PROP­ERTY

The onus is on you to un­cover any de­fects be­fore you buy, writes An­gelique Ruz­icka

CityPress - - Business -

When it comes to sell­ing prop­er­ties, there are two kinds of de­fects – a pa­tent de­fect is clearly vis­i­ble on in­spec­tion of the prop­erty, for ex­am­ple a bro­ken win­dow or cracks in the wall. Pa­tent de­fects must be listed on the of­fer to pur­chase, along with who will be re­spon­si­ble for fix­ing them.

“Be­cause pa­tent de­fects are vis­i­ble or ob­vi­ous with­out pro­fes­sional in­spec­tion, the buyer has no re­course against th­ese types of de­fects. It is up to the buyer to spot pa­tent de­fects and then de­cide if they want to pro­ceed with the pur­chase,” says Goslett.

La­tent de­fects, how­ever, are harder to de­tect be­cause they can’t nec­es­sar­ily be seen by the buyer. Ex­am­ples include a leak­ing roof or a faulty geyser. Common law dic­tates that the seller is re­spon­si­ble for all la­tent de­fects for three years from the date of the dis­cov­ery of the de­fect.

“Most sell­ers are aware that they are re­spon­si­ble for la­tent de­fects, which is why they include the voet­stoets clause in the sale agree­ment. The clause pro­tects the seller against all de­fects – in­clud­ing la­tent de­fects that are un­known to him. How­ever, if the seller was aware of a la­tent de­fect and de­lib­er­ately con­cealed it from the buyer, the buyer has re­course against the seller. It is im­por­tant to bear in mind that the onus will be on the buyer to prove that the seller was aware of the de­fect, but de­lib­er­ately hid it,” Goslett says.

HOW CAN YOU PRO­TECT YOUR­SELF?

Dis­cov­er­ing la­tent de­fects can prove to be costly. How­ever, be­cause some of th­ese de­fects may only come to the sur­face months af­ter the sale has gone through, it is im­por­tant for a buyer to have the prop­erty in­spected by a pro­fes­sional be­fore they sign on the dot­ted line.

Hir­ing a pro­fes­sional to in­spect the prop­erty be­fore­hand can be ex­pen­sive be­cause you are pay­ing for the builder’s ex­per­tise and time. How­ever, Goslett says it is worth it.

“The price of pay­ing a pro­fes­sional to do the job prop­erly will be far less than the time and has­sle caused by deal­ing with hid­den de­fects,” he says.

If you’re con­cerned that a prop­erty in­spec­tion won’t un­cover all the la­tent de­fects, you can take out in­sur­ance for added pro­tec­tion.

Hol­lard’s Home War­ranty, for ex­am­ple, en­sures that a pro­fes­sional prop­erty in­spec­tion takes place, and this is cou­pled with an in­sur­ance pol­icy.

Lee-Ann Do­brescu, head of group busi­ness de­vel­op­ment at Hol­lard and co-cre­ator of Hol­lard’s home war­ranty prod­uct, says: “As seller and buyer, you’re both pro­tected against the fi­nan­cial ram­i­fi­ca­tions of any hid­den de­fects that could emerge in the prop­erty for two years af­ter the trans­fer. It also means you don’t have to go through stress­ful and costly lit­i­ga­tion to re­coup your losses, or de­fend any claims, should some­thing un­to­ward be lurk­ing be­hind a voet­stoets clause.”

How­ever, tak­ing this route can be ex­pen­sive. Hol­lard says that pre­mi­ums are de­ter­mined on an in­di­vid­ual ba­sis, but you can typ­i­cally ex­pect to pay about R12 000 for a war­ranty on a R1 mil­lion home; R17 400 on a R2 mil­lion home and R27 500 on a R5 mil­lion home.

Hol­lard does, how­ever, point out that the cost of the home war­ranty can be covered by the seller – it can be spec­i­fied in the of­fer to pur­chase and the pre­mium can be paid from the pro­ceeds of the sale in the same way an es­tate agent’s com­mis­sion is paid.

How­ever, Sean Tucker of Leapfrog Prop­er­ties in Pre­to­ria is not a full sup­porter of such prod­ucts.

“I would say it’s not nec­es­sary un­less the buyer can see a lot of de­fects that look se­ri­ous. I don’t think it’s re­ally nec­es­sary as the buyer and seller should be able to come to a rea­son­able con­clu­sion on any de­fects found. If not, le­gal ac­tion can be taken against the seller,” he says.

Ul­ti­mately, you can’t use the CPA in your fight as a seller or buyer of prop­erty. This means you are left with only a few op­tions: get the prop­erty fully in­spected by a pro­fes­sional; pledge to fix any de­fects your­self; or in­sure your­self against any fu­ture de­fects that may oc­cur.

Le­gal ac­tion can be taken, but this can be costly and time con­sum­ing, and won’t be a short-term so­lu­tion to fix­ing any la­tent de­fects.

Un­der the law, sell­ers have to dis­close any known de­fects. How­ever, buy­ers who don’t get prop­er­ties in­spected are in ef­fect tak­ing a chance by not check­ing for la­tent de­fects.

With the cost of build­ing ser­vices and sup­plies in­creas­ing, you have to eval­u­ate whether you have the fi­nan­cial sta­bil­ity to take this sort of gam­ble.

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