LATENT DEFECTS – IS A SELLER BOUND TO DISCLOSE THESE WHEN SELLING A PROPERTY?

Even though buying property is likely going to be the biggest single investment or purchase that most people will make, very few people actually complete a thorough inspection of the property and even fewer use the services of a professional to inspect the property to ensure that there are no major ‘problems’ in the property, patent or latent, and sadly many disputes arise between sellers and purchasers after purchasers have taken occupation of a property.

Many purchasers and sellers alike are not aware that, when purchasing a property, there is an implied warranty that the property is sold free from any defects. Many sale contracts however, contain a ‘voetstoots’ clause which protects the seller by contracting the parties out of the implied warranty. Voetstoots is a Dutch word that literally means: sold ‘with a shove of the foot’. In the context of a property sale however, it means: ‘sold as is’ – what you see is what you get, and that no warranties exist. The purchaser therefore agrees to contract out of the implied warranty and purchase the property as it appears at the time of the sale, and that there will be no claims against the seller for defects, which are discovered later.

There are two types of defects in property, patent or latent. A latent defect is a fault that would not be readily visible or revealed through a reasonable inspection whereas patent defect is a fault that is not ‘hidden’ and should easily be is visible or revealed by a reasonable inspection. A seller is only liable to the purchaser for defects that the seller was aware of and did not make the purchaser aware of such defect.

Section 55(2) of the Consumer Protection Act (CPA) provides that: all goods must be reasonably suitable for the purposes for which they are generally intended, of good quality, in good working order and free of any (not only material) defects. The goods must 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”.

Many consumers are incorrectly under the impression that they are protected by the CPA for all property purchases should they purchase a property with latent defects, when in actual fact this is not the case. The CPA only applies if the seller either regularly sells property or continually markets itself as a seller of property. Interestingly the CPA does not apply to good bought at auction.  Even though the CPA applies to estate agents, the purchaser would only have a claim against the agent under CPA if he can show that the agent was aware of the fault and intentionally withheld the information.

Where the goods fail to meet the standards set in the CPA, the purchaser may within 6 months of the purchase, return the goods to the supplier and demand either a repair or replacement or the return of the purchase price. While this generally appears to apply for a period of 6 months, it may be longer in certain circumstances, especially those relating to property.

With such limitations in the CPA, where does that leave purchasers? Well, a purchaser who discovers a latent defect would ultimately have to approach the courts for relief, especially where the seller is not cooperating. A seller will not be able to rely on the voetstoots clause if it is found that the seller misrepresented or concealed any defect to the purchaser and the purchaser will generally have a period of 3 years from the date of becoming aware of the defect to hold the seller liable.

In order to protect themselves, purchasers should consider the following:

  • having a professional inspection completed, especially in respect of the roof, plumbing and electrical’s;
  • requesting the seller to make a written declaration of all defects in the sale agreement;
  • requesting the seller to declare if renovations have been undertaken, they have been undertaken in accordance with applicable municipal regulations; and
  • request the latest approved municipal plans.         

This will assist the purchaser later if it turns out that certain defects were not disclosed.

Until such a time that there is legislation that comprehensively deals with defects and purchaser protection, purchasers are on their own. Even though the voetstoots clause does not take away the seller’s liability for latent defects, a purchasers best recourse is to firstly, ensure that a thorough inspection is carried out by a professional team prior to signing the sale agreement (the bigger the purchase, the more detailed the inspection) and secondly to ensure that as many problems that can be seen are listed in the agreement and the parties agree who is liable to fix them.

*Disclaimer: The contents of this article should not be considered as legal, professional, financial or any other form of advice. These are merely views based on the writer’s personal experience. Readers should obtain independent advice on any matter prior to making any decision.

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