Know your rights when buy­ing or sell­ing prop­erty

Craig Hutchi­son, CEO of En­gel & Völk­ers South­ern Africa, talks to Home­Front about the legal ins and outs of prop­erty trans­ac­tions

Business Day - Home Front - - HOMEFRONT -

QAt a time when sev­eral se­vere cases of al­leged wrong­do­ing in the realestate in­dus­try are be­ing in­ves­ti­gated, Min­is­ter of Trade and In­dus­try Rob Davies has promised harsh con­se­quences for es­tate agents who be­tray the trust placed in them by home sell­ers and buy­ers. This, af­ter sev­eral al­le­ga­tions of mis­con­duct in the lo­cal in­dus­try re­lat­ing to pos­si­ble fraud­u­lent and un­pro­fes­sional be­hav­iour. In an en­vi­ron­ment where many sell­ers and buy­ers choose their es­tate agents based on how well their brand is es­tab­lished, how should South Africans now choose their real-es­tate pro­fes­sion­als? Sev­eral items of a new leg­is­la­tion are in process or have been pro­mul­gated, all gov­ern­ing how real-es­tate pro­fes­sion­als con­duct their busi­nesses. Not least of these is a Na­tional Qual­i­fi­ca­tion Frame­work cer­ti­fi­ca­tion and upto-date Es­tate Agency Af­fairs Board recog­ni­tion. These new lev­els of pro­fes­sional

Athat will pro­tect clients is the Con­sumer Pro­tec­tion Act (CPA). Al­though many el­e­ments of the act have been in place for a while now, the Na­tional Con­sumer Com­mis­sion only opened its doors for busi­ness on April 1, and the pro­vi­sions of the act have yet to be tested by any claims to the com­mis­sion or in any court. Ac­cord­ing to the Igqwetha Train­ing Academy, the act has the fol­low­ing aims:

To pro­mote a fair, ac­ces­si­ble and sus­tain­able mar­ket­place for con­sumer prod­ucts and ser­vices by set­ting na­tional norms and stan­dards re­lat­ing to con­sumer pro­tec­tion; To pro­vide for im­proved stan­dards of con­sumer in­for­ma­tion; To pro­hibit cer­tain un­fair mar­ket­ing and busi­ness prac­tices;

To pro­mote re­spon­si­ble con­sumer be­hav­iour;

To har­monise laws re­lat­ing to con­sumer pro­tec­tion;

To pro­vide a con­sis­tent en­force­ment frame­work; and

To es­tab­lish a Na­tional Con­sumer Com­mis­sion.

What has be­come clearer on closer ex­am­i­na­tion of the act and specif­i­cally with re­gard to prop­erty trans­ac­tions is the fol­low­ing:

The act does not cover the re­la­tion­ship be­tween the av­er­age seller and buyer of res­i­den­tial prop­erty or the con­tract be­tween them. This is be­cause the sale and pur­chase of the prop­erty is not con­sid­ered to be in the or­di­nary course of ei­ther of their busi­nesses as it is a once-off trans­ac­tion, there­fore, as ex­am­ples, the voet­stoots clause could re­main in the con­tract and the buyer would not be able can­cel the trans­ac­tion five days af­ter reg­is­tra­tion, for which the cur­rent CPA al­lows.

A prop­erty de­vel­oper or a prop­erty spec­u­la­tor would be gov­erned by the act even if an in­de­pen­dent es­tate agency was not in­volved in the sale of a prop­erty be­cause the sale of prop­er­ties is in the or­di­nary course of busi­ness of those in­di­vid­u­als, as are their mar­ket­ing ef­forts and con­trac­tual re­la­tion­ships re­lat­ing to the sale of the prop­er­ties. There­fore the con­tract in this re­gard would be sub­ject to the CPA. It is im­por­tant that de­vel­op­ers re­ceive legal ad­vice on their cur­rent con­tracts.

In the case of a de­vel­oper or a prop­erty spec­u­la­tor, a buyer can can­cel a trans­ac­tion at the seller’s cost up to five busi­ness days af­ter reg­is­tra­tion has taken place as these trans­ac­tions are seen to be in the nor­mal course of their busi­ness. Also note that in terms of the act the seller can claim dam­ages for the can­cel­la­tion of the con­tract, so it is not as cut and dried as just can­celling the trans­ac­tion.

