Scenario: Sally buys her dream home and is elated with her purchase. After she moves in, she notices that there are a number of electrical problems, the pool pump doesn’t work and the roof leaks after the first rains. She looks back at the agreement from the estate agent and sees that there is a “voetstoots” clause in the agreement. What does this mean?
Since the introduction of the Consumer Protection Act (CPA), there has been much debate and confusion as to whether the voetstoots (as is) clause may still be used in property sales or whether this is now overridden by the CPA. The general school of thought is that the voetstoots clause may not be used in contracts where the transaction falls under the CPA. In general, the CPA applies when transactions take place and goods and services are promoted, advertised or supplied in the ordinary course of business, and for consideration. For example, a property company who is in the business of buying and selling property will not be able to include a voetstoots clause into any of their sale agreements. On the contrary where a company that is not in the business of buying and selling property acquires and then later disposes of that property, they may include a voetstoots clause.
In accordance with section 48 of the CPA, the voetstoots clause is deemed to be “unfair, unreasonable and unjust”. It is for this reason that the inclusion of the voetstoots clause in an agreement that falls within the CPA is considered a violation of a consumer’s rights.
Property sellers continue to be at liberty to sell goods (and properties) within a specified condition, provided that the condition of such goods must be disclosed and pointed out to the buyer in the sale agreement. Property sellers and developers cannot escape the liability for patent and/or latent defects. Patent defects are those that can be seen with the naked eye and are easily identified. Latent defects are hidden and not easily identified, but are often only visible or discoverable upon inspection.
Private sales generally do not fall within the ambit of the CPA as the parties thereto do not sell or buy property within the ordinary scope of their business. Accordingly, the common law position will apply and the voetstoots clause may be included in the sale agreement. The advantage for the seller of course is that they won’t have to carry any liability or risk for the defects. However, the seller will be held liable in the event they had intentionally made a misrepresentation of any of the features of the property or if the seller did know about a latent defect and failed to disclose it.
Private sellers are advised to include a provision in the sale agreement to allow buyers an opportunity to inspect the property or have an expert inspect the property prior to purchase. So-doing allows the purchaser an opportunity to withdraw or re-negotiate prior to committing to the sale. The purchaser may alternatively request the seller to warrant that he/she is unaware of any patent or latent defects in respect of the property at the time of the sale. These clauses protect both parties.
In the event that the seller mandates an estate agent to sell the property, any representation by the estate agent will fall within the ambit of the CPA. This is because the estate agent acts in the ordinary course of business. An estate agent will not therefore be in a position to include the voetstoots clause in sale agreements.
If you have found yourself in any contractual difficulty, not only those relating to property sale and purchase, please do not hesitate to contact us on info@tuckers.co.za or 011 897 1900.
Article contributed by Diane Charles of Tuckers Inc.