Act demands full disclosure
Experts say compliance with the Consumer Protection Act will raise professional standards of the property industry, writes Anna-Marie Smith
THE participation period for public comment on the regulations in the new Consumer Protection Act (CPA), that are scheduled to come into effect on April 1, ended on January 31 with no extensions granted, and the National Consumer Commission and local consumer offices are ready to roll out its services to the public.
The act is set to transform service industries, and in particular sales and marketing, and is perceived as fraught with ambiguities and many grey areas that require succinct interpretation and application at all times.
At a recent seminar held by the Western Cape Institute of Estate Agents of SA (IEASA), in cooperation with Smith Tabata Buchanan Boyes Attorneys, local property professionals were informed of the statutory requirements and workings of the act.
Sandy Walsh, who heads the training and education division of IEA Western Cape, said that the institute is educating industry professionals locally and nationally regarding the new law.
Melanie Coetzee, conveyancing partner at Smith Tabata Buchanan Boyes Attorneys, interpreted factual realities, concerns, inconsistencies and complexities, with a focus on the most important clauses.
She said estate agents will face the challenge of practising within the parameters of the act at all times and maintaining an untarnished professional image by avoiding a National Consumer Commission hearing.
Coetzee said the
positive impact is that new opportunities await those who go the extra mile through full disclosure and effective communication with clients.
She said not only will the lawful conduct of such industry professionals result in the cream of the crop benefiting from transparent trading, it will also ease the burden on buyers and sellers who share an enormous responsibility in the correct interpretation of the act.
Coetzee said while the new act will have a blanket effect on all transactions, contracts and agreements, the main purpose of the CPA is to protect consumers. The act will allow the government to keep a closer watch on consumer behaviour, and in certain instances complaints will move from the courts to the Consumer Commission.
Essential for best practice is the clear understanding of legal terms such as who is a consumer, what constitutes a service, who is a supplier of a service, who is an intermediary, and what exactly does a fixed-term contract mean.
In an effort to eliminate discrimination through the protection of consumer rights and equality in the consumer market, various meanings of the word consumer are referred to, such as: a person to whom goods and services are being advertised, offered, supplied, performed or delivered in the ordinary course of business of such a supplier; a user of such goods or a recipient or beneficiary of such services; or a person who has entered into an agreement or transaction with a supplier.
Services rendered by property agents are services offered, supplied, performed or delivered in the ordinary course of business, as opposed to once-off private sales of holiday homes, for instance.
Another important clause is the reference to the expiry of fixed-term contracts, where landlords are suppliers and tenants are consumers who may cancel fixedterm contracts at any time by giving 20 business days’ notice in writing. If a consumer does not give sufficient notice the contract will continue automatically on a month-to-month basis.
Property agents are encouraged to make provision in mandates for the seller’s right to cancel at expiry or arbitrarily by supplying the 20 business days’ notice.
The act states that: “In the absence of a cancellation by the consumer, the fixed-term contract shall continue on a month-tomonth basis, subject to any material changes of which the supplier has given notice.”
With regard to the term voetstoots, the CPA specifically identifies consumer rights to goodquality products in good working order, free of any substantial defects and fit for its purposes.
From April 1, sellers will be obliged to disclose to buyers all defects of properties, not only the hidden but also the obvious, and this is best specified in a written agreement of the sale of a property.
Another consumer right to full disclosure includes provision of building plans upfront. As seen abroad, building plans form part of the documentation required for sales negotiations to reflect all alterations and additions and to ensure that the property being sold is lawful in all respects.
It also refers to the full disclosure of land usage and zoning of properties when entering into sales agreements.
Commenting on the act, Ian Slot, MD Seeff -Atlantic Seaboard, City Bowl & V&A Marina, says: “Although some anomalies in the act remain cause for concern, the public will be seeing greater disclosure, more plain language and simpler contracts.”
Slot says there will be a shift in agents’ mindset to communicate effectively for maximum transparency. The responsibility of full disclosure to potential buyers lies with both property agents and sellers, and can be remedied by property inspections by architects, engineers and builders.