Advice and Opinion

Home sellers engaged in one-off transactions are not subject to CPA

The promulgation of the Consumer Protection Act, from the 1st of April 2011, has led some people to think that any home sale is subject to the act’s strict provisions, which are designed to protect the consumer (in this case the buyer) from misrepresentation and a poor quality product. This, however, is not the case, says Barry Fourie, the Rawson Property Group’s Business Systems Implementation Manager, when discussing the subject recently. 

“The act”, said Fourie, “only applies only in those instances where the seller is providing the product/service as part of his usual, everyday business. Home sellers selling their homes as a one-off exercise are rather bound by the common law “Voetstoots” principle.”

One of the implications for this, said Fourie, is that the burden is on the purchaser to inspect all building plans and the building’s structure before signing the offer to purchase. In addition, the purchaser has to ensure that the building’s plans not only exist but have been approved by the municipality.

“South African case law at one stage determined that building plans carry an implied warranty by the seller. This ruling was overturned by a Supreme Court case (Odendaal vs. Ferraris) which laid it down that the purchaser has to make sure that the building has municipal approval before he signs the offer and that if he does not do this, the Voetstoots clause applies.”

From time to time, said Fourie, a purchaser will buy property in good faith, only to find, perhaps after transfer, that it has no building plans. This, he says, is usually due to the plans having been destroyed, e.g. by a buyer. If the buyer has bought directly from the owner, he will again have no recourse, in such cases, the “Voetstoots” principle applying.

However, he said, it has to be stressed that a reputable estate agency will usually be able to prevent such occasions arising: they will insist on the sellers signing a declaration, not only listing all the defects (including those not detectable to non-professionals) but also confirming the existence of approved plans. This information is then passed onto the buyer by the estate agency.

Should a purchaser be able to prove that the seller lied or misrepresented the facts regarding the house, the buyer will almost certainly be in a position to sue and can bring further pressure to bear on the estate agent by lodging a complaint with the Estate Agency Affairs Board. This board, he said, has a contingency fund for clients defrauded by an agent. Should plans not be available, a wise course of action is not to accept the situation but to have new plans drawn up, even though this may be expensive. These should then be approved by the municipality. This will have the great advantage of enabling the owner to sell the property or pass it onto his heirs without any problems.

In general, therefore, said Fourie, buyers should: 

1.)  Work with a reputable estate agency, one where inefficiency can be referred to the franchise principal or the franchisor’s senior staff;

2.)  Ask to see the approved building plans; and

3.)  Inspect the property with the agent and the seller for defects and get them to put any statements that they make on this subject in writing.

If a clause to this effect is not included in the offer to purchase, the purchaser is advised to consider asking the seller to sign an addendum to the offer confirming that all building plans not only exist but have been approved by the municipality, and all defects have been listed.

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