Voetstoots Clause In Private Sale Agreements
Despite the Consumer Protection Act (CPA), home buyers remain one of the least protected classes of consumers in South Africa. Because the law does not provide practical protection for purchasers of second hand homes from private sellers, the only option is for South African home buyers to protect themselves.
- THE VOETSTOOTS CLAUSE
The word “voetstoots” is an Afrikaans term generally used to effectively describe buying something “as is” – just as it stands, in whatever condition it is, warts and all. A voetstoots clause provides important protection to sellers of second hand houses, which have deteriorated through normal wear and tear, or which have become defective to some extent through constant use or through natural decay.
The basic purpose of the voetstoots clause is to shield the seller from any legal action arising from the purchaser discovering defects he was not aware of when purchasing the property.
- LATENT AND PATENT DEFECTS
In order to understand the extent to which a voetstoots clause affects both sellers and purchasers, it is necessary to understand the difference between a “patent” and a “latent” defect:
- Patent defect: This is a defect that is, or should reasonably be, easily identifiable upon inspection of the property by the purchaser. For instance, a wall crack, rotten woodwork, or a broken cupboard.
- Latent defect: This is a defect which is not apparent after ordinary inspection by a ‘reasonable man’. Latent defects are defects which only an expert could be expected to discover – for example, rising damp in a house, structural weakness of the roof timbers or an incorrectly installed geyser.
- PRIVATE SALE AGREEMENTS AND THE CONSUMER PROTECTION ACT
One of the central elements of the CPA is the right of consumers to be fully informed regarding the goods that they are purchasing. In the context of a property purchase this means that a property buyer has the right to know everything relevant about a property in order to be able to make an informed purchasing decision.
Generally, a private sale of property is not a transaction which falls within the ambit of the CPA, as the parties are not acting within the ordinary course of their business, and therefore property buyers remain at risk because private sellers are not obligated by the CPA to make full disclosure.
In the common law, there is a presumption against the voetstoots provision, unless expressly included in the sale agreement. A voetstoots provision in a private-sale agreement does not exempt sellers from liability in instances where they misrepresented or were aware of a latent defect in the property and failed to disclose same, as a warranty against latent defects applies automatically by operation of law.
- ACCOUNTABILITY OF THE ESTATE AGENT
In a normal transaction, with the estate agent being the go-between between the seller and the purchaser, the agent speaks to the purchaser and not the seller to the purchaser. A lot of the time the purchaser never even meets the seller, so the seller and purchaser cannot discuss the defects of the property, but it is discussed via the estate agent.
Traditionally, the only obligation on the estate agent is to inspect the property for obvious patent defects and the agent can only disclose to the purchaser what the seller discloses to the agent. But, it should be noted that should a seller mandate an estate agent to sell his property, then any representations in respect of the property made by the estate agent will fall under the scope of the CPA. This is due to the fact that the estate agent is acting in their ordinary course of business. Accordingly, an estate agent will not be able to rely on the operation of the voetstoots clause.
The duty on the agent is to double-check with the seller the state of the property and enquire properly about all defects – latent or patent. The estate agent should disclose as much information as possible and make sure that it is in writing and make sure that both the seller and the purchaser signs that they have read the disclosures.
- INSERTION OF A HOME INSPECTION REPORT
The seller always has a legal duty to reveal to the purchaser any latent defects of which the seller is aware. In practice however, the purchaser is faced with a double problem in claiming redress if he believes that the seller has been dishonest and failed to disclose latent defects:
Therefore, when it comes to a private once-off sale agreement to which the voetstoots clause may apply, it is advisable to insert a provision allowing the purchaser to inspect the property (or to have experts inspect the property) as a condition precedent. Such a provision gives the purchaser the option to withdraw or re-negotiate if the inspection report reveals defects.
- Because “once-off” private house sellers are excluded from accountability under the CPA, purchasers who believe that they have been cheated by sellers failing to disclose latent defects, are forced to take the expensive and time-consuming legal route of suing the seller.
- Second, even when the matter gets to court the purchaser is faced with the difficulty of proving to the satisfaction of the court that the seller knowingly concealed latent defects.
With regards to patent and latent defects, a professional home inspector should be able to see far more than the average home buyer. This is because the inspector will check the roof, roof cavity and all other areas of the house. An experienced and trained inspector will also pick up clues regarding defects or potential defects – clues which would not be obvious to the layman.
At present and until the CPA is changed, purchasers should refuse to sign sale agreements containing a voetstoots clause unless the agreement is also made conditional on a satisfactory pre-sale home inspection report. A combination of both a voetstoots clause and an inspection report is the best and fairest way to protect both the seller and the purchaser, as well as the estate agent.
The voetstoots clause provides legal protection for the private seller if the property is later found to be defective in any material way. On the other hand, a home inspection report provides the purchaser with detailed information on the actual “as is” condition of the property.
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