The Consumer Protection Act (CPA) does not negate or override the voetstoots clause that still appears in most property sale agreements, according to Bill Rawson, chairman of the Rawson Property Group.
“Real estate and legal experts as well as many consumers seem to think that if they find any latent defects in a property after they have purchased it, the CPA will entitle them to cancel the deal and get their money back, or claim damages either from the seller or from the agent who facilitated the deal,” says Rawson, noting that this is simply not true. “It has become clear that the CPA may apply in some cases where the seller is a property developer or a speculator whose ‘usual business’ is to build homes and sell them. But this does not apply when an individual homeowner is selling his home to another individual – because it is not the ‘usual business’ of that homeowner to sell real estate.”
Estate agents are generally only facilitators in an agreement of sale between sellers and the buyers, and therefore cannot be held liable for damages.
Rawson says the seller or his agent is still allowed to include a voetstoots clause, which basically states that the buyer is agreeing to purchase the property “as is” or “as it stands” on the date of the sale agreement – including all visible and invisible defects and any conditions or servitudes contained in the title deeds. “The buyer is of course quite entitled to refuse to accept this clause, but if he does accept it, he will not be able to cancel the sale agreement if defects are later found in the property, unless he can definitively prove that these are latent defects and that they were deliberately concealed with the intention to defraud him,” says Rawson.
This was confirmed in a recent Pietermaritzburg High Court case (Haviside v Heydricks and Another) in which the court found in favour of the seller despite the fact that the buyer only discovered certain defects after the transfer of the property. “The judgment was that the voetstoots clause in the sale agreement meant that the buyer had agreed to buy the property as it stood and that the seller could not be held liable for latent or patent defects,” says Rawson. “If the buyer had wanted to escape the provisions of the voetstoots clause, he would have had to prove that that seller intentionally withheld the information from them, but had not done so.”
Simply put the situation regarding ordinary home sales is much as it was before the introduction of the CPA. Buyers would be well advised to still carefully inspect any home they are interested in buying, and get a professional home inspector to help them if necessary.
“At the same time, we really believe home sellers should be as open and honest as possible about any defects that are known to them and ‘go the extra mile’ to show that they are not deliberately concealing any faults and are ready to negotiate transparently and in good faith,” he says. “Most reputable agents these days will ask you to sign a detailed disclosure report to be incorporated in the sale agreements and which is signed by the buyer to avoid disputes later about what was and was not disclosed.”