Consumer Protection Act Protects Buyers from Defects

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The impending implementation of the Consumer Protection Act (CPA) will regulate transactions between suppliers providing goods and or services to consumers in South Africa. In the sphere of property transactions, it seems that whilst the Act will apply to estate agents, developers and property speculators who market or sell property in the ordinary course of their business, it will not apply to private sellers. One way in which property buyers, specifically those who purchase property from developers, will benefit from the CPA will be in the way that the Act challenges the ability of sellers to hide behind the voetstoets clause. Historically, the term "buyer beware" was apt in describing the risk buyers assumed when purchasing a property. The property was sold "voetstoets" which means "as is". This clause protected sellers from the onerous responsibility of providing comprehensive information to the buyer regarding the condition of the property. If, after moving in, the buyer found that the roof or swimming pool leaked, for example, the buyer would have little or no recourse against the seller for non-disclosure as the seller could simply hide behind the voetstoets clause claiming that the property was sold "as is". The only exception being if the seller knew about the defects and fraudulently misrepresented the state of the property to the buyer. Even though most sale agreements will fall outside the application of the CPA, the business and conduct of estate agents, as suppliers of a service will always fall within the ambit of the CPA. Under the new law, there will be a larger responsibility on estate agents to make detailed enquiries regarding the condition of the property and to disclose those defects they are aware of. If not, buyers will have legal recourse and be able to claim compensation. The CPA also sets out to balance the playing field between savvy suppliers, such as estate agents and developers, and naive consumers. Sole mandates and sale agreements are usually pre-printed standardised agreements incorporating legal jargon. Many consumers do not clearly understand the terms of these agreements and do not feel comfortable at the point of purchase to ask questions or make changes. As a result, they often put pen to paper with few or no changes, sometimes to their detriment. Under the new Act, estate agents will be obligated to use plain and understandable language in their agreements and ensure that consumers have a clear understanding of the legal implications before signing. Some of the other implications of the Act include the obligation of suppliers to provide goods and services at fair prices and on fair terms and to provide express notice if any terms of the agreement limit the risk of the supplier or assign risk to the consumer. The rights bestowed by the Act on the consumer include the right to cancel a mandate within 5 days of contracting if it was procured by the agent via direct marketing methods and the right to return defective goods or property (hence the anticipated conflict with voetstoets). I think that the CPA is a positive step forward in that it promotes transparency and helps to protect consumers from exploitation and unfair marketing and business practices. The implication of the Act is still subject to interpretation and will only become concretised once the courts start setting precedents by ruling on matters under the new law. Our RE/MAX Address offices have already begun adapting business practices in anticipation of the new Consumer Protection Act. Gareth Bailey, RE/MAX Address Property Group (KZN Property Guide, Sunday Tribune, 20 March 2011)