Selling a Property with Defects: An Analysis into the Voetstoots Clause

Disputes regarding property defects oftentimes arise during or shortly after transfer into the names of the Purchasers have taken place. This can be a frustrating experience for all parties involved, especially if you are not aware of your rights and obligations towards the other contracting party. The aim of this article is to educate prospective Sellers and Purchasers on the different types of property defects that exist as well as who is responsible for attending to these defects. This article will pay special attention to the Voetstoots clause, and the instances in which a Seller is not protected under this clause.

There are two types of property defects, namely latent and patent defects. A patent defect is not hidden and is usually obvious to the naked eye during a reasonable inspection of the property. Patent defects may include broken windows, damaged floors or leaking taps. In these instances, the parties can discuss the options of who will attend to the repairs. It can be negotiated between the parties that either the Sellers repair the defect, or they reduce the purchase price to enable the Purchaser to do the necessary repairs.

A latent defect is not readily revealed by a reasonable inspection of the property. Typical examples of latent defects are leaking roofs, dampness and/or structural defects in the foundation and faulty geysers, to name but a few. Buyers will often only discover these defects months, or even years after living in the property. Thus, should the latent defect matter trigger a dispute between parties, the common law position is as follows:

• If the Seller gives the purchaser an express written warranty that the property is sold free from any defects, and after the sale is concluded, the purchaser confirms that there is a defect, the Seller can be held liable for the repairs. For example, if the Seller declared in the agreement of sale that the roof does not leak and after the sale the Purchaser experiences leaks in the roof, the Seller is held liable as there has been a breach of contract.

• If the Seller misrepresents to the Purchaser regarding the property’s condition, the Seller can be held liable. For example, if the Seller is aware that the roof leaks and does not declare the same to the Purchaser, the Seller can be held liable, and the sale can be set aside, or the Purchaser may proceed with the sale and claim a reduction in the price for the damages.

One may ask, but what if the Seller did not know about the latent defect? The answer is yes, the Seller can be held liable if the latent defect existed when the sale was concluded between the parties. But why is there a voetstoots clause in the sale agreement, which is supposed to protect the Seller by informing the Purchaser that they are purchasing the property as-is (voetstoots)? The voetstoots clause does not protect the Seller and does not exclude the Seller’s liability if the misrepresentation is proven; hence if the Seller was aware of the latent defect and did not disclose same to the Purchaser, the Seller can be held liable.

The Consumer Protection Act, which came into effect on the 1st of April 2011, states the Purchaser has to be informed of all details regarding the property that they are purchasing. Once the Seller expressly states what condition the property is in and the Purchaser expressly accepts the current state of condition of the property before purchasing the property, the implied warranty of the property’s condition falls away. The effect of the CPA has been that the voetstoots clause does little to protect the Seller when it is comes to defects; hence the Seller is urged to declare all defects of the property to the Purchaser before concluding a sale agreement.

In the matter between Maloka v Vermeulen and Another the High Court confirmed that sellers who are aware of a latent defect are not protected by the voetstoots clause.

The facts of the case were as follows:

The Plaintiff approached the Court for an order granting her a reduction in the R2.3 million selling price of the property she purchased, with an additional order demanding the sellers pay for repairs done to the property. The Plaintiff viewed the property with an estate agent but was unaware of a damp problem which affected the bedrooms, kitchen, dining room, and other parts of the property. The Plaintiff said that she had noticed bubbling and peeling of the wall paint, especially in the main bedroom. She approached the sellers directly to enquire about the affected area, who said that there was no damp problem at the property.

Shortly after, but before the purchase of the property, Plaintiff noticed that the damp on the walls had been repaired. Upon moving into the property, Plaintiff noticed the true extent of the damp issue, with the discolouration of the carpets and the smell of damp evident. The sellers denied that they were aware of a damp problem and that the house was sold to her “voetstoots” in any event. They also denied that she had approached them regarding the damp problem.

An expert witness at the trial testified that the defects shown in their report were all caused by incorrect design and construction of the property and that the inherent damp issue manifested itself soon after the first year of rains on the property. The expert witness believed that the sellers knew about the damp problem.

The Court said that the damp problem was a latent defect of the property and that the sellers must have known about the issue. The Court also found that the sellers’ failure to inform the purchaser of the defect was equivalent to deliberately withholding knowledge of the damp issue, which could be seen as fraudulent non-disclosure on the part of the sellers.

Ultimately, the sellers were not protected by the voetstoots clause and were ordered to pay just under R415,000 to the purchaser – in line with a quotation given by a contractor to fix the problem.

A note for Sellers

Don’t just assume that prospective buyers will find defects themselves, especially because certain latent defects cannot necessarily be seen by the naked eye. It is also important to note that the voetstoots clause is not a foolproof defence, and it is advised to not rely on it too heavily as it will not automatically protect you from liability. Avoid all doubt by thoroughly inspecting your property, annex to the sale agreement a written list of all defects you find or know about, then get the buyer to sign it in acknowledgment.

Disclaimer

This article is intended for general information purposes only and is not intended to stand alone as legal advice. Always consult a qualified property law practitioner on any specific problem or matter.