Voetstoots

Voetstoots

Category Property Advice

UNDERSTANDING TYPES OF DEFECTS VOETSTOOTS - OUR COMMON LAW

THE SOUTH AFRICAN LAW SYSTEM South Africa has an uncodified legal system. This means that there is not only one primary source where the law originates and can be found. (South African law has more than one source: LegislationCase Law (court decisions)Common Law-Roman, Roman-Dutch and English law.Customary lawOld writers / authorsIndigenous Law)

     Patent Defects

• Flaws that will be clearly visible on a normal inspection of a property.
• They include wall cracks, sagging gutters, broken windows, missing tiles and the like.
• It is a Buyer's duty to acquaint himself with the general condition of a property on purchasing it and he cannot later claim he did not see such defects.
• The test is an objective one, namely what could have been seen on the original inspection of the property.

      Latent Defects

• Faults that are not immediately obvious and are hidden from view.
• These include faulty pool pumps and geysers, rusted internal pipes, leaking roofs(except where strain marks make the leak obvious) and defects that have been concealed such as dampness behind a cabinet.
• The test is what could not normally be seen on inspection .
• In Van der Merwe v Meades1991(2) SA 1 (A) A latent defect is any material imperfection which prevented or hindered the ordinary common use of the property.
• It can also be described as a fault which could not have been discovered by a reasonably thorough inspection before a sale. It is a defect that only an expert would be able to identify.

THE VOETSTOOTS CLAUSE

• Origin: "it means being bumped or pushed with the foot".During the Roman-Dutch period, when they pushed a barrel of grain or wine over to the purchaser-as a symbolic mode or gesture of delivery; neither person was aware of the condition of the grain or wine, inside the barrel.
• Every sale agreement of a normal residential property with a house and its usual outbuildings will contain a voetstoots clause freeing the Seller from any liability for patent and/or latent defects, which the Buyer may later find when taking occupation of the property.
• The word voetstoots is an Afrikaans terms generally used to effectively describe, in just one word, the action of buying something as is, that is just as it stands in whatever condition it is, warts and all.
• It is essential to all sales of property purchased second hand which may well have deteriorated through normal wear and tear or which may be defective to some extent as a result of its constant use or through natural decay over a period of time.
• Its basic purpose is to shield the Seller from any action by the Buyer, on discovering any defects he was not aware of when purchasing the property, from doing anything to jeopardise the actual sale contract.
• A voetstoots clause completely liberates a Seller from any liability for patent defects.This exemption is not absolute in the case of latent defects, however.

THE SELLER'S RESPONSIBILITY FOR UNDISCLOSED LATENT DEFECTS-COMMON LAW

• In terms of numerous South African court cases a Seller is only excused from liability for latent defects where he himself was not aware of the problem at the time of the sale.
• If the property had the defect at the time of the sale;The seller deliberately concealed the defect as he/she knew, if it was not concealed and the purchaser saw it, the purchaser will either not have continued with the transaction, or the purchaser would have negotiated a more favourable price;
• The seller knew of the defect and did not disclose the defect to the purchaser; and
• The seller fraudulently made a material misrepresentation.
• The seller will then  be liable to the Buyer for the cost of its repair.
• In such a case he cannot rely on any clause in the original contract making no warranties as to the condition of the property.
• A Seller will thus be liable for all cracks or dampness and other similar faults deliberately hidden from view.
• He is also responsible for latent defects which he is presumed to have been aware of, such as any appliance, which is not functioning properly. E.g.: geysers delivering only lukewarm water, defective electrical points, and the like.
• The Court in Malokav Vermeulen and Another (2017/4418) [2023] ZAGPPHC 13confirmed that sellers who are aware of a latent defect to the property they are selling, are not protected by a voetstoots clause. The Court in this case ordered the sellers to pay an amount of R414 787.77 to the buyer of the property, as they deliberately and fraudulently failed to disclose extensive damp as a latent defect of the property.

