What South Africa’s Consumer Protection Act says (effective from 1 April 2011)
South Africa’s new Consumer Protection Act became effective from 1 April 2011.
Its intention is to stop high pressure selling, in which the buyer finds that he has signed for a home without being made aware of the implications and potential drawbacks.
The full act is available here.
1. All defects must be declared to the buyer in writing
Before the act, The “Voetstoots” or “As-Is” clause offered no protection to buyers who found defects only after property transfer had taken place. The only exception was if the seller or agent had deliberately concealed a known defect from the buyer (patent defect), and it was not reasonable to have expected the buyer to have noticed this defect when the property was viewed.
“Voetstoots” no longer applies! The buyer must be informed of all defects in writing:
This is an extract of clause 67 of the Act:
Mandatory disclosure form 67. (1) A property practitioner must— (a) not accept a mandate unless the seller or lessor of the property has provided him or her with a fully completed and signed mandatory disclosure in the prescribed form; and (b) provide a copy of the completed mandatory disclosure form to a prospective purchaser or lessee who intends to make an offer for the purchase or lease of a property.
(2) The completed mandatory disclosure form signed by all relevant parties must be attached to any agreement for the sale or lease of a property, and forms an integral part of that agreement, but if such a disclosure form was not completed, signed or attached, the agreement must be interpreted as if no defects or deficiencies of the property were disclosed to the purchaser.
(3) A property practitioner who fails to comply with subsection (1) may be held liable by an affected consumer.
(4) Nothing in this section prevents the Authority from taking action against a property practitioner or imposing an appropriate sanction.
(5) Nothing in this section prevents a consumer, for his or her own account, from undertaking a property inspection to confirm the state of the property before finalising the transaction.
2. Estate Agents will also be held responsible
Estate Agents will be held responsible for ensuring that home buyers are fully informed regarding the condition of the property.
- The “As Is” or “Voetstoots”clause in an Offer to Purchase will no longer apply
- Estate Agents will not be protected from the risks of non-disclosure.
- Estate Agents will need to provide full disclosure up-front to potential home buyers.
The Act imposes new responsibilities on estate agents and what they will be accountable for:
- Any action which on later investigation could be characterised as dishonest, unfair or misleading.
- Any aspects of the property which could be deemed of low or defective quality and/or of questionable value in terms of the price paid.
- Any documentation which could be deemed difficult to understand or insufficiently explanatory.
- Any statements in the advertising and promotion of the property which are exaggerated or misleading.
3. Buyers may still have an independent inspection done before finalizing the transaction
In terms of the Act, if latent defects become apparent in the home within six months of its being transferred to the new owner resulting in a reduction of the value of the home and the seller will have to remedy or pay compensation.
It’s not realistic that a seller (or buyer or estate agent) will, for example, climb onto his roof or into his roof cavity to look for defects or find issues that could present a problem in the near future if not attended to timeously.
For this reason, buyers, sellers and estate agents have home inspections done – so that everyone is aware of the condition of the property.