HouseCheck Property Fundi Blog – February 2012
Estate agency chiefs warn agents about the CPA
According to Bill Rawson, chairman of Rawson Properties, there is “much ignorance” among estate agents and consumers as to how the Consumer Protection Act (CPA) affects property transactions. Rawson adds that leaders in the property industry had mostly supported the more stringent transparency concepts which were now enforceable under the CPA
Rawson is quoted in the Weekend Argus (Feb. 11, 2012) saying that property buyers and sellers now have rights to open and full disclosure. Rawson added that these rights were now clearly recognised and enhanced in the CPA. He said, more and more buyers now understand that they have the right to full disclosure. Rawson added however that “it may take two years for a body of case law to be built up that will define more clearly the rights and obligations of buyers, sellers and estate agents.”
A similar sentiment was echoed recently by another leading estate agency executive, Adrian Goslett, CEO of RE/MAX of Southern Africa. Goslett told the Property24 website that home buyers should “beware of making assumptions about the condition of a property”.
Goslett pointed out that although the CPA now provided protection for home buyers it was always advisable to have a professional home inspector to take a look at the property. A professional inspector will be able to spot any problems that may otherwise go unnoticed, such as the structural integrity of the property.
“It may cost money to hire an inspector, but this could save a lot more money for repairs in the long run,” says Goslett.
The Consumer Protection Act (CPA) also affects estate agents says EAAB
The Estate Agency Affairs Board (EAAB) says in a recent post on its website that estate agents should be aware that the home buyer is a consumer when dealing with the estate agent. As such buyers enjoy protection under the CPA as regards implied warranties and rights.
The EAAB explains: Under the CPA the seller of a property, or the estate agents acting on their behalf, must not express or imply to the purchaser any false, misleading or deceptive representations concerning a material fact. The seller or agents may also not use exaggeration, innuendo or ambiguity regarding a material fact concerning the property. Also the seller or agent may not fail to disclose a material fact concerning the property and may not fail to correct an apparent misapprehension on the part of the buyer.
The EAAB says that in cases where the seller has been forced by the courts to compensate the buyer in terms of the CPA then the estate agent may also be at risk. This is because, should the estate agent have been at fault regarding the information communicated to the buyer, then the estate agent may find themselves liable to the seller for all or part of the losses of the seller. This is because the estate agent is providing a service in the ordinary course of business and so the relationship between the seller and the estate agent will also be governed by the CPA.
Agents warned against making unfulfilled promises
Anton du Plessis, chief executive officer of Vineyard Estates, says a recent High Court case (Guthrie and Another vs. Etango Game Lodge and Another) shows just how careful sellers must be in making promises they may not be able to keep.
Du Plessis says that Etango’s promotional literature apparently promised that among the perks that they offer those who bought land from them (and paid their levies) would be a new clubhouse and wellness centre with a gymnasium, a squash court and a pool, an electric connection point on their property, and a 6-seat game drive viewing vehicle for the owners’ use. Etango also undertook to see that the game reserve was fully stocked
After completing their house on their newly purchased erf, the Guthries found that no clubhouse was being built, game was not plentiful and was being captured and sold, there was no game drive vehicle and there was no electric supply point to their home.
The Guthries sued and the High Court ruled in their favour on every count, except that they could not get a court order authorising an immediate start on the clubhouse – this was because no date for this had been set in the agreement.
Du Plessis says that sellers and agents will now have to be much disciplined and avoid vague statements and promises which could now become ammunition for aggrieved buyers. He added that where promises are not kept or where it is clear the buyer did not understand the contract, immediate cancellation of it will be possible with total compensation to the misled party.
Cape Town property transfers on the rise
Business Report (13 Feb 2012) reports that Cape Town residents are bucking the property slump trend, with the city receiving an average of 300 new rates clearance applications each day.
Demetri Qually, mayoral committee member for corporate services, said there had been 5 142 rates clearance applications in January 2012. “The city used to receive fewer than 200 new applications a day, but by the end of January this had increased to 300 a day. For the first week of February 2012 the daily average increased to 380.
The HouseCheck Property Fundi Blog is published and distributed by HouseCheck in order to provide HouseCheck’s estate agency colleagues and HouseCheck clientrs with a variety of topical South African property news.