      Example of Voetstoots -Ellis vs Cilliers (Oct 2015)

• The house on stilts -was not level and the whole house sloped down the hill at an angle; with rotting foundations.
• Held: "A defect is any material imperfection, preventing or hindering the ordinary or common use of the property, and it is a defect in the sale."
• Held: Where the seller recklessly tells a half-truth or knows the facts, but does not reveal them, because he has not bothered to consider their significance -this might amount to fraud."
• Held the Defendant had to compensate the buyer R600,000.00 in damages.

THE BUYER'S RECOURSE IN TERMS OF THE COMMON LAW

It is very important for a Buyer to know what his rights are in such cases. By law he cannot do any of the following: - He cannot obtain a quotation and deduct the cost of repairs from the purchase price and tender a lesser amount (or reduce his deposit);

• He cannot refuse to pay occupational rental or any portion thereof unless the defective article seriously restricts occupation of the property;
• He cannot repudiate or cancel the sale contract.

It is he, and not the Seller, who will be in breach of contract if he takes any of these actions. By law his proper recourse is to institute an action for damages or reduction in purchase price.

This will obviously not appeal to the Buyer and the best way to resolve the problem is to ask the Conveyancer doing the transfer to settle the matter amicably with the Seller. Ideally, she should arrange a refund of the costs of repair to the Buyer on registration of transfer. It is in the best interests of both parties to agree to this.

A purchaser also has a contractual claim against a seller for damages suffered as a result of a breach of an implied warranty that the goods would be free of defects. This is known as the actio empti. (Wilhelm v Henkel South Africa (Pty) Ltd 1997 JDR 0190 (C))

What is considered the reasonable cost of repair is not necessarily the lowest of several quotes. Someone who is qualified must be called as a witness to support the reasonableness and necessity of the charges. The expert gives evidence which will assist the court in forming its own opinion as to the correct amount to be awarded to the plaintiff.

WARRANTIES AND MISREPRESENTATIONS

• Many Buyers think that a deliberate non-disclosure of latent defects constitutes a fraudulent misrepresentation on the Seller's part and that they can cancel their contract.
• Without a voetstoots clause such a contract might well be repudiated as the failure to disclose known latent defects would constitute a deliberate contractual misrepresentation on the Seller's part.
• South African courts have consistently held the view, however, that the inclusion of a voetstoots clause overrules any question of contractual misrepresentation by the Seller and the Buyer accordingly cannot cancel the sale on the grounds that the property purchased has been found to be worth less than the price offered.
• He is deemed to have purchased it as is, defects and all, and his rights are confined to an action for damages. The non-disclosure is only regarded as a delictual misrepresentation.

EXPRESS WARRANTIES BY THE SELLER

What, then, if a clause in a sale contract whereby the Seller guarantees the condition of any item or that it is functioning properly, only for the buyer to discover otherwise.

In this case the Seller has made an express warranty and the Buyer can refuse to take transfer until the defects are properly repaired at the Seller's expense.

Alternatively, the Buyer can sue for a reduction in the purchase price, an action known as actio quantum minoris.

OTHER FORMS OF MISREPRESENTATIONS

• A voetstoots clause only covers defects on a property.
• In other cases of misrepresentation, however, the Buyer will always have an immediate recourse against the Seller.
• Where, for example, a Seller innocently or deliberately misrepresents the extent of a vacant piece of land as, say, 1500 square meters when it is actually 1200, the Buyer will be entitled to a proportionate reduction in the purchase price.
• In serious cases where the Seller has made a fraudulent misrepresentation affecting the very purpose for which the Buyer bought the property or primarily induced him to do so (for example falsely alleging that the property purchased solely for business purposes duly has business rights), the Buyer will be entitled to cancel the sale contract and sue for any damages suffered.

OTHER ISSUES AFFECTING DEFECTS

There are two other important issues that also need to be covered as they often affect sales of immovable property.

