Legal Update - Voetstoots and the Consumer Protection Act
Since the promulgation of the Consumer Protection Act on 1 April 2011 (CPA) there has been debate as to whether the voetstoots clause is permitted by the CPA. This article serves as an argument in the first instance that the CPA does not apply to the vast majority of residential immovable property sales and in the second instance that if the CPA is applicable, the inclusion of a voetstoots clause is not prohibited.
WHAT DOES VOETSTOOTS MEAN
This term means that property is sold ‘as it stands’ or ‘as is’. The ‘voetstoots’ clause as it is commonly known, is found in most agreements of sale of immovable property. An example of the wording of a voetstoots clause is as follows:
The Property is sold voetstoots in the condition in which it stands and the Seller gives no warranty with regard thereto, whether express or implied.
EXCLUSIONS FROM THE CONSUMER PROTECTION ACT
The CPA contains various limitations and not all sales of immovable property are covered by this legislation. One of the central exclusions is to be found in the definition of a “transaction”. A transaction only falls within the CPA if that transaction is within the “ordinary course of business” of the supplier of the goods sold. In other words a sale of immovable property is a “transaction” for the purposes of the CPA if that sale is made in the “ordinary course of business” of the seller of that property. The effect of this exclusion is that where immovable property is sold by a person whose usual or ordinary business is not the sale of immovable property, that sale will not be protected by the CPA at all as the CPA would not be applicable. The clearest example of this is where a residential home owner sells his property.
WHAT IF THE CPA DOES APPLY
Chapter 2 of the CPA contains a series of fundamental consumer rights. One of those rights is the consumers right to safe and quality goods. This right includes the right to receive goods which are suitable for the purpose generally intended, of good quality, in good working order and free of any defects In making a determination as to this right, regard must be had to all circumstances including the manner in which the goods were marketed. The provisions of this clause do not apply where the consumer:
- has been expressly informed that the particular goods were offered in a specific condition; and
- has expressly agreed to accept the goods in that condition, or knowingly acted in a manner consistent with accepting the goods in that condition.
In other words, if the consumer is aware that the property is sold in the condition in which it stands at the date of sale and where the consumer has an opportunity to inspect the property, it is argued that this exception permits the continuation of the voetstoots clause. It is suggested that under these circumstances the Purchaser must be made to thoroughly inspect the property and the Seller is to provide the Purchaser with a comprehensive defect list which should be annexed to the sale agreement. It is further suggested that the following clause, which should be highlighted, be included in the agreement for the sale of immovable property.
VOETSTOOTS (IN THE CONDITION THAT THE PROPERTY STANDS ON DATE OF SALE)
The Purchaser records that s/he understands that the Property sold in terms of this offer to purchase has been offered for sale by the Seller in the condition in which it stands on the date this agreement is signed. The Purchaser records that s/he has had an opportunity to inspect the Property. The Purchaser specifically agrees to accept the Property in the condition in which it stands as at the date this agreement is signed.
Source: Schindlers Attorneys
Courtesy - The EAAB Estate Agency Affairs Board