By Bryan Hack
Since the dawn of settled civilization, humans have constructed homes and engaged in their sale. In bygone eras, upon purchasing a property only to discover a leaky roof during the initial rains, if such issues were not disclosed by the seller, conflict would ensue between buyer and seller, whether they were royalty engaging in warfare or common folk settling disputes in town squares.
Influence of the law
By the time of the Roman civilization and the codification of the law of property it was recognised that a seller had an obligation to disclose any known defect in the object being sold, which would not, by mere inspection, be visible to the buyer. This is of course the much debated “latent “ defect.
These Roman law principles were adopted and incorporated into Roman Dutch law and ultimately into our common law as applied in South Africa.
Latent defects
This concept of liability for latent defects, however, has in the course of time occupied the minds of our courts regularly. This is due to the difficulty of determining exactly when a defect is latent and when the seller would be liable for failing to disclose the defect.
The courts have developed numerous criteria and guidelines over time. This is consistent with our common law’s character as a living, evolving and developing body of law. In SA, however, Parliament has steadily intervened in an attempt to clarify, and to a degree, codify the requirements upon which not only a seller but also his agent can be held liable. In the first instance the Consumer Protection Act placed obligations on agents to be diligent in making enquiries about possible defects before marketing a property.
A more stringent provision is now also embodied in the Property Practitioners Act, No 22 of 2019 which came into effect on 1 February 2022. The act provides in Section 67, 68 and 69 various provisions to ensure that a seller discloses all known material defects in the property. It also places stringent obligations on agents (now defined as property practitioners) to obtain a fully completed disclosure form as prescribed in the Regulations before accepting a mandate to sell or rent a property. A copy thereof must be provided to a prospective buyer or seller, and it must ultimately also then be attached to an agreement of sale or lease.
The act provides further that if no such form is provided it will be accepted that no defects were disclosed. Should a defect then be discovered there will be no protection, such as a reliance on a voetstoots clause, for the seller or the practitioner if the buyer claims from them his or her loss.
This act is a salient addition to our law of property and any seller or practitioner who fails to comply with the provisions of the act places themselves in peril. This is a significant advancement in the development of our consumer protection law.
The emphasis has changed from ‘buyer beware’ to ‘seller beware’. Be careful of the ramifications of this new Act.
Bryan Hack is an admitted advocate at the High Court of the Western Cape and a member of the Cape Bar. He is experienced in property and other contractual matters. For questions, email him at hack@capebar.co.za
A view by CDH Legal
in a public document entitled The Property Practitioners Act unpacked: Mandatory disclosure forms, the esteemed legal firm (www.cliffedekkerhofmeyr.com) advises as follows:
Section 67 of the Act obliges property practitioners to obtain a “disclosure form” from a seller or lessor before concluding a mandate, and to provide it to a purchaser or lessee before making an offer.
The disclosure form is a standard template document prescribed by the Act. The disclosure form must be signed by all parties and attached to the sale or lease agreement
What are the implications of section 67(1), which provides that a property practitioner may not accept a mandate where there is no fully completed and signed disclosure form?
Circumstances may arise where a seller or landlord lives abroad and may, on this basis, refuse to complete such a form, as the condition of the property is simply not within their knowledge. The language of section 67(1)(a) is clear. It says that the property practitioner must not accept a mandate unless they have received the duly completed and signed disclosure form.
What then are the associated risks in accepting a mandate without a fully completed and signed mandatory disclosure form, notwithstanding the prohibition in section 67(1)(a)? Regulation 38 states that a breach of section 67(1) constitutes a minor penalty of R15,000. The bigger issue, however, is the potential personal risk for the property practitioner in terms of liability for defects in the property.
