In the process of trying to ascertain a home or any other property of significant value, one might come across the common law term “voetstoots”, whether it is uttered by a hasty estate agent or hidden in a lengthy purchase agreement. In this article we shall address the essence of the term “voestoots” and how it relates to the Consumer Protection Act 68 of 2009 (‘CPA’).
When an individual says they are selling property “voetstoots”, they are essentially saying that they are selling the thing “as is”, whereby what you see is what you get. In other words, they are absolving themselves from any liability should any latent or patent defects present themselves. By including this clause the problems that persisted at sale become the purchaser’s problem and no longer the sellers.
To an extent the CPA has limited the application of the “voetsoots” clause by stating that “service providers or suppliers” cannot rely on the clause to avoid liability for defects they were aware of. Thus, at first glance the CPA seems to eradicate the purport of the “voestoots” clause, however this only holds truth where transactions find application under the CPA. There are two important provisos.
The first is that the CPA only applies to transactions which are concluded in the ordinary course of the suppliers business. In other words, a company which ordinarily trades in property will not be able to rely on a “voetstoots” clause to avoid liability for any defects in property sold. However, a once-off private seller can still validly rely on the clause.
Second, where the purchaser or “consumer” is an entity with an annual turnover of more than R 2 million, the CPA shall find no application. Entities of this kind are presumed to have the resources to adequately protect their interests.
It is important to appreciate that even when a “voetstoots” clause seems to be validly included in a sales agreement, it does not wholly indemnify the seller. In certain instances the purchaser may still be entitled to some form of relief if a defect is later discovered. Relief might come in the form of a price reduction or the cancellation of the purchase agreement.
The CPA includes ‘an implied warranty of quality’ from the seller, in any transaction that falls within its ambit. Thus the seller will be presumed to be transferring property free from any defects. The only means of ensuring that the presumption does not apply is to explicitly disclose all defects or potential defects, to which the purchaser must expressly agree to. Put differently, the purchaser must be placed in a position whereby they may make an honest assessment in negotiating the purchase price or whether to purchase at all.
It is therefore important that the purchaser of any property seek the requisite legal advice when coming across clauses of this nature in the process of concluding purchase agreements or sellers in seeking to include such terms. Obtaining legal advice in this regard is pertinent in limiting unnecessary financial risk.
Fezile Nqiwa | Candidate Attorney | Banking & Finance Law
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)