The Voetstoots Clause and the CPA

Nov 23, 2018 | All, Industry, News

You’ve probably heard the common law term “voetstoots” before. It usually crops up when things are being sold, but it’s especially relevant when selling or buying property.

Selling a property voetstoots means it is being sold as is, meaning with all its problems. The clause is also viewed as a way for sellers to protect themselves. While this was helpful in the past, the advent of the Consumer Protection Act (CPA) means there are important things you need to know.

And in came the CPA

The Consumer Protection Act has changed the game for consumer rights. In a nutshell, it states that buyers are entitled to receive goods that are of good quality, “reasonably suitable” for the purposes for which they are generally intended, defect-free, durable and safe.

The CPA Section 55 has limited the application of the voetstoots clause by stating that “service providers or suppliers” cannot rely on the clause to avoid liability for defects they were aware of.

At first glance, it appears the CPA contradicts the voetstoots clause. Here are two important scenarios to consider.

  1. The CPA only applies to transactions which are concluded in the ordinary course of the suppliers’ business. In other words, a company which ordinarily trades in property will not be able to rely on a voetstoots clause to avoid liability for any defects in property sold. However, a once-off private seller can still validly rely on the clause.
  2. Where the purchaser or “consumer” is an entity with an annual turnover of more than R2 million, the CPA shall find no application. Entities of this kind are presumed to have the resources to adequately protect their interests.

 

Does it apply to all sales?

Developers, builders, investors and the like are clearly bound by the CPA. But for private sellers, the position is less clear.

Note that the CPA applies only when the seller is selling “in the ordinary course of business”, so generally “private sales” will fall outside its ambit.

Developers, builders, investors and the like are clearly bound by the CPA.

It is important to note that even when a “voetstoots” clause seems to be validly included in a sales agreement, it does not wholly indemnify the seller. In certain instances, the purchaser may still be entitled to some form of relief if a defect is detected later on.

Relief might come in the form of a price reduction or the cancellation of the purchase agreement.

Advice for Sellers

As a seller, you must disclose known defects.

Also, record any such disclosure/s in a written and signed annexure to the deed of sale. A buyer cannot complain if you have informed him/her of the condition of goods or, in this case, the property.

If you are selling in the “ordinary course”, be very aware that the CPA applies to you. What we have described here is only a brief overview. You must understand the strict requirements and the risks of failing to comply.

If you are a “private seller”, make sure you are covered by a properly-drawn “voetstoots” clause.

On the off-chance its validity is challenged, you can avoid later disputes with another approach; have the property checked out by an independent expert (like a home inspection service when selling a house) and have your lawyer incorporate that into the sale agreement.

Advice for Buyers

Buying a property can be overwhelming, especially if you’re doing it for the first time. Endeavour to find out as much as you can about the state of the property before committing to purchase. If the seller hasn’t provided you with a report, commission an independent one yourself.

Always seek legal advice when buying or selling property, especially when it comes to clauses. While it does add an extra expense up front, it could save you a lot of headaches down the line and limit financial risk.

Buyers must also take great care to do their homework, analyse their financial position and refrain from signing an offer until they are 100% certain that they want and can afford the home – voetstoots or not.

With the help of our highly effective scheduling team and legal team, at PropertyFox, you can be well-informed throughout your property journey. Contact us today and we’ll take it from there. 

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