When does a Property Practitioner run the risk of being held liable for remedying defects?

The Consumer Protection Act. (CPA) considers the Property Practitioner to be an intermediary in the property purchase agreement between a seller and a buyer of a property.

What is an intermediary defined as by the CPA in the case of a property transaction?

A person who, in the ordinary course of business and for remuneration or profit, represents a seller offering property for sale or represents a buyer purchasing property owned by a third party.

Thus, the Property Practitioner is considered a vendor who provides a service to the client.

When a listing and a selling Property Practitioner are involved in a transaction.

The listing Property Practitioner enters into a mandate agreement with the seller and the selling Property Practitioner facilitates the purchase agreement on behalf of the buyer.

If only one Property Practitioner is involved in a transaction.

In this case, the Property Practitioner performs a double fold service. He enters into a mandate agreement with the seller and mediates the purchase agreement on behalf of the buyer.

The responsibility of the Property Practitioner.

1) The mandate agreement with the seller.
The Property Practitioner is expected to engage in responsible marketing. In terms of the CPA, this means being honest in his/her dealings and respecting the consumer’s fundamental rights to full disclosure, equality, and privacy.

2) The contract of sale agreement between the seller and the buyer.
The property practitioner is obliged to inform the buyer of any latent defects of which he is aware, as well as of any other relevant aspects of the property before the potential buyer makes an offer on a property.

The onus of proof can put Property Practitioners in the hot seat.

What steps can an attorney take to claim damages in a hidden defects dispute?

The reality is that, in the case of a voetstoots purchase agreement, it can be very difficult to prove the seller’s liability. Did he knowingly withhold information about the defect or was he unaware of it? To what extent is he protected by the voetstoots clause? Did the property practitioner fulfil his obligation to identify defects and inform the buyer?

Attorneys tend not to want to sue the seller under the common law because it is not easy to prove liability, in which case they usually advise their clients to either sue the property practitioner under the CPA or refer the dispute to the Consumer Affairs Ombudsman.
This is permissible because the CPA argues that the Property Practitioner is providing a service not only to the seller but also to the buyer. By facilitating the contract of sale, the property practitioner is a service provider to the buyer. And if the consumer is not satisfied with the goods delivered, he has the right under the CPA to claim compensation.

The Property Practitioner is at risk here. If he/she is found guilty, he/she may be faced with a hefty fine.

(See our next article on how the Property Practitioner can protect the seller and the buyer)