Find the right local SA attorney now!

DOES VOETSTOOTS APPLY IN PROPERTY TRANSACTIONS?

Article by listed AttorneyNanika Prinsloo

The voetstoots clause is a well-known clause when one sells property or second-hand items.  The voetstoots clause basically means “as it stands” – meaning, that you buy the item with its flaws and problems. When it comes to property, it means that a purchaser buys the house (or flat or farm or townhouse or building or factory) “as is”.  The voetstoots clause means therefore, that the purchaser cannot hold the seller liable if he/she finds out about any defects to the item he/she has purchased after the signing of an agreement which contains a voetstoots clause.

See Also:

Certificates Required by Property Sellers

Electric Fence Certificates

In terms of the new Consumer Protection Act (CPA), a purchaser is entitled to receive goods that are free from defects and that a seller cannot rely on a voetstoots clause any longer and will be responsible for any defects in the item that the purchaser has purchased.  So a seller cannot throw his/her hands any longer and say “I rely on the voetstoots clause in our contract, it is your problem” any longer.  However, this is only for agreements that fall under the CPA – as not all agreements are covered by the CPA.

The CPA excludes all legal entities with an turnover of more than R2million per year. So any entity that turns more than R2million a year, cannot rely on a voetstoots clause in their contracts, even if their contracts contain such a clause.  The entity will be held liable for any defect in the property/item. The entity referred to here would, for example, be a developer or a builder or such.

However, where you as Mr Joe who works and owns one residence sells the house to a purchaser, you will not fall under the CPA and you will still be able to rely on the voetstoots agreement when you sell your house.  Voetstoots does not necessarily protect the seller completely, but it can help in general protection.  The problem it normally causes, even if you as the seller can rely on the voetstoots clause, that you have such an unhappy purchaser that he/she may insist on a reduction of the purchase price (even if only finds out about the problem afterwards) or try and cancel the sale.  To avoid expensive litigation, it is normally cheaper and faster to either fix the problem (despite the voetstoots clause) than having to pay legal fees to defend the matter.

THE SELLER MUST DISCLOSE

There is a duty on the Seller to disclose any defects which are latent – meaning defects in the property that the naked eye cannot see.  If the Seller is not aware of the defects, he/she of course, cannot disclose it to the Purchaser.  If the Seller hides the defect, being fully aware of it, the Seller will not be protected. The voetstoots clause will protect the Seller if he was unaware of the defects, but not if he was and deliberately hid it from the Purchaser.

THE PURCHASER MUST INSPECT

The Purchaser can’t just buy the property, for example over the phone.  Of course he/she can do that, but then he/she will not be able to inspect the property and then cannot call fowl afterwards. The Purchaser must be aware of what he/she is purchasing.  If the Purchaser does inspect the property and finds defects, then the Purchaser must have these defects written into the sale agreement and state that the Seller must fix the problem(s) before the date of transfer.  It must be as specific as possible.  

HOW FAR DOES VOETSTOOTS PROTECTION GO

The voetstoots clause will protect the Seller from liability for patent defects, but not so much for latent defects.

Patent defects are defects (flaws) that you can see with the naked eye on a normal inspection of a property.  (for example cracks in the walls, broken windows, broken tiles and such like).  The Purchaser must take note of these defects and have them written into the agreement if the Seller is not going to fix it before transfer.  If it is going to be fixed, it must also be specifically listed and stated that the Seller will fix the defects at his/her own cost.

If these defects could be seen objectively with the naked eye on a routine inspection, then it is a patent defect.

Latent defects are defects that are not obvious and cannot necessarily be seen with the naked eye on a normal inspection. These defects will, for example, include faulty plumbing, broken swimming pool pumps, roofs that leak and such like. 

If these defects cannot objectively be seen with the naked eye on a routine inspection, then the defect is latent.

IF THE SELLER WAS NOT AWARE

If there is a voetstoots clause in the sale agreement of the property, the Seller will be protected where he/she was not aware of the defect at the time of the sale of the property.  If the Seller knowingly concealed the defect, he/she will have to fix it at his/her own cost.

IF THE SELLER WAS AWARE

If the Seller was aware of latent problem and concealed the fact from the Purchaser, then the voetstoots clause does not protect the Seller. If the Purchaser has specifically enquired after potential latent defects and the Seller denied them (if the Seller was aware of them), then the Seller did not disclose the information and will be held liable. This will constitute breach and the Purchaser will be entitled to cancel the agreement or claim damages form the Seller.

WHAT CAN THE PURCHASER DO IF THE DEFECTS ARE ONLY DISCOVERED AFTER TRANSFER

The Purchaser cannot fix the problem at his/her own cost and then deduct the cost from the purchase price and pay the Seller less.  The sale agreement will contain a clause or clause that will deal with breach and if the Seller refuses to fix any defect that is not covered by the voetstoots clause. The agreement will dictate what the Purchaser can do or cannot do.

Normally the Purchaser will be able to sue the Seller for damages, but as mentioned before, expensive litigation is not the first choice to go. (says an attorney who should talk you into litigation! But we don’t work that way – we work holistically and will rather try and save you money and take wise decisions than to take your money and head you into expensive litigation.)

DAMAGES OR DEFECTS AFTER THE SALE AGREEMENT WAS SIGNED

What happens if the property had no defects on the date that the sale agreement was signed, but after the parties signed, there was a big hailstorm and the roof was damaged.  The agreement normally  (and should) states who carries the risk of the property until date of transfer.  In general the Seller carries the risk until date of transfer and must keep the property insured. In this case the Seller will be liable for the damages, unless there is a clause in the agreement that excludes it. The Purchaser takes over risk after date of transfer.   However, if the Purchaser lives on the property already before date of transfer and pays the Seller occupational rent, then it depends what the agreement says. Most agreements say that if the Purchaser lives in the property, risk shall pass to the Purchaser on date of occupation and then the Purchaser shall be liable for the damages if it occurs after date of occupation, but before registration of transfer of the property into the name of the Purchaser.

If the Purchaser damages the property himself after date of occupation, he/she will be liable for such damages incurred.

IS THE ESTATE AGENT LIABLE?

In a normal transaction, with the estate agent being the go-between between the Seller and the Purchaser, the agent speaks to the Purchaser and not the Seller to the Purchaser.  A lot of the time the Purchaser never even meets the Seller, so the Seller and Purchaser cannot discuss the defects of the property, but it is discussed via the estate agent.

Purchasers tend to hold estate agents liable for latent defects and not the Sellers. The only obligation on the estate agent is to inspect the property for obvious patent defects. The agent can only disclose to the Purchaser what the Seller discloses to the agent, so the agent cannot be held liable for information that the agent did not have.  The duty on the agent is to double-check with the Seller the state of the property and enquire properly after all defects – latent or patent. 

The estate agent should disclose as much information as possible and make sure that it is in writing and make sure that both the Seller and the Purchaser signs that they have read the disclosures.

THE BEST ADVICE is to (a) inspect the property properly (b) make sure that the estate agent gives you a written list of disclosures that can be annexed to the sale agreement (c) use a good conveyancer to attend to the transfer of your property.

This article written by Nanika Prinsloo of Prinsloo & Associates Attorneys and Conveyancers.

Email: nanika@vodamail.co.za

www.empowerlaw.co.za