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