Act de­mands full dis­clo­sure

Ex­perts say com­pli­ance with the Con­sumer Pro­tec­tion Act will raise pro­fes­sional stan­dards of the prop­erty in­dus­try, writes Anna-Marie Smith

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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.

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