Legal Discussions with Vengai Madzima: Rights of Buyers in Uncompleted Property Developments for Residential Stands

NewZimbabwe.com has invited Mr. Vengai Madzima, the Senior Partner at Madzima Chidyausiku Museta Legal Practitioners (MCM Legal) to discuss with us legal issues that affect Zimbabweans. The discussions are of a general nature and those seeking specific legal advice should contact their lawyer.

Reporter: Welcome back Mr. Madzima. This week, we want to discuss an issue that is causing a lot of pain to buyers of stands in new property developments: that is failure of developers to complete developments for stands in time or at all, and in some instances, for a buyer to find out late that no permissions to do the development were ever granted. Why has this become commonplace?

VM: Thank you

If you recall, we have discussed some aspects of this before; however, the issues remain topical and a serious pain point to buyers of stands in new developments. Uncompleted developments do not only result in the loss of people’s savings or hard- earned money but also people’s dreams deferred and, in extreme situations, lost, never to be achieved.

It will be reckless, however, before I proceed, to paint all developers with the same brush; there are developers who are completing developments and adhering to the prescriptions of the laws that govern developments and completing beautiful international standard developments.

Just about 2 weeks ago, I had the opportunity to attend a ground – breaking ceremony for another development by Velda Estates in Harare, a developer whose track record so far has been pleasing to say the least, as they, to my knowledge, complete all their developments. You have others like Aloe Enterprises on the Mutare Christmas Pass, doing a great job to obtain all compliance before off-loading stands.

Now to answer your question, the issue that is causing some of this mischief is really an attempt to strike a balance. On one hand, the buyers of stands during the development stage have an opportunity to purchase for low prices while the developer will benefit from capital funding for development progress.

In my view, it is incumbent on the buyer to legally protect themselves before purchasing, during development and post-development.

Reporter: How can a buyer protect him or herself before purchasing?

VM: It may sound like a cliché, but I cannot overemphasize the requirement to conduct due diligence on every development one intends to purchase. I will tell you my reasons.

First thing, our laws do not recognize the sale of a portion of land where there is no subdivision permit. If I am to be specific, our courts have regarded an agreement for the change of ownership of a portion of land which did not have a valid subdivision permit to be illegal, unenforceable, and void ab initio, meaning void from the beginning or that it never happened.

So, if the agreement never happened, then there cannot be any sale of land. The buyer does not own any land nor have any rights been ceded to him. The option available for the buyer as a remedy to recover what is lost is to sue the developer for unjust enrichment, among other legal options.

The law is very strict on having a permit for any agreement of sale that has a suspensive condition; for example, the agreement will stipulate ‘such and such when the subdivision permit is issued’ does not cure the invalidity of the agreement as long as it was executed prior to the permit.

An initial due diligence will look at these issues among others.

Reporter: This information is actually a bit scary, and I am convinced of the necessity of a legal due diligence. You did mention that a buyer also has to protect him or herself during the development stage; how can one do that?

VM:  Well, there are a number of permits that are required for developments, some obtained during the development stage and some only achievable at completion of the development. An initial due diligence will alert the buyer on the progress of works towards either.

 I will give a brief of some permissions required for a development, master and local plan compliance, subdivision permit as mentioned earlier, approved survey diagrams and general plan; without this, the stands remain purely theoretical and do not achieve independent legal existence.

There is also a need for a local authority certificate of compliance after the requirements in subdivision permits have been achieved, in time.

Some local authorities or development contracts prohibit the sale of land or the building of superstructures without a development permit or not having achieved certain benchmarks in the development progress.

Reporter: What risks are there during this period and how can a buyer protect himself?

VM: Local authority developments suffer local authority commonage and endowment cessions where the developer cedes 10% of the total land area free of cost to the Local  Planning Authority. If the developer does not plan for this by identifying and allocating the said stands early before sales, there may run a risk of double allocation where the local authority claims the statutory allocation on land that may have been sold.

This issue of double allocation is also a real issue where selling systems are disjointed and do not speak to each other. Other issues that may rise is that the developer just stops the development midway, leaving the buyers with an incomplete development.

In situations where buyers suffer from land that has been double sold,  the buyers may seek court interdict orders to stop the developer from selling sold stands following declaratory applications to show who has current rights and interests in the allocated stands.

In situations of incomplete developments past the agreed times, the buyers may sue for specific performance, compelling the developer to complete the developments in terms of their agreement.  

There remains the possibility of also suing for damages against the developer for losses incurred.

Reporter: In closing, what may the buyer do post completion of development?

VM: The natural consequence of a completed property development for stands is that the buyer gets their title deeds. If they are being delayed because the developer does not want to issue them, the buyer may seek an order to compel the developer to issue title deeds

Reporter: Thank you, Mr. Madzima. We have to end here because of our time.

VM: Thank you.

You can contact Vengai Madzima on vengai@mcmlegal.co.zw or at www.mcmlegal.co.zw