     Defects Caused After a Sale

• Who is responsible for damage done to a property after a sale contract has been signed but before registration of transfer takes place'?
• For example, a negligent motorist might smash the front wall of the property, or a geyser might suddenly burst, flooding the house and damaging its fitted carpets.
• Responsibility will lie as follows:
  • On the Seller if the contract makes him liable for the risk in the property until registration of transfer (as is the case in most contracts);
  • On the Buyer if the risk falls on him from date of sale or occupation (as in terms-sale contracts where transfer is delayed for more than a year);
  • On the Buyer if he causes the damage while in occupation.

      Late Discovery of Defects

• Buyers who only complain of defects some months after registration of transfer has taken place.  There are two issues here.
• Firstly the discovery of defects that only appear later. For example, a Buyer may only experience a major roof leak when the first summer rains appear long after registration.
• If it can be shown that the Seller knew or must have known about the leak and consciously failed to disclose it, the Buyer can sue him for his repair costs.
• The second issue concerns a delayed discovery of defects by the Buyer. For example he may only first complain about a wall crack six months after taking occupation. It will be very hard to prove that the Seller knew about a defect which the Buyer himself took so long to discover or that the defect existed at the time of the sale. In such cases the Buyer will have no recourse against the Seller.

THE ESTATE AGENT'S RESPONSIBILITY IN TERMS OF COMMON LAW

• Far too many Buyers want to hold their Estate Agents liable for latent defects they only discover sometime after the sale has been concluded.
• This is particularly the case where a defect has only been discovered months after the transfer has been registered and the Seller can no longer be traced.
• In terms of the Common law, an Estate Agent is only obliged to inspect the property for obvious patent defects, to enquire from a Seller as to what known latent defects exist, and to then disclose them before signature to the Buyer.
• Once having done this the Buyer's recourse is against the Seller alone. Often a Seller, on being challenged about an undisclosed latent defect, will falsely claim that he had informed the agent about it prior to the sale. A Buyer's recourse will inevitably rest against the Seller alone and the Estate Agent should not be harassed in any way.

THE COMMON LAW AND THE  PPA ACT

The PPA specifies that property practitioners ( from 1 Feb 2022)

must not accept a mandate unless the seller or lessor of the property has provided him or her with a fully completed and signed mandatory disclosure in the prescribed form and;

• must provide a copy of the completed mandatory disclosure form to a prospective purchaser or lessee who intends to make an offer for the purchase or lease of a property.
• The completed mandatory disclosure form must be signed by all relevant parties and must be attached to any agreement for the sale or lease of a property, thus making the form an integral part of the agreement.
• Should the parties neglect to complete, sign or attach the mandatory disclosure form, then it is deemed that no defects or deficiencies of the property subject to the agreement were disclosed to the purchaser.
• The PPA does not impact the validity of a voetstoots clause in a sale of property agreement where the latent defect, present at the time of the sale, was not known to the seller and not deliberately concealed from the purchaser.
• The duty of an estate agent with regards to the issue of disclosures is set out in Regulation 34.3.2 of the Property Practitioners Act, 2019. (Previously Clause 4.1 of the Estate Agency Affairs Board Code of Conduct).
• Regulation 34.3.2.1 provides that an estate agent shall convey to a purchaser or lessee all facts as are, or should reasonably in the circumstances be within his personal knowledge and which are, or could be material to a prospective purchaser (or lessee).
• If the obligation in Regulation 34.3.2.1 is broken down, there are four main requirements:- The estate agent must disclose facts which are within the estate agent's knowledge, i.e. facts in respect of which the agent has actual knowledge;- The estate agent must disclose facts which should be within their knowledge i.e. if the estate agents hold themselves out to be the area specialist, they need to be aware of issues affecting the area such as new roads planned or new hospitals etc;- The estate agent must disclose facts which are material to purchasers. This implies that the estate agent should disclose facts which are known to be material to the purchaser;- The estate agent should disclose facts which could be material to a purchaser. This requires wider disclosure and a broad exercise of this discretion.
• The question arises whether an estate agent should disclose a particular fact or not, for example when the previous occupant was either murdered or died in the property.
• The above must serve as a guide in every instance.
• The answer to the question should be yes, disclosure of this fact is needed. In this example, the facts (i.e., there was a death) is within the knowledge of the estate agent and may be material to the purchaser.The estate agent should find the appropriate timing and method of disclosure of such a fact.
• Bear in mind that adverse property conditions and /or incidents involving the property are likely to be known by neighbours etc. who will no doubt advise the purchaser in any event of such property conditions and/or incidents after the sale has taken place.
• Regulation 34.3.4.2 of the Act (previously clause 5.2 Code of Conduct) of the Act further provides that an agent shall not wilfully or negligently, in relation to his activities as an estate agent, prepare, make or assist another person to prepare or make a false statement, whether orally or in writing, knowing it to be false or knowingly or recklessly prepare or maintain any false books of account or records.
• Regulation 34.3.4.5.1 (previously clause 5.5.1 Code of Conduct) provides that no agent shall wilfully or negligently mislead or misrepresent in regard to any matter pertaining to the immovable property where a mandate is held.
• Regulation 34.3.4.5.2 provides that an agent shall not use any harmful or misleading marketing techniques.

MUNICIPAL APPROVED BUILDING PLANS

• In the case of Havisidev Hydricks and Another 2014 (1) SA 235 (KZP)  , it was found that the absence of approved building plans constitutes a latent defect.Furthermore, that a voetstoots clause can protect an innocent seller.
• An important set of questions were posed in this case. Perhaps, useful now for purposes of ensuring that as an unknowing buyer you are not without recourse. The seller was asked whether or not he:
• obtained the copy of the title deeds before buying the property?
• approached the municipality to inspect the building plans before buying the property?
• He answered no, and further said that he assumed everything to be in order. The result being, that the voetstoots clause was applied and the purchaser had no recourse against the seller.
• In Odendaal v Ferraris [2008] 4 All SA 529 (SCA) the Supreme Court of Appeal held that an illegally erected structure, its demolition or alteration as a condition for municipality approval of the plans, constitutes a latent defect. This, because defects interfere with the ordinary use of the property. Therefore, a voetstoots clause also covers the absence of statutory authorisations.
• Moreover, if a purchaser wanted to avoid the consequences, he had to prove that the seller knew of the latent defect and did not disclose it.Therefore, that there was an intended fraud on the part of the seller.

Failure to comply with the PPA act by the Estate Agent

• Apart from constituting a minor offence (for which the Authority may impose a R15000 penalty) for failure to comply with the Act,
• It also triggers potential liability for the estate agent to stand in for the purchaser's losses that may result from the fact that the Disclosure Form was not provided(section 67(3)).
• This would be the case where, for example, the estate agent decided not to bother with getting the form completed and nonetheless successfully negotiated the sale. Then afterwards, when serious pre-sale damage to a roof or other part of the house is established, the buyer may have a claim against the agent for losses incurred in repairing the damage.
• Presumably, of course, the agent will only be held liable where (i) the buyer did not neglect also to perform his/her own inspection; and (ii) could not reasonably detect the damage on such inspection; and (iii) had the Disclosure Form been completed and furnished to the buyer, he or she would have been alerted thereto.

