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March 14, 2015

Is an estate agent liable to a buyer for defects?

What is the legal position if a house has defects, such as rising damp? Can the buyer look to the seller and/or the estate agent?

Although the courts must still rule on this, I believe that there may be an action against the agent.

Option 1 (My opinion – the courts still must test this):

An estate agent is bound to the CPA as:

1.      an estate agent “promotes or supplies goods or services in the ordinary course of business”; and

2.      an estate agent meets the definition of an “intermediary” - a supplier who “in the ordinary course of business and for remuneration or gain, engages in the business of representing another person with respect to the actual or potential supply of any goods or services; accepting possession of any goods or other property from a person for the purpose of offering the property for sale; or offering to a consumer, soliciting offers for or selling to a consumer any goods or property that belongs to a third person, or service to be supplied by a third person”.

Accordingly, an intermediary (the agent) cannot avoid the provisions of the CPA by relying on the mandate agreement it has with the owner of the property (the seller) – an intermediary is NOT accessory to the underlying mandate agreement.

For example, should a defect arise on immovable property, section 54 allows the buyer to receive a reasonable portion of the purchase price as compensation, or section 56 allows the buyer to choose whether the goods should be fixed or replaced. I believe that the buyer has a claim against the estate agent as the supplier and the seller, jointly and severally.

Option 2 (should the CPA not apply):

There is a common law remedy called the actio empti – which gives the buyer a remedy to enforce his/her rights against the seller. This remedy allows him or her to claim damages as the property was delivered without the good qualities guaranteed, or with defects the absence of which was guaranteed by the seller OR the seller was aware of the defects but did not disclose same to the buyer (misrepresentation).

In either option 1 or 2, the voetstoots clause will not affect the buyer’s remedy.

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