Selling a property with defects: What you need to know.

The purchaser signs an agreement of sale with the seller. The property is transferred into the purchaser's name. A month later, there is heavy rainfall, and they realise that the roof is leaking. Is the seller liable to repair the roof or the purchaser, as the new owner?

To understand which party is liable, one must appreciate the difference between latent and patent defects. A latent defect is not visible or can be discovered when inspecting the property. This type of defect impairs the use and enjoyment of the property. Typical examples of latent defects are leaking roofs, dampness and/or structural defects in the foundation, to name but a few.

On the other hand, a patent defect is visible when inspecting the property. Hence, the parties can discuss the options of who will attend to the repairs. The same may be negotiated between the parties, be it the seller who repairs the patent defect or reduces the purchase price for the purchaser to repair.

Thus, a latent defect matter may trigger a dispute between the parties should it arise. The common law position is as follows:

If the seller gives the purchaser an express written warranty that the property is sold free from any defects, and after the sale is concluded, the purchaser confirms that there is a defect, the seller can be held liable for the repairs. For example, if the seller declared in the agreement of sale that the roof does not leak and after the sale, the purchaser notices leak in the roof, the seller is held liable as there has been a breach of contract.

But why is there a voetstoots clause in the sale agreement, which is supposed to protect the seller by informing the purchaser that they are purchasing the property as-is (voetstoots)? The voetstoots clause does not protect the seller absolutely and does not exclude the seller's liability if the misrepresentation is proven; hence if the seller was aware of the latent defect and deliberately concealed the defect from the Purchaser, the Seller can be held liable.

It is important to note that although a Seller may be held liable for defects in a Property, only a court of law can make this determination and the buyer would have to seek their own independent legal advice in making a claim for damages due to defects.

It is further important to note that in terms of the Property Practitioner's Act 22 of 2019, a Seller is obliged to complete a Mandatory Disclosure Form when selling their Property through an Estate Agent. This serves as a valuable opportunity for the Seller to disclose any defects in the Property and avoid potential disputes either during or after the Transfer process and also gives clarity to the Buyer on any potential defects in the Property they should be aware of.

Extract From NGL Attorneys