What is the real effect of a voetstoots clause in a property sales contract if the buyer later discovers undisclosed defects in the house being bought?
Because the authority of the Consumer Protection Act does not extend to private “once-off” sellers of real estate, most sellers and their agents still rely heavily on the insertion of a voetstoots (“as is”) clause into the sale contract in order to provide legal protection to the seller.
Under common law when something is sold, there is an implied warranty that the thing sold is free from any defects. A seller is able to remove this warranty by stating that the thing sold is bought “as is” – “voetstoots”. Most agreements for the sale of immovable property contain a voetstoots clause, thereby freeing the seller from any liability for patent and/or latent defects, which the buyer may later find when taking occupation.
The word “voetstoots” is an Afrikaans term generally used to effectively describe buying something “as is” – just as it stands, in whatever condition it is, warts and all. A voetstoots clause provides important protection to sellers of second hand houses, which have deteriorated through normal wear and tear, or which have become defective to some extent through constant use. or through natural decay.
The basic purpose of the voetstoots clause is to shield the seller from any legal action arising from the buyer discovering defects he was not aware of when purchasing the property,
There are two exceptions that would entitle the buyer to either to cancel the contract, or to sue for a reduction in the selling price.
- The seller knew of the defects and did not disclose them to the buyer.
- The buyer could also cancel the contract on the basis of a fraudulent, or innocent, material misrepresentation – but only if it can be shown that the latent defect is so serious that if the buyer had known of it he would not have bought.
In order to understand the extent to which a voetstoots clause affects both sellers and buyers, it is necessary to understand the difference between a “patent” and a “latent” defect.
Patent defect: This is a defect that is, or should reasonably be, easily identifiable upon inspection of the property by the buyer. For instance a wall crack, rotten woodwork, or a broken cupboard.
Latent defect: This is a defect which is not apparent after ordinary inspection by a ‘reasonable man’. Latent defects are defects which only an expert could be expected to discover – for example, rising damp in a house, structural weakness of the roof timbers or an incorrectly installed geyser. Some more examples of latent defects include damaged pipes in walls, leaking roofs (except where strain marks make the leak obvious) and defects such as dampness behind a cabinet. The test is what could not normally be seen on inspection by a “reasonable man”.
As regards patent and latent defects, a professional home inspector should be able to see far more than the average home buyer. This is because the inspector will check the roof, roof cavity and all other areas of the house. An experienced and trained inspector will also pick up clues regarding defects or potential defects – clues which would not be obvious to the layman.
However, it should be remembered a home inspector still relies on his powers of observation and does not conduct an invasive investigation – for instance excavating alongside the foundations, or removing part of the roof covering.
This is why a home inspection report never constitutes a warranty. An inspector cannot be expected to predict all future failures of the components of a house. But an observant, trained inspector should be able to pick-up a lot more than the average buyer, regarding the condition of the house.
That is why making an offer to purchase conditional on a home inspection report is so important. This contingency provides the buyer with some protection to counterbalance the protection which the voetstoots clause gives to the seller.
But what of a situation where the seller conceals information regarding latent defects from the buyer? For instance, if the roof leaks, but the house is being sold in the dry season after the seller has painted over the damp stains – what then?
In terms of common law, where there is some latent defect in the house the seller can still be sued if it can be proved that the seller knew about the defect and failed to disclose it to the buyer. In this case the voetstoots clause in the agreement of sale will not provide protection to the seller.
The seller always has a legal duty to reveal to the buyer any latent defects of which the seller is aware. In practice however, the buyer is faced with a double problem in claiming redress if the buyer believes that the seller has been dishonest and failed to disclose latent defects.
- Because “once-off” private house sellers are excluded from accountability under the Consumer Protection Act, buyers who believe that they have been cheated by sellers failing to disclose latent defects, are forced to take the expensive and time-consuming legal route of suing the seller.
- Second, even when the matter gets to court the buyer is faced with the difficulty of proving to the satisfaction of the court that the seller knowingly concealed latent defects.
John Graham CEO of HouseCheck (www.housecheck.co.za). Contact: 083 310 9766 or john@housecheck.co.za