Does the sellers declaration protect the buyer?

The Consumer Tribunal set up in terms of the consumer protection act issued a judgment in 2014 that clarifies the rights of sellers and buyers in a second-hand property transaction.

In case number NCT/12984/2014/75(1) (b) CPA the applicant sought relief from the first respondent (the estate agent), the second respondent (the seller) and the third respondent (the agency), for the costs of replacing the roof of the property which became necessary when severe roof leaks became evident two days after the applicant moved into the home. The cost of replacing the roof amounted to R111 271.80.

The judgment is worth reading. Essentially the relief was denied. The applicant sought to bind the seller and agent by virtue of the fact that the agent was acting as an agent or broker agent of the seller. The tribunal disagreed.

The ruling stated that the second respondent, the seller was not covered by the act, by nature of the fact that they did not sell homes in the ordinary course of business.

Secondly, the judgment clearly stated that in this case there was no evidence before the tribunal that the first respondent acted as an agent of the seller. Without this specific evidence (possibly a copy of the mandate – depending on the wording) the estate agent was probably acting as an intermediary in terms of the act and therefore could not be held liable for the second respondents (sellers) actions.

Thirdly, the tribunal found that there was no evidence before it that the agent, who may have been acting as an intermediary and had a duty to disclose all defects known to her, had any knowledge of the defects.

The implications of this judgment are huge for buyers of properties.

Firstly it would appear that a simple sellers declaration will let estate agents off the hook in terms of disclosure of defects.

Secondly, buyers who then find hidden defects will have to prove sellers hid the defects knowingly. This is extremely difficult to do. Estate Agents have probably changed their mandate forms to make sure that they are not seen as operating as broker agents or agents in terms of the law but rather as intermediaries.

This leaves the buyers very exposed when buying a second-hand property. To seek legal recourse the onus is on them to prove that the seller hid defects, not an easy thing to do in terms of the law. Furthermore, they cannot rely on the consumer protection commission in terms of the act.

The seller’s declaration form, which agents routinely ask sellers to fill in and which will be a legal requirement in terms of the new Property Practitioners Act, at first glance is meant to offer protection to the buyer, but is indeed merely a protection for the agent and has little value for the buyer at all.

The only way a buyer can protect themselves when buying a property appears to be to get an independent property inspection.

So if you don’t want any R100 000 surprises do the sensible thing and get a home inspection.

 

Link to judgment

“Grateful to have a good report for Agent to offer prospective buyer”

- Nell Browne

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