A guide for consumers and sellers relating to property defects disclosures

A guide for consumers and sellers relating to property defects disclosures

"When a purchaser becomes the new owner of second-hand property, it is a case of "what you see is what you get and what you don't see, you also get." So, is the new law going to result in the disclosure of all defects prior to purchase, for example, the whole truth and nothing but the truth?

A property practitioner may not accept a mandate from a seller/landlord of a property without first obtaining a completed and signed mandatory Disclosure Form (DF). The DF is in a legislated prescribed format. The completed DF must be disclosed to all prospective purchasers and they may or may not decide to submit an Offer to Purchase based on the disclosures in the DF.

Its intention is to protect consumers in the property industry and therefore the common practice to provide a DF to purchasers has now been strengthened by this new law.

It is supposed to be a written record of defects in the property and also serves as reminder for the purchaser of the right to have the property inspected at their own cost. It is a checklist for the seller to disclose defects, especially the latent (not immediately obvious, hidden from view) defects that the seller may be aware of.

If the DF is not properly completed it may create problems later in the sale process or, even worse, after the change of ownership. The DF needs to be carefully and honestly completed and the property practitioner should assist sellers in this regard. Defects should be properly disclosed or properly fixed before sale to avoid disputes.

This new law may falsely raise the expectations of purchasers. Why?
The definition of defects in the DF is limited and the DF cannot be described as complete or comprehensive in any way. Is the DF a warranty or guarantee for the purchaser that there are no other defects? No, absolutely not.
Does it weaken the protection that the "voetstoots" (buying "as is" with all existing defects) clause offers the seller? No, assuming that the seller does not provide a guarantee or warranty elsewhere in the Agreement of Sale which conflicts with the voetstoots clause.

A property practitioner who accepts a mandate from a property owner without first obtaining a completed and signed mandate may be held liable by an affected consumer and face sanction in terms of this new law.

The DF does not apply to private sellers (unless the private seller is a developer).

Commercial property

Does the DF apply? Yes, definitely, even though it may be an administrative inconvenience for an owner where multiple agents may be mandated to sell or lease a property. It is a standard form so it simply needs to be completed once only and then circulated to all mandated agents.

Vacant land

Should it be completed? Yes, there may be boundary line, servitude or sinkhole issues.

You still have the right to use the voetstoots clause and benefit from its protection. Sellers will adopt the standpoint that they should not be made liable for any defects that they, the seller, are not actually aware of. You have always had a duty to disclose any defect which is not obviously evident.

Ensure that the clauses in the Agreement of Sale and the DF do not contradict each other.