Entering your dream home should be a joyous occasion, but when your haven starts leaking like a sieve during rainfall, frustration sets in. The question then arises: Can you hold the seller accountable?
The situation becomes clearer through a recent Supreme Court of Appeal case involving a flooded guest house. The buyers purchased the property for R1.3 million with ambitions to run a successful venture. However, their dreams were drenched when heavy rains triggered roof leaks merely three months after moving in. The resulting flood wreaked havoc on furniture, carpets, and other belongings, causing substantial financial losses. To cover repair expenses and compensate for lost income during the repairs, the buyers filed a lawsuit against the seller, ultimately winning an award of R240,000 in damages.
The foundation for their success rested on a legal principle: “fraudulent non-disclosure of latent defects.” To establish a claim under this principle, three elements must be proven.
- Firstly, the seller must have been aware of hidden defects at the time of the sale—defects not immediately visible to an ordinary purchaser upon inspection;
- Secondly, the seller must have intentionally concealed these defects;
- Thirdly, the seller’s aim should have been to induce the buyer into completing the sale.
In this case, the sellers knowingly concealed the compromised state of the roof, falsely reassuring the buyers about its condition. The court ruled that the seller’s actions amounted to deliberate non-disclosure, qualifying as fraud.
An alternative route for a claim is the breach of an “implied warranty.” This warranty automatically guarantees that the sold item—whether property or goods—is free from hidden defects. However, the “voetstoots” protection, often found in sale agreements, shifts the risk of latent defects to the buyer, stating that the property is sold “as is,” without any warranties. To challenge this protection, one can either prove fraud by the seller or invoke the Consumer Protection Act (CPA), where the CPA applies. The CPA normally does not apply to once-off “private” sales between individuals, and there are grey areas here, so specific legal advice is indispensable.
To ensure transparency in property transactions, sellers are now required to disclose all known defects through a mandatory disclosure form attached to the sale agreement. Meanwhile, buyers should exercise due diligence by thoroughly inspecting properties and obtaining expert reports for any concealed defects. With these precautions in place, both parties can aspire to smoother, leak-free property transactions.
For professional advice when purchasing a property contact Tracey Watson-Gill at Goldberg & de Villiers Inc. on 041-5019800 | email@example.com