Hidden defects could be doom and gloom
When looking for a new home, more often than not, home buyers tend to be so exicited with what's on the outside that they give little or no thought to a closer inspection.
Before you know if you have signed the agreement and the property is yours. But what about all those defects you didn't see during your first - or even second - visit.
Although it's the law that home sellers have to be up front about defects, it's amazing what a coat of paint will cover up and you will only start noticing problems six months down the line - when it's too late for recourse.
Buyers who only complain of defects some months after registration of transfer has taken place occasionally exasperate sellers and Estate Agents. There are two issues here. Firstly the discovery of defects that only appear later. For example, a Buyer may only experience a major roof leak when the first summer rains appear long after registration. If it can be shown that the Seller knew or must have known about the leak and consciously failed to disclose it, the Buyer can sue him for his repair costs.
The second issue concerns a delayed discovery of defects by the Buyer. For example he may only first complain about a wall crack six months after taking occupation. It will be very hard to prove that the Seller knew about a defect which the Buyer himself took so long to discover or that the defect existed at the time of the sale. In such cases the Buyer will have no recourse against the Seller.
Every sale agreement of a normal residential property will contain a voetstoots clause freeing the Seller from any liability for patent and/or latent defects, which the Buyer may later find when taking occupation of the property. It is important to know what the effect of such a clause is and to what extent it protects the Seller.
The meaning of "Voetstoots"
The word voetstoots generally used to effectively describe, in just one word, the action of buying something as is, that is just as it stands in whatever condition it is - warts and all. It is essential to all sales of property purchased second hand which may well have deteriorated through normal wear and tear or which may be defective to some extent as a result of its constant use or through natural decay over a period of time.
Its basic purpose is to shield the Seller from any action by the Buyer, on discovering any defects he was not aware of
when purchasing the property, from doing anything to jeopardize the actual sale contract.
Patent and Latent defects
A voetstoots clause at face value discharges a Seller from liability for all patent and latent defects. Before looking at how far this protection goes it is important to explain the distinction between these two different types of defects.
Patent Defects are flaws that will be clearly visible on a normal inspection of a property. They include wall cracks, sagging gutters, broken windows, missing tiles and the like. It is a Buyer’s duty to acquaint himself with the general condition of a property on purchasing it and he cannot later claim he did not see such defects. The test is an objective one, namely what could have been seen on the original inspection of the property.
Latent Defects are faults that are not immediately obvious and are hidden from view. These include faulty pool pumps and geysers, rusted internal pipes, leaking roofs (except where strain marks make the leak obvious) and defects that have been concealed such as dampness behind a cabinet. The test is what could not normally be seen on inspection
A voetstoots clause completely liberates a Seller from any liability for patent defects. This exemption is not absolute in the case of latent defects, however.
The seller’s responsibility
In terms of numerous South African court cases a Seller is only excused from liability for latent defects where he himself was not aware of the problem at the time of the sale. If a Seller knowingly conceals a latent defect he will be liable to the Buyer for the cost of its repair. In such a case he cannot rely on any clause in the original contract making no warranties as to the condition of the property.
A Seller will thus be liable for all cracks or dampness and other similar faults deliberately hidden from view. He is also responsible for latent defects which he is presumed to have been aware of, such as any appliance, which is not functioning properly. Examples are geysers delivering only lukewarm water, defective electrical points, and the like.
The buyer’s recourse
It is very important for a Buyer to know what his rights are in such cases. By law he cannot do any of the following:
He cannot obtain a quotation and deduct the cost of repairs from the purchase price and tender a lesser amount (or reduce his deposit);
He cannot refuse to pay occupational rental or any portion thereof unless the defective article seriously restricts occupation of the property;
He cannot repudiate or cancel the sale contract.
It is he, and not the Seller, who will be in breach of contract if he takes any of these actions. By law his proper recourse is to institute an action for damages and sue the Seller. This will obviously not appeal to the Buyer and the best way to resolve the problem is to ask the Conveyancer doing the transfer to settle the matter amicably with the Seller. Ideally he should arrange a refund of the costs of repair to the Buyer on registration of transfer. It is in the best interests of both parties to agree to this.
WARRANTIES AND MISREPRESENTATIONS
Many Buyers think that a deliberate non-disclosure of latent defects constitutes a fraudulent misrepresentation on the Seller’s part and that they can cancel their contract. This illusion is quite common. Without a voetstoots clause such a contract might well be repudiated as the failure to disclose known latent defects would constitute a deliberate contractual misrepresentation on the Seller’s part.
South African courts have consistently held the view, however, that the inclusion of a voetstoots clause overrules any question of contractual misrepresentation by the Seller and the Buyer accordingly cannot cancel the sale on the grounds that the property purchased has been found to be worth less than the price offered. He is deemed to have purchased it as is, defects and all, and his rights are confined to an action for damages. The non-disclosure is only regarded as a delictual misrepresentation.
What, then, if a clause in a sale contract whereby the Seller guarantees the condition of any item or that it is functioning properly, only for the buyer to discover otherwise. In this case the Seller has made an express warranty and the Buyer can refuse to take transfer until the defects arc properly repaired at the Seller’s expense. Alternatively the Buyer can sue for a reduction in the purchase price, an action known as actio quantum minoris.
Other issues affecting defects
There are two other important issues that also need to be covered as they often affect sales of immovable property.
Defects caused after a sale
Who is responsible for damage done to a property after a sale contract has been signed but before registration of transfer takes place’? For example, a negligent motorist might smash the front wall of the property or a geyser might suddenly burst, flooding the house and damaging its fitted carpets. Responsibility will lie as follows:
On the Seller if the contract makes him liable for the risk in the property until registration of transfer (as is the case inmost contracts);
On the Buyer if the risk falls on him from date of sale or occupation (as in terms-sale contracts where transfer is delayed for more than a year);
On the Buyer if he causes the damage while in occupation. lie will be liable even if he only uncovers a latent defect, such as causing a rusted pipe under a sink to break when trying to fit his washing-machine connection to it.
Estate Agent's Responsibility
Far too many Buyers want to hold their Estate Agents liable for latent defects they only discover sometime after the sale has been concluded. This is particularly the case where a defect has only been discovered months after the transfer has been registered and the Seller can no longer be traced. An Estate Agent is only obliged to inspect the property for obvious patent defects, to enquire from a Seller as to what known latent defects exist, and to then disclose them before signature to the Buyer.
Once having done this the Buyer’s recourse is against the Seller alone. Often a Seller, on being challenged about an undisclosed latent defect, will falsely claim that he had informed the agent about it prior to the sale. A Buyer’s recourse will inevitably rest against the Seller alone and the Estate Agent should not be harassed in any way.
If you are in the market to buy a new home, enlist the services of a professional home inspection service to look at the property before signing any agreement of sale. Even if the property is too good to miss out on - you can make the offer to purchase subject to an inspection report.