Downside of the voetstoots clause
Guest Blog by Lea Jacobs of Private Property
Buying a home should be one of life’s most exciting experiences, but unfortunately, unless buyers know what to look for, it can prove to be a lot more costly than originally budgeted for. Most of us (unless we have a legal background) do not understand the voetstoots clause that appears in virtually every property sale agreement. Sellers often assume that it means that the property is sold as is and that buyers have no recourse if problems are found after the sale has gone through. This is not strictly true.
Sellers who are aware of faults are not permitted to hide behind the voetstoots clause. If they are aware of defects, they have to disclose these at the time the sales agreement is signed. With all the hype surrounding the Consumer Protection Act (CPA) many buyers assume that the voetstoots clause has lost its validity and that they are fully protected when things go wrong. However, this relatively new legislation remains largely untested and only applies to sellers who either regularly sell property or continually market themselves as sellers of property.
Buyers may have a claim against the agent under the CPA if they can prove that the agent was aware of the fault and intentionally withheld the information. Trying to prove that a third party (an agent) was aware of any problems could be difficult.
John Graham from HouseChecksays that his company is regularly contacted by buyers who discovered problems only when they moved in. “I am sure this is just the tip of the iceberg and that there are countless others who have been duped into buying property that needs major repair work.”
Disturbingly, Graham says in a number of cases where buyers called in inspectors after the sale and the problems were exposed, the buyers had yet to receive compensation.
“In one case, an estate agent was ordered to pay R25 000 in compensation under the Consumer Protection Act. Four months on, the agency is still stalling and the elderly buyer has yet to receive justice.”
Crystal Swanepoel, a first time buyer, has discovered the hard way that hiring a home inspector before the sale went through could have saved her a great deal of money – and heartache.
“While viewing the property, we were shown a leak in the main bedroom’s bathroom. The sellers told us this had been repaired, but the damage had not and was clearly visible. We said that we would repair the damage ourselves. After moving in, we noticed a leak in the guest bathroom. In addition to these problems, we have found that the shower in the en suite bathroom leaks.
We contacted the seller’s attorney and they replied, stating we should obtain two quotes to have the leak fixed. Shortly thereafter, before the quotations were in, we received an sms stating that the registration had been completed. My husband again contacted the seller’s attorney and was told that we had bought the property voetstoots and that the seller would not pay for any repair work.”
While the Swanepoels may well be able to sort this out through the courts, litigation can be a costly and stressful exercise.
Graham says it is important to remember that a buyer effectively signs away his rights when he signs an offer to purchase that contains the voetstoots clause. “It is acknowledged that the voetstoots clause provides necessary protection for sellers. However, it becomes iniquitous if the estate agent has not advised the buyer of the benefits of becoming properly informed via a home inspection. We always advise this.”
In Graham’s opinion, the offer to purchase should be contingent upon a home inspection report. “This means that the buyer only pays for the inspection once the conditional offer has been accepted. The standard clause we recommend for our clients reads as follows:
“This offer is subject to the purchaser obtaining a report on the property from HouseCheck within–days of the final signature on this offer and is also subject to the purchaser being satisfied with the condition of the property as detailed in the HouseCheck report – specifically with regard to patent or latent defects documented in the HouseCheck report.”
There may be those who argue that the seller should be held liable for the costs of having the home inspected. Graham however disagrees, saying that buyers need the information contained in the report far more than do the sellers. He has a good point, as the buyer has much more to lose if problems become evident once the sale has been concluded.
Unfortunately, unlike countries such as the US, where eight out of 10 properties are inspected before purchase, most South African buyers are not aware that they have this option available. Graham estimates that currently only one percent of buyers insist on having the home inspected by a professional. Perhaps the time has come for South African buyers to take the initiative and call in a third party to double check that all is what it seems. Unless of course, they want to become another voetstoots statistic