Posted on: April 11, 2011 Posted by: Diane Swarts Comments: 0

The new SA Consumer Protection Act requires estate agencies to declare safety, health, environment and quality defects in houses for sale.

House sheq audits may become standard practice in real estate. The Act came into effect on 1 April 2011, impacting on property developers, owners, estate agents, financiers, banks and conveyancing attorneys.

The former ‘voetstoets /voetstoots’ clause is removed, and the onus switches from house buyers to house sellers, to ensure that a properties for sale are safe, healthy, environmentally sound, and fit for living in.

Failure to declare structural, electrical, plumbing, geological, and other hazards and faults up front, could have expensive ramifications for sellers, estate agents, banks and conveyancing attorneys. It may be possible for buyers to reverse a house sale up to six months after buying a house in response to direct marketing.

Mike Hendrikse, marketing manager of House Check, comments that a formal house inspection services has been operating in Cape Town for three years. “Clients are mainly buyers and people involved in building disputes. We are working with the Institute of Estate Agents (IEA) and conveyancer associations to launch a pre-sale compliance inspection format, which is not required in the Act, but could become general practice.”

Hendrikse says that informed estate agents, developers and attorneys seem to agree that full disclosure by sellers is now legally required. Estate sellers and agents could opt to use independent house inspectors to manage their new legal liability and prevent costly disputes with buyers.

House sheq inspection skills

Skills required for independent house sheq inspections, include knowledge of the estate market, and of basic construction, electrical, plumbing, sheq, renovation, and maintenance service market.

SHEQ practitioners who have operated on building projects are well suited to the task, says Hendrikse. House Check offers a training week, a manual of 30 000 words, followed by weekly web seminars, but the training is not standardised or accredited yet.

A house sale agreement and draft checklist, aimed at common problems, are available on House Check software.

House quality standard developing

No SANS standards are yet relevant to house sale inspections. “We base our training on USA NACHI standards. I think the Act did not foresee the implications on the property industry. Home inspection is a whole new industry for sheq professional, who are used to working to standards”, said Hendrikse.

Franchises are operating in Cape Town and Gauteng, and soon in East London, Nelspruit and Port Elizabeth.

Legal opinion on house condition regulation

Attorneys Webber Wentzel commented in April 1011 that the Consumer Protection Act applies to property transactions by professional sellers or landlords, and private purchasers or tenants, typically an individual or two individuals.

The Act is not clear on which aspects of selling or letting a property are “goods”, and which are “services” in terms of the Act. It is difficult to apply the provisions of the Act to property transactions.

When there is a defect in goods, remedies include a full refund, but the remedy for a service that is defective, is a refund of a portion of fees. “We hope that this uncertainty will be resolved soon after the full effective date of 31 March 2011, by the courts or the National Consumer Tribunal”, said the attorneys.

Buyers of property from direct marketing, have a five business day cooling off period, and may without penalty, and without giving a reason, cancel the agreement by sending a written notice to the seller, before transfer of the property at the Deeds Office.

This cooling-off right is in addition to a period in terms of section 29A of the Alienation of Land Act, which applies where the value of the property is R250 000 or less and the purchaser is an individual.

A property may not be displayed for sale without displaying the purchase price. It will not be sufficient for a seller to invite offers. A board or a dated estate agent’s catalogue or advertisement must display a price.

House specs to include sheq

Developers who sell properties “off plan” must ensure that the property delivered to the purchaser complies in all material aspects to a description, artist’s impression or plan as provided to the purchaser.

I the purchaser was persuaded to make the purchase on the basis of a show house, the developer must deliver a house that complies in all material respects with the show house. If the consumer saw a description and a show house, the house must correspond to both.

If a purchaser buys a property “off plan” or “off spec” specifications, the purchaser may at any time cancel the transaction. This does not apply if the property is “special order goods” de4viating from a standard plan or fittings. A reasonable cancellation fee applies. 

The Act provides protection for purchasers regarding the time, place and cost of delivery, and how risk is allocated, unless a contract provides differently.

A purchaser may require a seller to take re-transfer of a property that is not of good quality, working order, free of substantial defects, or fit for purpose. The purchaser has this right for six months from transfer and may return the property to the seller without penalty and at the seller’s expense and risk.

A purchaser may choose a refund or replacement property, or repairs.

Traditional voetstoots clauses that breach consumer rights to property that is of good quality, in good working order, free of substantial defects, and fit for its purpose, are prohibited to professional house sellers.

Inspect and disclose house defects

House sellers must specify property condition, regarding patent (visible) defects and latent (unknown) defects. If this clause is accepted by the purchaser, the seller will not be liable for disclosed defects. “We recommend that sellers and estate agents obtain detailed defects reports from home inspectors and attach these to the deed of sale.”

Parties have recourse to courts, or to a National Consumer Tribunal, ombud, consumer court (tribunals under provincial governments), alternative dispute resolution agent, or National Consumer Commission.

House marketing may not mislead buyers by exaggeration, innuendo or ambiguity regarding material facts. Sellers and estate agents must reconsider expressions like “dazzling, immaculate, secure, great investment”.

Hendrikse foresees that house inspectors would introduce standardised terminology to describe and rate house location, condition, age, security, plumbing, wiring, damp, insulation, and a host of other aspects.


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