Buyers – and sellers – urged to do their homework before signing an offer

BUYERS are urged to carefully assess the properties they consider purchasing before making an offer as, despite legislation protecting them in cases where the true state of properties are hidden, they still need to “beware”.

“Caveat emptor” – “let the buyer beware” – is a phrase from contract law that often applies in property transactions as buyers know less about properties than the sellers.

“The onus is on them to inform themselves of the true state of the property they are about to purchase,” says Paul Stevens, chief executive of Just Property.

“While the Consumer Protection Act has gone some way towards protecting buyers, and the new proposed Property Practitioners Bill goes further, buyers still have to beware.”

Sellers would also do well to check their properties before they list their them, as this could save them a lot of money, and even the sale itself.

Stevens says to avoid liability for damages, sellers and their agents are required to inform buyers of all defects or potential defects, even if the property is being sold voetstoots – meaning “in current condition”. The new bill will make it mandatory for sellers to attach disclosure forms to the sales agreements or leases. Some agents already do this.

Sellers are also required to provide electrical compliance certificates, electrical fence certificates, beetle certificates and, if relevant, gas compliance certificates. In Cape Town, certificates of plumbing compliance are also required. Certain banks require compliance certificates for properties with asbestos.

“Transfer of properties cannot pro- ceed without these and will be delayed until such certificates are issued.”

Although agents should advise sellers of these requirements and put them in touch with the relevant professions, Stevens warns that even the most scrupulous agents and honest sellers may not be qualified to pick up all defects.

“As a result, consumer watchdogs encourage buyers to ensure all certificates supplied by sellers are legitimate, and to undertake extensive inspections of homes they plan to buy. The proposed bill also looks to recommend and regulate home inspections by qualified inspectors.”

To ensure compliance certificates are legitimate, Stevens advises buyers to include the following in their offers to purchase:

Regarding beetle, in addition to the mention of “wood-destroying insects”, add the words “and organisms”. This expands the report to include investigations for fungi and borer.

Regarding electrical certificates, add the word “verified”, as the provincial electrical inspection authority will then be asked to re-check the entire installation. If faults are found, the authority will require the electrician who issued the certificate to sort out the faults at the contractor’s expense.

“Any costs to remedy the installation would be for the seller who is responsible for providing the certificate,” says Stevens.

Add the proviso that the property passes a home inspection before transfer, and that if any defects are found, these be repaired to your satisfaction before transfer. This inspection is payable by the buyer, who chooses which professional home inspection company to use.

Add the condition that “the home passes a due diligence investigation”. This includes title deed conditions, servitudes and confirmation that the structures on properties have been approved by the local authority.

“Good practice is to add a clause in your offer, under ‘Special Conditions’, that states a copy of approved municipal plans must be provided by the seller prior to registration of the property.”

Stevens says this diligence is also important for the seller if problems crop up later.

“Putting matters right can be expensive. There are cases of sellers having to pay out tens of thousands to rectify electrical and plumbing faults.” – Property Writer