Every sale agreement contains an ‘as is’ clause, or as we call it here in South Africa, a ‘voetstoets’ clause. This clause protects the seller of the property but only to a certain extent. The seller has a duty to disclose any latent (hidden) defects and doing so protects them from future claims of fraudulent misrepresentation. It is a necessary clause that shields the seller from any action by the buyer (on discovering any defects he wasn't aware of) that will jeopardise the actual sale of the property. Unfortunately many sellers use the clause as an excuse to sell a damaged/defective property without the responsibility of repairing it.
This leaves both the seller and buyer with responsibilities. The seller needs to disclose any defects so that they can avoid legal problems of the sale. The buyer is responsible for properly inspecting any property they wish to purchase. Any problems found are to be included in the offer to purchase, clearly stating that they must be fixed prior to registration of the transfer. The offer will then either be refused or accepted by the seller and if it’s accepted that means the seller has agreed to fix the problem.
There are two types of defects, patent and latent. Patent defects are easier to spot as they are clearly visible during a normal inspection of the property. These defects need to be addressed by the buyer as it cannot be claimed that they "weren't seen" at a later stage. Patent defects can include, but are not limited to, broken windows, broken or sagging gutters, cracks in the walls and leaks that have caused obvious stain marks.
We have previously mentioned latent defects, these could include, but are not limited to, rusted pipes, broken or faulty geysers and/or pool pumps, leaking roofs and very often damp problems that have been concealed with a quick coat of paint. Keeping this in mind, it isn’t advisable to merely take a seller at their word when they say the property is in good shape. Getting an independent property inspector to assess the property can save you time and money.
If you forego the property inspector route and you do end up with defects on the property your only course of action, legally speaking, will be to institute an action for damages and sue the seller. A buyer may not, after signing the contract, then get a quotation and deduct such costs from the purchase price. They cannot refuse to pay any of their occupational rent to insight the seller to fix said problem and they cannot cancel the sale contract. The most amicable option would be to try and negotiate with the seller, and come to an agreement about where the money for the cost of repairs will come from. This is an arrangement that isn’t always easy to reach.
Let’s look at the issue of misrepresentation by the seller. Misrepresentation constitutes fraudulent behaviour on their part and it’s a very important point. This misrepresentation by the seller can occur in two ways. Firstly we have express misrepresentation. This occurs when the buyer asks the seller a question directly about a possible defect, a leaking roof for example, and the seller denies the existence of that defect. The second possible misrepresentation on the part of the seller is non-disclosure. Even if the buyer does not expressly ask about a potential problem, but the seller is aware of said problem, the seller is obligated to inform them.
Contrary to what a buyer may believe, the Consumer Protection Act (which will be referred to as the CPA forthwith), does not apply to sellers unless they sell property on a regular basis. The CPA does therefore apply to estate agents, but the buyer would have to prove that the agent intentionally withheld information of a fault.
The CPA states that the transaction is "An agreement between or among that person and one or more other persons for the supply, or potential supply, of any goods or services in exchange for consideration." The buyer has the right to receive goods or services that "are of good quality, in good working order and free of any defects" and that "will be useable and durable for a reasonable period of time, having regard to the use to which they would normally be put and to all the surrounding circumstances of their supply".
The buyer has up to six months from purchase to return the goods, demand repair or replacement, or the return of the purchase price. It might be longer than six months in the case of immovable property, especially if the seller used false, misleading or deceptive representations to help the sale of the property along. All these rules and guidelines involve difficult processes to prove fault and to ultimately get the buyer the quality of property they deserve.
Buyers could only discover defects at a later stage, sometimes months after transfer has taken place. For example a crack in the foundation, or a massive leak that is only discovered after a heavy rain. It can be very hard to prove the seller knew about these defects, which took the buyer a considerable time to even discover themselves, in which case the buyer would have no recourse against the seller.
Many of the problems we have mentioned can be avoided by simply having a home inspection done. It is in the Buyers best interests to:
- have the property properly inspected by an independent party;
- record known defects in the sales agreement;
- have the defects repaired prior to occupation.
What you should get out of the home inspection process is:
- peace of mind;
- an unbiased opinion on the condition of the property;
- a report of the property both written and photographic;
- protection from fraudulent sellers.
"Few would risk buying a pre-used car without an automobile inspection so why risk your life savings on a property that you can’t be sure about?"
- Director of Affairs of South Africa