of an act prohibited by the legislature.
The High Court based its decision on section 14 of the Act which provided for late enrolment and non-declared late enrolment.
The Court held that one of the distinguishing features of this case was the fact that Cool Ideas was registered as a home builder in terms of the Act by the time that it sought the arbitration order to be made an order of the Court and thus made an order in favour of Cool Ideas.
Ms Hubbard appealed to the Supreme Court of Appeal. There the majority of judges upheld her appeal, stating that the purpose of the Act was to protect consumers and therefore both Cool Ideas and Velvori were required to be registered before commencing with construction, enforcing the arbitral aware, would disregard a clear prohibition in law. Even though the developer had subcontracted a builder who was registered, it also had to be registered in order to receive consideration.
Cool Ideas sought leave to appeal but the Supreme Court of Appeal refused. It then successfully applied to the Constitutional Court for leave to appeal, which was granted but the appeal itself was dismissed, in order to reach this conclusion, the Court interpreted the stature purposively, stating that the Act makes provisions for the protection of consumers and that by depriving unregistered home builders of their right to claim payment for the home in question was not unconstitutional. The Court held that the agreements concluded between Cool Ideas and Ms Hubbard remained valid but that Cool Ideas could not enforce its rights.
REGISTRATION OF BUILDERS UNDERTAKING RENOVATIONS
As it stands, the Act does not make provision for renovations or enrolment of projects where the owner undertakes alterations, conversions or improvements to his home, although there has been discussions relating to imposing the same requirements on builders who undertake such lesser works.
CONCLUSION
It is the duty of developers and builders to ensure that they are registered and enrolled with the NHBRC as should such developer and/or builder fail to do so, they will not be entitled to claim full compensation of the works completed and the housing consumer will not be deemed to be unjustly enriched by the fact that he/or she retains a property without fully compensating the developer or builder. It is further to be noted that registration subsequent to conclusion of agreements will not assist the builder or developer. Registration and enrolment with the NHBRC is therefore imperative in order to prevent losses that may otherwise have been recoverable.
Consumers can verify a builder’s registration with the NHBRC on their website: