Property Defects Full Disclosure Required By Consumer Protection Act

Property defects must be fully disclosed
Property defects must be fully disclosed

Under the new Consumer Protection Act full disclosure of property defects or potential defects has become essential.

From 1 April 2011, developers, speculators, and investors with property portfolios who sell property in their ordinary course of business can no longer rely on the Voetstoots clause to limit their liability for defects. In fact the new act makes it illegal not to specify these in writing. Failure to do so can have dire consequences and could even lead to the cancellation of the sale and a full refund of the purchase price.

Previously the voetstoots clause (voetstoots is a term derived from Roman Dutch Law and means literally “as is”) protected the seller who was able to rely on the fact that it was the buyers responsibility to examine the property for any defects on the principal of caveat emptor or “buyer beware.” Previously an aggrieved buyer had to prove that a seller deliberately withheld information on a defect or was ignorant of a defect that any conscientious seller should have known about.

Under the CPA, no matter how little the seller knows, or could have known, the seller can be held liable for a defect which is discovered by the buyer after transfer takes place.

This has led to a growth industry in the form of Home Inspectors who, for a fee, will check the entire property from top to bottom and produce a detailed report which can be shown to the buyer. This is intended to remove the uncertainty from the sale and to help prevent “nasty surprises” from cropping up once the property has changed hands.

In practice very few people have the required expertise in such a wide spread of disciplines — plumbing, electrical, structural, waterproofing, finishing, etc. Furthermore, the average inspector is unlikely to do better in the way of identifying defects than the average owner doing a comprehensive inspection on his own.

The boundaries of a property are of critical importance and it is essential to establish that the boundary walls are correctly positioned and that they do not encroach on adjoining properties. Agents acting on behalf of sellers should make sure that they have access to site diagrams that indicate exactly the extent of the property. Sellers and their agents should also be aware of any proposed zoning changes in the area.

It is incumbent on the agent to show any defects to the buyer that the seller has revealed. In addition the agent needs to be proactive about physically examining the property and needs to ask probing questions of the seller regarding crime in the area, municipal services problems, noisy neighbours or noisy dogs. Failure to do so will provide buyers with grounds for legal recourse, compensation and even grounds for cancellation where appropriate.

If there is anything you would like to add, please feel free to do so in the comments.

113 thoughts on “Property Defects Full Disclosure Required By Consumer Protection Act”

  1. Hi John,

    We purchased a home a year and a half ago. Recently I discovered that multiple trusses in the roof have been poorly repaired and some are just outright broken.

    The sellers claim to have no knowledge of this and claim that the original builder must have done it, some 25 years ago. As the only previous owners of the house, is it not reasonable to expect them to have had knowledge of this? I went up into the roof after a year and a half.

    Am I to believe that never, over a period of 25 years, did anybody that lived in the house ever go up into the roof?

    1. Hi Morne,

      “Am I to believe that never, over a period of 25 years, did anybody that lived in the house ever go up into the roof?”

      I have to agree, that does seem a bit of a stretch.

      However, as far fetched as it may be, you need proof that the seller knew about the problem in the roof before the seller can be held liable for an undisclosed hidden defect. Without such proof the seller may simply assert that he had no knowledge of any badly repaired or broken roof trusses.

  2. Hi John,

    We have moved into our new home and are the owners now for almost a month. After topping up the swimming pool on three occasions I became suspicious and knew that the pool was leaking – assuming it was the very common problem at the weir.

    Two quotations later, it is very clear that the pool has two cracks that have been repaired prior to us moving in. The agent, previous owner and their chosen attorney are all saying we have no case and they are not responsible to repair the pool.

    No pool problem was disclosed and this is a very expensive surprise. The cause could be many things, I agree, but it seems that the pool is leaking at the old cracks.

    Can the previous owners be held accountable to repair the pool?

    1. Hi Charmaine,

      Congratulations on the purchase of your new home, notwithstanding the nasty surprise.

      This may well be a typical example of a hidden defect that was not disclosed by the seller and where the seller may be liable for the cost of the repairs. Alternatively, the agent may intentionally or unintentionally have neglected to pass on to you, the purchaser, information that the seller may have communicated to the agent regarding the condition of the pool.

      It’s difficult to comment without knowing all the facts. You’d be well advised to consult with an experienced attorney; someone who can peruse your documentation and give you an informed opinion as to what options may be available to you. Many attorneys offer some free basic advice that can help to point the way forward.

      Best of luck, and thanks for the question.

  3. Good day John,
    Last year I bought a ground floor apartment in an security estate and 8 months ago it was registered in my name and everything seems to go quite well. I was ecstatic! My 1st home… but then I had problems with the outflow of my kitchen drains (washing machine, basin, etc)… twice already they came to open the drains for me and last Friday, I had the surprise to find that the sewerage overflowed in the one bathroom after I did one bundle of washing… and it even pushed up into the bath!. Now the plumber tells me that with the building of the complex the builders took a lot of incorrect shortcuts… and now I’m sitting with all of this. Do you have any advice for the road ahead?
    Kind Regards

    1. Hi Elizma,

      You didn’t say, but I’m presuming that you bought into a Sectional Title scheme and you pay your levies monthly to a Body Corporate.

      Your best bet may be for you to lay this problem squarely at the feet of the Body Corporate. Contact the chairman of the Body Corporate and take care to document all your communications. You can do this by confirming the details of any verbal discussions by email to get it on record. Hopefully they will address your problems which, judging by the the symptoms you’ve described, could be the result of a poorly designed effluent and waste water drainage system.