The Purpose of the  Disclosure document

• The purpose of a disclosure document is to, in the first instance serve as a record of the condition of the property for the purchaser.The purchaser will enter into the sale agreement based on the disclosures made by the seller in such document.
• The prescribed mandatory disclosure document is a broad-based document that does not deal with detailed property issues.
• The document deals mainly with broader property disclosures. Where agents require additional and more detailed disclosures and wish to prompt a seller, an additional annexure can be used. It is assumed that the mandatory disclosure document can be added to but portions thereof cannot be deleted or not used.
• A clause in a sale agreement to the effect that the disclosure document is to follow or be provided in a certain number of days is incorrect, impractical and contrary to the Property Practitioners Act. The disclosure document MUST precede the sale agreement in every case and must be annexed to the sale agreement.
• The second purpose of a disclosure document is to document the seller's instructions with regard to the condition of the property for the agent's protection. The document prevents the seller from alleging after the fact that the agent was advised of a certain defect which was not disclosed to the purchaser or was inaccurately conveyed.
• The agent needs to impress on the seller the importance of the document and the importance of the need to complete the document properly and honestly. This can be more difficult than otherwise thought and the estate agent should actively assist the sellers in this process.
• There is a tendency by sellers to not disclose for fear that disclosure will lead to a lower price or a delay in selling, alternatively to disclose insufficiently. There is also a tendency not to disclose issues in respect of which the sellers either do not apply their minds or in respect of that which they consider to be an acceptable defect. Issues in the property should rather be disclosed and/or properly dealt with or remedied before sale to avoid legal disputes after sale.It is often the agent's reputation which is tarnished by non-disclosure.
• As indicated above, the disclosure document is now obligatory and to the extent that same is not possible, for example where the seller is an executor of a deceased estate or has lived overseas for some years, the mandatory disclosure document must still be annexed to the sale agreement. The fact that the seller or the executor cannot complete the document must be noted on the document and the purchasers must be advised to properly inspect the property in the absence of a disclosure by the seller.
• It is our view that until the Property Practitioners Authority provides clarity, the mandatory disclosure document should be annexed to every sale or lease of immovable property, whether this be commercial or residential and or for vacant land.

IF THE SELLER IS NOT AWARE OF DEFECTS-PPA ACT

• 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".

HOW TO DEAL WITH DEFECTS THAT HAVE BEEN REPAIRED

• Where sellers are aware of defects in the property that have been repaired (for example a leaking roof), ensure that you obtain proof of the repairs in the form of a  warranty by the Seller.
• It must be born in mind that most sale agreements have a clause to the effect that "no representation and/or warranties made by the parties prior to the agreement are binding on the parties unless included in the agreement". This means that any disclosures must be in writing and included in the agreement if they are to be relied upon.

FIXTURES AND FITTINGS CLAUSES

• There are essentially two types of fixtures and fittings clauses. One that makes a representation that "all fixtures and fittings are in good working order"and another that only warrant that these are theSeller's "exclusive property and fully paid for".
• Estate agents who have the former clause have an additional task of ensuring that all the fixtures and fittings are in working order.
• This must be specifically brought to the seller's attention and the necessary disclosures and/or repairs should be made.

HOME INSPECTORS

• These may be used, however the clause must be clear as to, by when the inspection must take place, the consequence of this not taking place, whether the sale lapses if unacceptable defects are found and the obligation of the seller to correct any defects found.
• Sellers must further understand the risk that the inspection report may bring to light defects the seller was not previously aware of and which then need to be disclosed to new purchasers due to the seller's new found knowledge.

THE CONSUMER PROTECTION ACT

• Under the Consumer Protection Act (CPA) 68 of 2008, consumers have the right to fair value, good quality and safety.
• The CPA only applies to the sale of immovable property where the seller is a property developer and investors who buy, renovate and sell houses as a business.
• Whereas for the sale of a home or a holiday home, the CPA does not consider this to be in the ordinary course of business and its regulations regarding property defects do not apply. Instead common law is applied.

OBLIGATIONS PLACED ON ESTATE AGENTS BY THE  CPA ACT

• The CPA regards the estate agent as an intermediary in a purchase agreement between the seller and buyer of a home or holiday home.
• An intermediary is defined by the CPA asa person who in the ordinary course of business and for remuneration or gain, engages in the business of representing another person with respect to the actual or potential supply of any goods or services; accepting possession of any goods or other property from a person for the purpose of offering the property for sale; or offering to sell to a consumer any goods or property that belongs to a third person?.
• Thus the agent is considered a supplier who provides a service to the customer. In this case the estate agent performs a two-fold service.
• He enters into a mandate agreement with the seller and facilitates the sale agreement between the seller and the buyer.

