SELLERS BEWARE!
Category Property Ownership
A
seller or landlord in a property transaction will be completely exposed for defect claims and will have no legal defense to such claims under the new
Property Practitioners Act, effective 1 February 2022, unless a few things have been taken care of.
The Property Practitioners Act was signed into law already on 3 October 2019 and the effective date was announced barely two weeks prior to implementation, leaving all role players very little time to get their ducks in a row. The Act has many far-reaching effects, and also a few grey areas, but that it has consumer protection top of mind, leaves no doubt.
Everyone in real estate knows that the disclosure of defects in the property being marketed is a primary aspect when the sale is concluded. Property Practitioners have always borne a heavy responsibility to ensure that they get as much information as possible from the sellers regarding the condition of the property and then to ensure that they disclose these defects to prospective buyers in a way that would still encourage an Offer to be made.
Section 40 of the Consumer Protection Act 2008 expressly prohibits Property Practitioners from marketing properties for which a full discovery and disclosure of defects have not been made. Buyers are consumers of the services delivered by Property Practitioners and they usually make decisions to buy or not to buy, and on which terms, based solely on the information supplied to them by the Property Practitioner.
Section 67 of the Property Practitioners Act expands the common law and consumer law obligations on the part of sellers to disclose all material defects of the property. It is the seller's responsibility to ensure that all defects are disclosed, and to assist Property Practitioners in the process of collecting all material information for the benefit of the buyer, failing which the buyer could have a claim against the seller when defects are discovered after the fact.
It is more prudent than ever to choose your Property Practitioner with great care, and fortunately for sellers, it can now be established right from the start whether such person is on top of his game or not. Section 67 of the Property Practitioner Act is very clear on the obligations of the Practitioner with regard to the process to follow in determining possible defects in the property;
1. Obtain the fully completed and signed disclosure form as prescribed in the Property Practitioners Act before accepting a mandate to sell or rent;
2. Provide a copy of such completed disclosure form to all prospective buyers or tenants;
3. Attach a copy of the completed disclosure form to the sales/rental agreement.
It is important to note that if the disclosure form is
- not completed prior to the mandate, and/or
- a copy supplied to all prospective buyers and tenants, and/or
- it is not attached to the agreement,
then it will be accepted that no defects were disclosed to the buyer or tenant.
This means that the seller or landlord is not protected against claims with regard to defects found in the property. Property Practitioners who fail to follow the rules can similarly be held liable in their personal capacity for damages on the part of either the seller, landlord, buyer or tenant.
If a person other than the owner provides the information for the Disclosure Form, such person must be duly authorised by the legal owner to do so. In the absence of a representative, it is advisable that the seller appoints a professional property inspector to ascertain possible defects.
Sellers are cautioned to be truthful in the declaration, and to list all possible defects, big and small; this serves as your protection against any claims, and it does not mean that you must fix anything unless it is stipulated in the sales agreement.
Note: A "defect" means any condition, whether it is visible or not, that could have a significant adverse impact on, or affect the value of the property, or that could significantly impact on the health or safety of the occupants, or if not repaired, removed or replaced could adversely affect the lifespan of the property.
Author: Adrie Barnard
