Disclosure Form, voetstoots & who is liable when the defects show up
This is #5 in our short series of instalments on all the new things to bear in mind with the coming into operation of the Property Practitioners Act on 1 February 2022.
- The Property Practitioners Act, in section 67, states that a property practitioner must:
“(a) not accept a mandate unless the seller or lessor of the property has provided him or her with a fully completed and signed mandatory disclosure in the prescribed form; and
(b) provide a copy of the completed mandatory disclosure form to a prospective purchaser or lessee who intends to make an offer for the purchase or lease of a property.”
- In addition, the completed “mandatory disclosure form signed by all relevant parties” must be attached to any agreement for the sale or lease of a property.
- The section goes on to state that if such a Disclosure Form was not completed, signed or attached, “the agreement must be interpreted as if no defects or deficiencies of the property were disclosed to the purchaser.”
What does this mean for an estate agent?
- Apart from constituting a minor offence (for which the Authority may impose a R15000 penalty) for failure to comply with the Act, it also triggers potential liability for the estate agent to stand in for the purchaser’s losses that may result from the fact that the Disclosure Form was not provided (section 67(3)).
This would be the case where, for example, the estate agent decided not to bother with getting the form completed and nonetheless successfully negotiated the sale. Then afterwards, when serious pre-sale damage to a roof or other part of the house is established, the buyer may have a claim against the agent for losses incurred in repairing the damage.
Presumably, of course, the agent will only be held liable where (i) the buyer did not neglect also to perform his/her own inspection; and (ii) could not reasonably detect the damage on such inspection; and (iii) had the Disclosure Form been completed and furnished to the buyer, he or she would have been alerted thereto.
Does a voetstoots clause in the agreement change this or assist the estate agent?
The voetstoots clause is a provision in a sale agreement which stipulates that the purchaser buys the property from the seller as it stands and thereby indemnifying the seller against claims for damages in respect of defects on the property, whether patent or latent. A claim may exist in the hands of the purchaser if he or she can show that the seller knew of a latent defect, chose not to disclose it whilst knowing full well that it was an important factor for the purchaser in making a decision to buy and the amount of the offer.
- Clearly a voetstoots provision essentially involves the relationship between a seller and purchaser and will (generally) not involve the agent (unless the agent, in facilitating the sale, failed to respond honestly to the purchaser’s enquiries).
Don’t attract unwanted liability
The obligation to liaise with the buyer in providing the Disclosure Form therefore places an important new obligation on estate agents. Where an agent is presented with an instance where a buyer is unwilling to comply, it is best to speak to your conveyancer at STBB for assistance, to ensure that you do not open yourself to unnecessary financial liability.
For more information, contact us at firstname.lastname@example.org