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Tuesday Feb 08, 2011

'Full disclosure of property defects will be made important by CPA'

An avalanche of comment about the Consumer Protection Act, the regulations of which will be published in March 2011, has not yet fully defined the rules with which all South African manufacturers and suppliers will have to comply but, says Tony Clarke, managing director of Rawson Properties, what is clear is that in the residential property marketing sector, full disclosure of any defects or potential defects will become essential.

"It will in fact be illegal not to mention these - and to put them in writing," said Clarke. "As I read the new Act, the failure to disclose a defect could lead to the cancellation of the sale agreement and the refunding of the full sale price."

Asked how this ruling compares with the voetstoots clause, Clarke said it is likely to be more stringent.

"Under the voetstoots clause," he said, "it is essential for the injured party (the buyer) to show that the seller deliberately withheld information on a defect or was ignorant of the defect which any conscientious seller would have known about.

"With the CPA no matter how little the seller knew (or could have known) of the problem, he could still be held liable for it when it crops up after transfer."

Certain sellers, said Clarke, are now employing home inspectors to check out their homes. The problem here, he says, is that very few such people can have all the expertise - including knowledge of structural, electrical, plumbing, waterproofing, pest and surface matters - that such an "expert" would need.

"It is doubtful if the average inspector would be able to find anything not already apparent to the homeowner doing a careful check on his own," said Clarke.

Sellers and potential buyers should go through the home room by room and look at all the places hidden by carpets, furniture, curtains and other objects, and should list and sign for any defects found.

The seller should also then disclose upfront any problems he may have experienced with noisy neighbours (or their dogs), crime in the area, traffic or municipal services - and because this can deter a minority of buyers, he should also mention if there has been a death in the home recently.

The contractor/service providers for any work done on the home in the last year - even on a minor item like a swimming pool pump - should, says Clarke, be asked for a detailed receipt of the work and, if possible, a warranty and these should be handed over to the buyer.

It is particularly important to reveal any short or long term plans for rezoning in the area, says Clarke.

"Non-disclosure here could, again, be regarded as an illegal act."

The full disclosure rulings, added Clarke, put South Africa in line with the USA where the federal laws stipulate that it is a legal offence to avoid mentioning any defect or potential defect.

"This," he said, "is taken very seriously. It is even essential, if the house was built before 1978, or to verify that no walls have lead based paint. If they do, they must be tested."

Rawsons Properties Press Release

 
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