This article can help prevent serious lawsuits against property sellers and/or real estate agencies.
By Gerhard Lourens Incorporated | Conveyancer and Litigation Attorneys Nelspruit | 0137552080 • info@gerhardlourens.co.za
When selling your property, it’s crucial to disclose all defects. Failure to do so can lead to significant legal and financial consequences. At Gerhard Lourens Incorporated, we stress the importance of transparency in property transactions to protect both sellers and buyers and prevent potential lawsuits against sellers and real estate agencies. To ensure your end is covered, complete a Consumer Protection Act disclosure form provided by your real estate agent or conveyancing attorney.
The Legal Framework for Disclosure
Disclosure of property defects is governed by both common law and the Consumer Protection Act (CPA). The CPA aims to protect consumers and outlines duties for suppliers in consumer agreements. However, it typically applies to developers and estate agents rather than individual homeowners selling their primary residences.
Common Law
Under common law, two types of defects are recognized: latent defects, which are not visible upon reasonable inspection, and patent defects, which are clearly visible. The ‘voetstoets’ clause in sale agreements indicates that buyers accept the property as-is, protecting sellers from claims for defects. However, this clause does not protect sellers from claims for latent defects when there is fraudulent misrepresentation or non-disclosure. Additionally, buyers have the right to thoroughly inspect the property or hire a professional to conduct the inspection on their behalf before agreeing to the offer to purchase (OTP).
Consumer Protection Act
The CPA influences common law warranties against latent defects but does not apply in all situations:
- Transactions involving a buyer who is a juristic person with assets or turnover exceeding R2 million.
- Sales not conducted in the ordinary course of business, such as a homeowner selling their primary residence.
In scenarios where the CPA does not apply, common law principles prevail. The purpose of these laws is to protect consumers from fraudulent practices and to require suppliers to provide certain warranties against defects.
Identifying ‘Serious’ Defects
Defects can pertain to both the land and the property itself. Land-related defects include issues with subsoil, such as groundwater problems or plumbing damage caused by tree roots. Common property defects include roof leaks, damp walls, faulty electrical installations, plumbing issues, and unauthorized structures. Serious defects can significantly impact the property’s value and functionality.
When and How to Disclose Defects
Sellers must disclose all known defects to the estate agent during the initial property inspection and valuation. This disclosure helps determine the property’s price and informs potential buyers of any risks. According to the EAAB Code of Conduct, sellers must complete a mandatory Disclosure Form before the buyer signs an offer to purchase. This form informs buyers of any material defects and must be signed by the buyer before presenting an offer.
Consequences of Failing to Disclose
If a seller knowingly fails to disclose a defect, the buyer has legal recourse. Depending on the defect, the buyer could seek financial compensation, require the defect to be fixed, or even cancel the sale. Each case is unique and may require legal assistance to resolve.
Questions Agents Should Ask Sellers
Agents should thoroughly discuss the Declaration Form with the seller before signing a mandate. Ensuring all common defects are mentioned, and recommending a specialist review can provide a comprehensive report on the property’s condition. This ensures accurate information for both the seller and buyer during negotiations.
Final Tips for Buyers
Buyers should consider hiring a home inspection firm to conduct a detailed inspection and report. This can be a condition of the Deed of Sale, ensuring no serious latent defects are found. While this may incur additional costs, it offers peace of mind.
Conclusion
Transparency is essential when selling your property. Full disclosure protects you from legal issues and ensures a fair transaction. For expert legal advice and assistance with property transactions, contact Gerhard Lourens Incorporated today.
Contact Gerhard Lourens Incorporated for expert legal advice and assistance with all your property transaction needs.