A land­lord leas­ing a prop­erty would ar­guably be seen as pro­vid­ing the unit for res­i­den­tial rent in the nor­mal course of his busi­ness due to the na­ture of a lease, there­fore the CPA would ap­ply to the lease agree­ment signed be­tween the par­ties. If the rental agree­ment is seen to be in the nor­mal course of busi­ness the CPA would ap­ply and the con­tract could be can­celled at any time by the lessee. As is the case with a de­vel­oper, the land­lord would have a pos­si­ble dam­ages claim for the can­cel­la­tion of the lease.

A prop­erty pro­fes­sional’s man­date signed with the seller, buyer, land­lord or lessee, and their ac­tions with these par­ties, would fall into the act. A man­date can be can­celled at any time as the man­date falls within the CPA. Any costs car­ried up to the date of the can­cel­la­tion can be claimed back from the seller or buyer, de­pend­ing with whom the man­date was signed. This would in­clude any ad­ver­tis­ing costs in­curred. It is now more im­por­tant than ever for prop­erty pro­fes­sion­als to nur­ture the re­la­tion­ships with their buy­ers and sell­ers and en­sure that only the best ser­vice is of­fered so that the man­dates are not can­celled. Even with all these safety mea­sures, the ques­tion still re­mains, how do you choose which real es­tate pro­fes­sional to en­trust? When en­gag­ing with a realestate pro­fes­sional it is vi­tal that sell­ers and buy­ers ask to see proof of the can­di­date’s qual­i­fi­ca­tions and cer­ti­fi­ca­tion, as well as proof of the in­tegrity of their trust ac­count. This fi­nan­cial el­e­ment of the trans­ac­tion should re­main with the trans­fer­ring at­tor­neys, leav­ing the real es­tate pro­fes­sion­als to fo­cus on mar­ket­ing the prop­erty, but while the sta­tus quo re­mains this is a vi­tal el­e­ment to con­sider. If you’re putting your prop­erty on the mar­ket, in­ter­view pos­si­ble real-es­tate pro­fes­sion­als and es­tab­lish the depth of their knowl­edge and un­der­stand­ing of your area. This will en­able you to choose one pro­fes­sional that you are happy with to mar­ket your prop­erty on a sole-man­date ba­sis. An ex­pert will be able to of­fer a re­al­is­tic value that meets the con­di­tions of the cur­rent mar­ket and a true pro­fes­sional will be able to present a cus­tomised mar­ket­ing plan for your par­tic­u­lar prop­erty. This should in­clude a com­bi­na­tion of care­fully fo­cused ad­ver­tis­ing, show days and an un­der­stand­ing of the points on which you are pre­pared to ne­go­ti­ate.

If you are con­sid­er­ing pur­chas­ing a prop­erty through an agent in a new area, ask for ref­er­ences from some of their re­cent clients, both sell­ers and buy­ers, and ask for a brief over­view of the ac­tiv­ity that they have seen in their area in re­cent months. A suc­cess­ful and trusted agent will en­joy good ref­er­ences and a sig­nif­i­cant num­ber of sales and they will be able to dis­play their qual­i­fi­ca­tions and cer­ti­fi­ca­tion read­ily.

En­gel & Völk­ers South­ern Africa sup­ports all the mea­sures set in place to reg­u­late the in­dus­try. The sale of a prop­erty is of­ten the big­gest fi­nan­cial trans­ac­tion that some­one will en­ter into and they have ev­ery right to ex­pect a fully trans­par­ent, hon­est and pro­fes­sional ex­pe­ri­ence. En­gel & Völk­ers part­ners with qual­i­fied real-es­tate pro­fes­sion­als who are pas­sion­ate about prop­erty and com­mit­ted to re­la­tion­ships of in­tegrity in their busi­ness and ours. We em­brace the high stan­dards im­posed by our in­ter­na­tion­ally recog­nised brand, se­cure in the knowl­edge that our so­phis­ti­cated sys­tems not only boost our ef­fec­tive­ness but also main­tain a tight con­trol on the pro­fes­sion­al­ism of our rep­re­sen­ta­tives.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.