Con­sumer Pro­tec­tion Act holds de­vel­op­ers and builders re­spon­si­ble, but agents’ po­si­tion un­clear

Weekend Argus (Saturday Edition) - - PROPERTY -

SINCE Grant Gun­ston and other Cape attorneys and con­veyancers be­gan is­su­ing warn­ings that the full im­ple­men­ta­tion of the Con­sumer Pro­tec­tion Act (CPA) would have a huge im­pact on all mar­ket­ing, Lan­ice Stew­ard, MD of Anne Porter Knight Frank, says she has been asked whether this would make the voetstoots clause, which is in­serted in most South African res­i­den­tial prop­erty sale agree­ments, ob­so­lete and in­valid.

“This is a very real con­cern,” says Stew­ard, “be­cause the new act places a far greater re­spon­si­bil­ity on man­u­fac­tur­ers, im­porters, sup­pli­ers, dis­trib­u­tors or re­tail­ers to look af­ter buy­ers and give them to­tally sat­is­fac­tory prod­ucts. If this is not done, or if it can be shown that buy­ers were not fully in­formed about the possi- ble de­fects or con­se­quences of pur­chases, they will be in a po­si­tion to get the en­tire sale con­tract can­celled and de­mand re­place­ments or com­pen­sa­tion.

“Ob­vi­ously, if this be­comes pos­si­ble in prop­erty trans­ac­tions, it could lead to se­ri­ous dif­fi­cul­ties.”

Attorneys have ex­plained that the CPA rul­ing is limited to trans­ac­tions that are con­cluded as part of the reg­u­lar busi­ness of sell­ers, sup­pli­ers, dis­trib­u­tors and man­u­fac­tur­ers.

The act does not at this stage ap­ply to one-off trans­ac­tions un­der­taken by pri­vate in­di­vid­u­als who want to sell goods or prop­erty, pro­vided this is not their usual busi­ness.

“If, for ex­am­ple, I run a liv­ery sta­bles and I sell you a horse on the un­der­stand­ing that it is sound but it then proves to be lame, the buyer can claim full com­pen­sa­tion be­cause, as a horse dealer, I should be sup­ply­ing only qual­ity goods, that is horses in good con­di­tion.

“If, how­ever, I have two or three horses on my prop­erty and de­cide to sell one, and it sub­se­quently be­comes lame in train­ing, the buyer would have a hard time claim­ing from me be­cause horse deal­ing is not my busi­ness and I can­not be deemed re­ally knowl­edge­able on that sub­ject.”

The same ba­sic rules ap­ply in prop­erty sales, says Stew­ard.

If the “sup­plier” of the home is a de­vel­oper or builder, and de­fects be­come ev­i­dent af­ter the sale, he could now be held re­spon­si­ble – and no voetstoots clause would pro­tect him.

“The ques­tion now arises as to whether es­tate agents, be­ing reg­u­larly em­ployed in prop­erty trans­ac­tions, can be deemed an in­te­gral part of the sup­ply chain, and there­fore as li­able as pri­mary sup­pli­ers, or whether they will be seen as third party fa­cil­i­ta­tors of one off buyer-seller agree­ments, to which voetstoots could ap­ply.

“This mat­ter has not yet been tested and we have no guide­lines.”

Once the act is in op­er­a­tion, es­tate agen­cies will have to get sell­ers to list any de­fects of which they are aware be­fore the sale, and to see that buy­ers are made aware of these and sign dec­la­ra­tions that they fully un­der­stand them.

If this is done, says Stew­ard, the voetstoots clause, in her view, may still be ap­pli­ca­ble in one-off deals if sell­ers have not dis­closed any de­fects.

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