In transactions involving the sale of immovable property, the discovery of a defect by a purchaser after signing a sale agreement is commonplace. From a faulty pool pump to a leaking roof and mouldy cupboards, discovering – and repairing – property defects is a less pleasant element of the property transfer process. In light of the ubiquity of property defects, this article explores how this aspect of the transaction is assessed and managed by a skilled and experienced conveyancer.
According to section 67 of the Property Practitioners Act, estate agents are required to procure a completed Immovable Property Condition Report (‘the report’), which is annexed to the sale agreement, from the seller. Designed to safeguard purchasers from fraudulent or misleading representations by the seller or their agent, the report mandates full disclosure of all property defects to the purchaser at the time of the sale. Generally, the report includes eleven statements concerning the condition of the property, to which the seller must respond by marking ‘yes’, ‘no’, or ‘not applicable’. The statements range from whether the seller has actual knowledge of defects in the roof, electrical installation, or septic tank, to knowledge of boundary line disputes, and the heritage status of the buildings on the land.
In practice, however, it is not feasible to list every defect at the point of sale. Typically, undisclosed defects are discovered by purchasers when they take occupation of the property, which occurs on or prior to the registration of the transfer of ownership. In these instances, a conveyancer is required to evaluate each defect and facilitate a speedy resolution for all parties.
A defect may be classified as patent if it is visible to the naked eye and thus reasonably discoverable at the time the sale is concluded. Wall cracks, shattered windows, broken ceiling fans, and missing tiles are patent property defects. Since purchasers have a duty to properly inspect the property before entering into an agreement, they cannot reasonably claim that they were unaware of any patent defects at the point of sale.
Contrastingly, latent defects are not reasonably detectable to non-experts prior to signature, and include faulty geysers and rusted pipes. Usually, purchasers complain of leaking roofs, damp, and rising mould – especially in winter. In these instances, the onus is on the purchaser to prove, on a balance of probabilities, that the seller was aware of the defect at the time of the sale and fraudulently concealed the defect from the purchaser.
Crucially, sellers who sell their property voetstoots or ‘as is’, with all patent and latent defects, cannot escape liability for the fraudulent non-disclosure of a defect. This applies to agent-assisted sales, too. Nevertheless, proving this subjective element is rather difficult. Instead, the parties are generally encouraged to settle and avoid costly litigation, depending on the nature and extent of the defect.
During the transfer process, purchasers often discover defective fixtures and fittings, such as faulty ceiling fans or hobs. Disputes are easily avoided by incorporating a clearly worded clause in the sale agreement specifying that all fixtures and fittings are in working order on the date of transfer. Relatedly, purchasers might complain that compliance – in respect of electrical installations, gas, plumbing (where applicable), or electric fencing – is not in order despite the seller being issued with valid compliance certificates. This issue is best resolved through consultation with the compliance contractor who is required to remedy the problem at the seller’s cost.
Sometimes, damage is sustained at the property after the conclusion of the sale but before transfer occurs. For example, a burst geyser, storm damage, or damage emanating from a burglary. In these scenarios, risk in and to the property shifts from the seller to the purchaser on the date of registration of transfer. However, the purchaser may elect to take early occupation and possession of the property. In this case, risk passes to the purchaser prior to transfer. In all other instances, the risk remains with the seller who is required to evaluate whether the claims are covered by insurance. Nevertheless, any damages sustained must be remedied by the seller – and at their expense. To avoid costly delays, the transfer may move forward. In the interim, a conveyancer will retain a portion of the proceeds from the sale of the property while the insurance claim is finalised and or remedial work is conducted.
Ultimately, property defects discovered post-signature are best assessed and resolved by an experienced and skilled conveyancer who is best-placed to consult with the seller, purchaser, and estate agent.
At STBB, we endeavour to make the transfer process as seamless and stress-free as possible for all parties. For all your property-related needs, contact us today at info@stbb.co.za.
The author previously provided this article for publication on an online platform.
