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Tuesday Apr 19, 2016

Voetstoots still applicable to property sales

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.

He says this issue has been extensively discussed by property and legal experts as many consumers are still under the impression that the voetstoots clause is no longer applicable to home sales and may not be included in sale agreements.

"They seem to think that if they find any latent defects in a property after buying 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.

"However, 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. However, it does not apply when individual homeowners are selling their homes to other individuals - because it is not the usual business of the seller to sell property.

"In addition, since an agreement of sale is a contract between seller and buyer, and the estate agent is generally only the facilitator of that agreement, buyers cannot look to the agent for damages if they later decide they are not satisfied with their purchase."

This means, Rawson says, that sellers or their agents are still allowed to include a voetstoots clause, which basically states that the buyer is agreeing to buy 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.

"Buyers are of course quite entitled to refuse to accept this clause, but if they do accept it, they wonÂ’t be able to cancel the sale agreement if defects are later found in the property, unless they can prove that these are latent defects and were deliberately concealed with the intention to defraud them."

This was once again 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. 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 the buyer had not done so."

In other words, Rawson says, the situation with regard to ordinary home sales is much as it was before the introduction of the CPA - and buyers should still inspect any home they are thinking of buying with great care, 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 they are not deliberately concealing any faults and are ready to negotiate transparently and in good faith.

"And the best way to do this is to work with a professional agent who understands that his or her job is not just about marketing your home and finding prospective buyers, but also about seeing the transaction through to the end, when the property is successfully transferred to a new owner."

Such an agent, he says, will diligently go through your home in detail and properly assess how it compares to others on the market or recently sold in your area, and then help you to set a listing price that is fair for the property in its current condition. The agent should also be able to tell you what repairs or improvements would be essential and/or most cost effective if you want to attract more prospective buyers and better this price.

"Most agents these days will ask you to sign a detailed disclosure report to be incorporated in the sale agreements and also signed by the buyer, so there can be no dispute later about what was and was not disclosed."

Property
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