      If you get no joy within a reasonable time frame, it’s time to see an attorney with sectional title experience and request they send a letter to the Chairman of the Body Corporate giving 7 days to reply or face possible court action. If it gets to this stage, your lawyer may also request the financial statements, minutes of the last two AGMs and details of all maintenance work performed during the last two years so that your attorney can properly advise you as to the remedies that are available to you.

      Best of luck.

  4. Hi John

    I bought a house last year through an estate agent. I have recently been suspecting a problem with my neighbour’s fencing. Then I went to the municipality who gave me the sketch of the site and indeed my site has been encroached on. Can I hold the estate agent liable because the neighbour is in denial and a surveyor will cost me.

    1. Hi Siya,

      This is a more common problem than one would imagine. Often the boundries are at variance with the site diagram, or the property may be incorrectly described. For example, the extent of the property may be less than the area conveyed in the Offer to Purchase (OTP). There may be an error in the Title Deed of the property.

      It’s important to get all the facts so that you know who’s to blame, and what to do to fix it. There may several options to consider in reaching a solution. An attorney would certainly help to bring some clarity to the problem. You should do your best to see one as soon as possible.

      To keep the costs down, your attorney might be able to help you negotiate reasonable compensation with the liable party, be it your neighbour, the seller or the agent, doesn’t matter.

      Best of luck, and thanks for your contribution.

  5. Hi we bought a house about 8 months ago i only now noticed some defects that have occured, the defects were not there when i bought the house it took some time for the damage to take place, the celing is cracking and the roof is leaking due to there not being plastic in the roof, what do i do? cani contact the seller to fix the issues? thank you for your time.

    1. Hi Ashley,

      When considering legal recourse, it’s always a good idea to consult with an attorney.

      The CPA requires a seller’s disclosure of defects only if the seller is a ‘supplier,’ as is mentioned in the above article. It’s more likely that your contract contained a voetstoots clause. To claim damages you may need to prove that the defects you mentioned were pre-existing, that this was known to the seller and that it was purposely hidden from you.

      You could start by discussing a compromise with the seller and see what comes up. You might be pleasantly surprised.

  6. Hi John,

    My husband and I signed an offer to purchase on a home. The contract stated that we were aware of the existing cracks on the premises. The agents assured us that work was done to repair the cracks and that it was still under guarantee according to the Engineering report. We thus signed in good faith that the report existed and was recent.

    Consequently, we discovered that the report had expired in 2010 and was no longer valid. We then had an Engineer inspect the property and estimate the cost of the repairs which amounts to about R200 000. From a affordability point of view we could not go ahead with the purchase and cancelled the sale, based on the fact that the correct information was not disclosed.

    The seller is now holding us liable for damages and the agent says they did not do anything wrong. What would you advise us to do?

    Thank you

    1. Hi Natalie,

      Apparently, the agent and the seller have been less than honest with you about the nature and extent of the ‘cracks’ on the property. You need the professional help of an attorney to help you deal with the sellers claim against you.

      Best of luck.

  7. Dear John,

    I need advise on Non-disclosure. We have just taken occupation of the house we are in the process of buying to find out that the house and area are very high in crime. When we first saw the house it was my first question to the estate agent and she said she was not told of any issues. I asked this repeatedly.

    We moved in to the house on the Saturday and we saw the owner on the same day. I again asked about security and he said he had no issues in 10 years. My main issue when buying a house was the safety. I fell that if they told me the truth I would not have bought the house at all.

    Since moving in we have found out that the owner was held at gunpoint in his home and robbed. The man across the road was hijacked. Every single neighbour around the property has either be robbed or hijacked.

    What are my rights? I feel the owner should have told me the truth. And the owner put a clause in the OTP that he is not responsible for the alarm, etc. We said that was fine since we were under the impression it was a safe place to live. Please can you give me some advise here on what our rights are.

    Thank you Lorraine

    1. Hi Lorraine,

      As mentioned in the above article, failure to disclose issues such as noisy neighbours or problems with crime may provide buyers with the grounds for legal recourse, compensation or even cancellation where this is appropriate.

      If you are considering cancellation it’s important that you seek the professional help of an attorney who can peruse your documentation and advise you as to what remedies may be available to you. You would need to see an attorney other than the conveyancer who is attending to the transfer.

      Good luck.

  8. Hi John

    My fiancé and I put through an offer to purchase, but our offer was a back-up offer. After two weeks of looking we found another unit that we were interested in and decided to withdraw the back-up offer as it was not into effect as yet, (however we were already granted a bond for the property which we cancelled).

    Now the estate agent and the seller are threatening to sue us and to apply for an interdict for any bond that we apply for, due to us not continuing with the sale. After the first offer that was already in place before us didn’t go through, do they have the right to do so?

    Thanks

    1. You signed an Offer to Purchase (OTP) that was subject to the granting of bond finance. This OTP became legally binding on you the moment your bond finance was approved. At that point it was too late to withdraw from this offer. You should not have entered into the second offer before your first offer was withdrawn. At the very least your second offer should have been made subject to the suspensive conditions of your first offer not being fulfilled.

      You now have the choice of withdrawing from either of the two sales that you have entered into, and paying the respective penalties applicable to cancellation. The moment you receive a legal demand you should immediately consult with an attorney, not the conveyancing attorneys involved with either sale, as these are acting in the interests of the sellers.

      Good luck.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>