Will the new Property Practitioners Act Nullify the Voetstoots Clause in Offer to Purchases?
Voetstoots and the Property Practitioners Act 2019
The Property Practitioners Act 2019 (PPA) requires the seller to include, as part of the agreement of sale, a disclosure to inform prospective buyers about the condition of the property. The question arises: Is the seller’s disclosure a warranty and will this declaration nullify the effect of a voetstoots clause included in the agreement?
Definition of Voetstoots Clause
Existing homes in South Africa are usually sold subject to a voetstoots clause. This means that the property is sold “as it stands” and the onus is on the purchaser to determine the condition of the property with respect to both “patent” and “latent” defects.
Latent and Patent Defects
- A latent defect is a fault that would not readily be revealed by a reasonable inspection of the property being sold; and
- A patent defect is a flaw that is not hidden and ought to be easily identified upon reasonable inspection.
If a property is sold voetstoots then the only current responsibility of the seller is to disclose any latent defects of which the seller is aware. Examples of such latent defects could be:
- Occasional flooding of the home in heavy storms due to ineffective stormwater management;
- A slow leak in the swimming pool which was not readily apparent.
So the question is: Will the voetstoots clause still be relevant when the minister gets around to gazetting the regulations for the Property Practitioners Act 2019 (PPA)?
The Provisions of the Property Practitioners Act 2019
This is what the PPA says regarding consumer protection (for buyers).
- 67.1.a: An estate agent may not accept a mandate from a seller or landlord unless the seller or landlord also provides “a fully completed and signed mandatory disclosure in the prescribed form”.
- 67.1.b: An estate agent must provide prospective buyers or lessees with a copy of the mandatory disclosure.
- 67.2: The completed mandatory disclosure form signed by all relevant parties must be attached to any agreement for the sale or lease of a property, and forms an integral part of that agreement. If such a disclosure form was not completed, signed or attached, the agreement must be interpreted as if no defects or deficiencies of the property were disclosed to the purchaser (or lessee).
- 67.5: Nothing prevents a consumer from undertaking a property inspection to confirm the state of the property before finalising the transaction.
- 68.1: The agreement of sale/lease together with the mandatory disclosure must be drafted by the seller/landlord.
- 68.2: The Property Practitioners Regulatory Authority may publish from time to time “guideline” agreements and disclosures.
It can be seen from the Act and, unless stated otherwise in the regulations still to be published, that the following will apply in the new dispensation:
- The wording of an agreement and of the mandatory disclosure is at the discretion of the seller/landlord but should, presumably, conform to the “guidelines” when published.
- In the event that the consumer is not provided with a disclosure then the consumer is entitled to assume that the property is free of defects.
What about inaccurate or incomplete sellers declarations?
But what if the disclosure is inaccurate or incomplete – simply because the seller/landlord did not know any better?
- Does a false or incomplete declaration challenge the validity of the entire agreement of which it must, by law, now form an integral part?
- Is the inclusion of a voetstoots clause rendered moot by the PPA? This question arises because the consumer is no longer buying/leasing in “as is” condition, but rather in accordance with the seller/landlord’s declaration of the condition of the property? In other words, is the declaration actually a warranty of condition on which the consumer can rely?
Unless clarified otherwise in the Minister’s regulations pertaining to the PPA, the answer to the above questions will probably need to be resolved by a court.
What should the prudent seller or agent do?
In the meanwhile it seems prudent for sellers/landlords and their agents to adopt a disclosure, which lists all known defects and also lists all of the areas of a property where the seller/landlord is uncertain regarding the condition. The National Association of Building Inspectors of SA (NABISA) has published a free-to-use disclosure template which takes this uncertainty into account (http://www.nabisa.org.za/sellers-declaration).
NABISA recommend that where the seller/landlord is uncertain about the condition of any part of the property, then this should be disclosed to the prospective consumer. This will have the effect of shifting the responsibility to the consumer to commission an independent inspection in order to find out more about the condition of any part of a property..
Such a strategy for agents and their sellers/landlords would certainly be in harmony with PPA 67.5: “Nothing … prevents a consumer, for his or her own account, from undertaking a property inspection to confirm the state of the property before finalising the transaction”.
Only independent inspections, paid for by any of the seller, buyer or agent can ensure that there are no unpleasant and expensive come-backs post-sale or post-lease.
By John Graham
Executive Chairman HouseCheck
At the time of writing the Property Practitioners Act 2019 has been passed but not yet promulgated.