Voetstoots clause: Legal implications when buying or selling immovable property
Buying or selling immovable property is one of the most important financial decisions a person can make, therefore being well-informed is critical, more so if the agreement in respect of the property contains a voetstoots clause.
Originating from Roman-Dutch law, the term, ‘voetstoots’, translates as: “testing something by shoving it with one’s foot”. Simply put, the term effectively signifies that something is sold "as is". Consequently, the voetstoots clause in a sale agreement essentially states that the purchaser shall buy the property “as is” from the seller, exempting the seller from any claims for damages by the purchaser arising from any defects in the property, whether patent or latent. There are however certain exceptions to the liability a seller could face, especially in terms of latent defects, which will be discussed in more detail below.
When interpreting this clause and any damages which have arisen in a property subsequent to a sale, it is important to distinguish between “patent defects” and “latent defects”.
A “patent defect” is a defect that is visible to the eye or easily identified by a reasonable person upon inspection of the property prior to the purchase thereof. Examples of the aforementioned include wall cracks, sagging gutters, broken windows and missing tiles.
A “latent defect” on the other hand is a defect that is not apparent upon ordinary inspection of the property by a reasonable person. Latent defects to a property may include, inter alia rising damp, faulty pool pumps or geysers, rusted internal pipes and leaking roofs. If defects are identified by a purchaser or are known to the seller, these defects must be disclosed, in writing, by the seller in a disclosure document - or an immovable property condition report, which can either form part of the sale agreement or be attached as an annexure to the sale agreement.
It has been ruled by our courts that a seller cannot rely on the voetstoots clause if the seller was aware of a latent defect and knowingly concealed or neglected to disclose it with the intention to mislead the purchaser. This position was confirmed in Odendaal v Ferraris 2009 (4) SA 313 (SCA), wherein the court held that ‘it is trite that if a buyer hopes to avoid the consequences of a voetstoots sale, he must show not only that the seller knew of the latent defect and did not disclose it, but also that he or she deliberately concealed it with the intention to defraud.’ Contrastingly, if the defects are brought to the attention of the purchaser, the purchaser cannot go back and claim from the seller for damages arising from them if they do not object to them in the disclosure document.
Additionally, the Consumer Protection Act (‘CPA’), which took effect on April 1, 2011, has added further legal requirements as regards to the concept of voetstoots, but it is important to note that in respect of property sales, the CPA only applies to agreements “made in the ordinary course of business” by a developer who supplies products (property) to a purchaser.
The CPA states that when a company buys and sells property in the ordinary course of its business, it is not permitted to include a voetstoots clause in the sale agreement when selling to a customer. As a result, a property developer cannot utilize a voetstoots clause in their sales agreement to avoid liability for defects in the property. However, if the same developer sold his own home, the transaction would be exempted from the CPA because the developer would not be doing so in the ordinary course of business.
Section 55 of the CPA furthermore provides that a purchaser is entitled to receive property that is reasonably suitable for the use for which it is generally intended, is of good quality, in good operating order, and free of defects. The property must also be usable and maintainable over a reasonable period of time. Therefore, according to the CPA, a seller must specifically inform a buyer that the property is being offered in a specified condition, and the buyer must expressly agree to accept the property in that condition. The CPA also includes an implied quality warranty in contracts, as well as alternatives for repair, replacement, and refund but this does not always mean that the whole amount of damages will be reimbursed.
It is important to note that even if the sale is by developer who is selling in the ordinary course of its business, the CPA will not always apply. This is because Section 5(2) of the CPA clearly states that the Act will not apply to a transaction if the purchaser is a juristic person with an asset worth or annual turnover of more than R2 000 000.00. Thus, a voetstoots clause may be included in a sale agreement between a seller and a juristic entity purchaser whose annual revenue exceeds R2 000 000.00 as such agreements are not regulated by the CPA.
In conclusion, the mere presence of a voetstoots clause in a sale agreement does not absolve a seller of liability. As stated previously, the purchaser should thoroughly inspect the property for all patent defects and identify them prior to the conclusion of the agreement; otherwise, if a voetstoots clause is included, the purchaser will have no recourse against the seller for such defects. However, the seller has an obligation to disclose to the purchaser any latent defects of which he/she is aware, failing which he/she risks being sued by the purchaser in that they may seek a refund of part of the purchase price or even the entire sale, depending on the nature and extent of the defect.
When purchasing a property, it is always in the purchaser’s best interest to act with prudence by hiring a professional to inspect your prospective home or to personally inspect the property thoroughly with the aim of identifying any defects before the conclusion of a sale agreement. Same is inevitably preferent to rushing through the conclusion of a sale agreement whilst your judgment is clouded by excitement, wherein you are simply left to endure regret at a later stage.
For more information kindly email us on info@hjw.co.za.
Written by Cathleen van der Walt
This article is provided for informational purposes only and should not be substituted for legal advice on any specific matter. Any opinions expressed herein are subject to the law as at the time of writing and will change in accordance with any change in the law. We recommend that you contact HJW ATTORNEYS at info@hjw.co.za directly for advice applicable to your specific matter.