PROPERTY ADVICE
PROPERTY ADVICE

PROPERTY ADVICE

BRUNO SIMAO

Founder & Director Bruno Simao Attorneys

Q What is a voetstoots clause, patent and latent defects and how does it impact me when buying a property?

A The voetstoots or “as is” clause, simply put, means that what you see is what you get. To elaborate on this a little further, by using this clause, the seller excludes the implied warranty that there exist no latent defects in the property being sold, leaving the risk of such defects on the shoulders of the purchaser. This affords the seller protection from any later claim by the purchaser for damages, the reduction of the purchase price or even cancellation of the sale as a result of such defects.

To understand better how voetstoots works, one must distinguish between what is known as a “patent” defect and a “latent” defect.

“Patent defects” are defects that are apparent and easily discoverable by a reasonable inspection, e.g. broken cupboards and windows.

“Latent defects”, in contrast, are defects that are not apparent to an ordinary purchaser, often unnoticeable to an untrained eye, e.g. mould resulting from dampness and flooding caused by rain.

It has always been a principle in our law that if the seller of a property is aware of a latent defect but fails to disclose this to the purchaser, then the seller will not be able to rely on the voetstoots clause.

Another, very important, change to the application of the traditional voetstoots clause was affected through the introduction of the Consumer Protection Act, no. 68 of 2008 (“CPA”).

According to Section 55(2), every consumer has a right to receive goods that are “reasonably suitable for the purposes for which they are generally intended”, “are of good quality, in good working order and free of any defects”, “will be usable and

durable for a reasonable period of time” and “comply with any applicable standards”.

It follows in Section 56(2) that if the above is not adhered to, “within six months after the delivery of any goods to a consumer, the consumer may return the goods to the supplier, without penalty and at the supplier’s risk and expense”. In such circumstances the supplier must, at the choice of the consumer, either:

* “Repair or replace the failed, unsafe or defective goods;” or

* “Refund to the consumer the price paid by the consumer”.

This protection will not, subject to some exceptions, be afforded if the consumer has been expressly informed of the condition of the goods and has agreed to accept the goods in that condition.

It is important to remember, however, that the CPA only applies in instances where the seller is selling “in the ordinary course of business”.

Quite simply, the CPA does not apply to any private transaction, such as the sale of one’s home, and in these circumstances, the seller will be able to rely on the voetstoots clause.

There are a few circumstances where the CPA would find application (and by implication the voetstoots clause would not apply), such as:

* The sale of a property by a property developer or trader in the ordinary course of his/her business; and

* The services provided by an estate agent, irrespective of whether the sale itself is private.

There is some debate as to the extent of the definition of “ordinary course of business” and whether, for example, it is wide enough to encompass the sale of a seller’s only buy-to-let investment property.

Is there any practical advice for property investors regarding the CPA?

As a seller:

* Whether or not uncertain as to the applicability of the CPA, rather include a voetstoots clause in the deed of sale on the off-chance that it can be relied upon;

* Allow the purchaser to thoroughly inspect the property, affording him/her the opportunity of becoming aware of any latent or patent defects and expressly agreeing to the condition of the property;

* If you are aware of any defects, disclose these in the deed of sale, as this will prevent a later claim by the purchaser, even after registration of transfer; and

* One may even go so far as to engage the services of a property inspector in order to list any defects for the purposes of disclosure;

As a purchaser:

* From the outset, establish whether the CPA applies and if in doubt, insist that the deed of sale records its applicability.

* Whether or not the CPA applies, undertake and document a comprehensive inspection of the property, even making use of property inspectors. Even if the CPA protects you, enforcing its provisions after the registration of transfer may prove difficult, especially if the seller contends that the CPA is, in fact, not applicable and that he was not aware of any defects; and

* Act as soon as you become aware of any defects, particularly prior to registration of transfer. The CPA is riddled with time frames and, moreover, before the registration of transfer, as a purchaser, you still have a lot of bargaining power.

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