In most agreements of sale of immovable property, such as a house, there appears the well-known “voetstoots” clause. The term “voetstoots” simply means “as it stands” which implies that the buyer purchases the property, together with its defects and cannot hold the seller liable therefore. Simply put, what you see is what you get and that includes what you don’t see.
The new Consumer Protection Act (“CPA”) determines that consumers have the right to receive goods that are free from defects and if the agreement of sale is subject to the CPA, the seller cannot rely on a “voetstoots” clause to avoid being held liable for any defects in the property, even those defects which the seller was unaware of.
Is this cause for all purchasers to jump for joy and sellers to run for the hills? Not necessarily…. The CPA only applies to transactions that are concluded in the ordinary course of the supplier’s business and furthermore, the CPA excludes legal entities with an annual turnover of more than R2 million from the definition of “consumer”. Thus, not all agreements of sale necessarily fall under the CPA and its protections for the purchaser against defects.
If the purchaser is a consumer as defined in the CPA and buys a house where the seller is, for instance, a developer, a builder, a speculator or an institutional investor with a property portfolio – then the seller will not be able to hide from defects in the property sold by using a “voetstoots” clause as the seller will be acting in the ordinary course and scope of his business as a service provider or supplier as defined in the CPA. In short, the sale transaction will fall under the CPA and protect the consumer-purchaser from the provisions of any “voetstoots” clause and the seller could be held liable for defects discovered after the sale.
On the other hand, where the seller enters into a once-off sale of his property, he does not qualify as a “service provider or supplier” in terms of the CPA and in such an instance, the sale will not fall under the provisions of the CPA and a “voetstoots” clause will be effective. This will be the case in many of the property sales between individuals buying and selling a house, even though an estate agent may be involved whose actions are regulated by the CPA.
Sellers take note however, the inclusion of a valid “voetstoots” clause does not necessarily provide a blanket indemnity as there are exceptions available that may provide a purchaser with relief in the event that defects are discovered after he takes possession of the property and that may entitle the purchaser to cancel the agreement of sale or claim a reduction in the purchase price.
Sellers should take care when including “voetstoots” provisions into any agreement of sale for their property and should obtain legal advice as to whether such provisions will be enforceable. Likewise, purchasers should be on the lookout for clauses which limit the liability of the seller and it would be prudent to obtain legal advice regarding such provisions before you enter into any agreement of sale.