      The responsibility of the estate agent in terms of the CPA

• First, with regard to the mandate agreement with the seller. The estate agent is expected to practice responsible marketing.
• In terms of the CPA this constitutes being honest in his dealings and showing regard for the consumers fundamental rights of equality and privacy.
• Second, with regard to the purchase agreement between the seller and the buyer. The agent is required to disclose to the buyer any latent defects that he is aware of as well as any other relevant issue regarding the property.
• In the case of a voetstoots purchase agreement, it can be very difficult to prove that the seller is liable. Did he knowingly withhold information about the defect or was he not aware of it? To what extent will he be protected by the voetstoots clause?
• Did the estate agent fulfil his obligation to detect and disclose defects to the buyer?
• Remember the estate agent provides a service not only to the seller but also to the buyer. By facilitating the sale agreement, the agent is considered to be the supplier of services to the buyer. And under the CPA, if the consumer is not happy with the goods delivered, he is entitled to claim for compensation.
• The agent is at risk here. If found guilty, he may be faced with a hefty fine.

      How can the estate agent protect him/herself?

• The mandate agreement should record that the seller accepts and acknowledges that it is his duty and responsibility to disclose any latent defects that he is aware of as wellas well as any relevant issue regarding the property.
• The purchaser should initial (and thereby acknowledge) the voetstoots clause in the agreement of sale.
• Always ensure that the parties complete and sign the mandatory disclosure form.
• In this way the estate agent can take adequate care of both parties and ensure that they know exactly what their rights and obligations are.
• If the buyer enquires about the value of the  property, its development potential, its zoning, any other condition-always ensure that the Seller gives the necessary warranties to the Purchaser and even better, insert a feasibility study clause and place the onus of to investigate on the Purchaser.
• For instance: " Subject to the Purchaser having 30 days from date of acceptance of the offer to do a feasibility study on the land to ensure it is fit for the purchase of developing a sectional title scheme consisting of 30 units."

      Is a Seller obliged to issue an Electrical Certificate of Compliance (CoC) to the Purchaser when              same is not noted in the Offer to Purchase?

• The Department of Labour enforces the requirements of the Electrical Installation Regulations in respect of residential properties.
• It is important to note that the law expressly provides that a CoC needs to be issued when a property on which an electrical installation exists changes ownership at any time after 1st of March 1994.
• (Note: The Electrical Installation Regulations do not dictate who should issue this certificate and most definitely does not state that a Seller is obligated to issue same to his Purchaser before transfer of the property can be effected.)
• There is an exception that if the installation existed prior to October 1992 and there have been no addition or alteration to that installation, and it has not changed ownership since 1 January 1994, then no CoC is required. Once a change of ownership occurs, a CoC is required to be issued.
• For this reason, the majority of property sale agreements stipulate that a Seller will provide the Purchaser with a valid certificate of compliance. The Seller is however not obligated to have the said CoC issued if such obligation is not contractually agreed to.
• Contrary to popular belief, the CoC is not required by any Deeds Office to effect transfer of ownership of fixed property.
• IMPORTANT: Please take note that the CoC certifies only that the electrical installation is reasonably safe and does not confirm or certify that any appliances (stoves, aircons etc.) are in fact in good working order.
• Take note that if the Seller has not bound himself contractually to issue a valid CoC to the Purchaser the Purchaser will have to carry the cost burden of acquiring same as the Purchasers Bank would usually require a copy of the valid CoC before registration of transfer.

SUMMARY:

• Our law makes a difference between patent and latent defects.
• Sellers are protected by a Voetstoots clause.
• The CPA act makes it an obligation for estate agents to disclose known latent defects to Purchasers as an intermediate.
• The PPA act makes it an obligation to disclose all defects in a mandatory disclosure document.
• T he rights of Purchasers are entrenched in our law and a higher task is placed on estate agents to protect Purchasers.

Author: Schaefer Attorneys