Author: Rowan Alexander
Director: Alexander Swart Property
3 November 2017
When does the Consumer Protection Act apply to property sales?
The wave of publicity that accompanied South Africa’s widely-praised Consumer Protection Act has in some cases led buyers (consumers) to believe that they are afforded a blanket protection covering every commercial transaction in which they are involved.
Rowan Alexander, Director of Alexander Swart Property, says, however, that in property dealings most transactions do not fall under the Consumer Protection Act.
One such is the sale of a residential property by its owner by means of a private treaty, i.e. with a standard Deed of Sale. In these cases, Alexander says the agreement is not covered by the Consumer Protection Act because legally the seller is not classified as a ‘supplier’.
Alexander says this can lead to considerable frustration for buyers who have possibly neglected to inspect the property they are about to purchase thoroughly, believing that they will be fully protected by the act. Later they find that the property may have one or two serious defects, but they then discover that the seller cannot be held responsible for these.
Properties which are sold by investors, speculators, traders, builders and developers “in the ordinary course of business” are, however, fully protected by the Consumer Protection Act. One effect of this is that a ‘voestoots’ (as it stands) clause cannot be applied, even if it appears in the sales contract. In these cases defects will be deemed to be the seller’s responsibility, and they will have to put them right or pay compensation.
In most property transactions, including those by private treaty, Alexander says a third party, the agent, is involved and their actions are subject to the Consumer Protection Act where he or she has provided a professional service.
If it can be shown that he or she deliberately withheld information or misled the client in any way, they can be held liable – and be made to pay penalties. Their misconduct will be recorded in perpetuity by the Estate Agency Affairs Board (EAAB) because it has contravened their Code of Conduct.
The original article can be viewed here: