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.

Advice to couples contemplating divorce.

The first question that I ask a couple (or the husband or wife who may see me individually) is whether their marriage has, in fact, broken down irretrievably or whether they shouldn't rather be seeing a marriage counsellor.

If divorce is the only option, I point out that first prize is for the parties to reach agreement so that I can put together a deed of settlement that can be made an order of court. In the settlement I provide for the distribution of assets, maintenance for the wife (if appropriate) and, if there are children, to look after their well-being, and make sure that the dad gets reasonable contact with them.

I emphasise that if the parties are unable to reach agreement they should (and this is now a legal requirement before a matter can be heard by a judge) approach an accredited divorce mediator to facilitate a resolution of the dispute. Depending on the seniority of the mediator, they would be looking at a fee of approximately R 4000. This is significantly cheaper than each approaching a separate lawyer, who will likely dig in their respective heels and posture, each trying to impress his or her client with his or her intractable (and very expensive) way of stringing out the divorce.

In this scenario, the clients get poorer and the lawyers get richer. The parties hate each other even more, and the children are, inevitably, caught in the crossfire.

If sense prevails and the attorneys adopt a holistic approach, the parties can remain on reasonably good terms, the children are less likely to be overly traumatised and the fees will be insignificant.

If at any time a woman feels threatened or intimidated, she must immediately seek independent legal advice, and should never sign any document, before it is first sanctioned by an attorney.

‘Wrongful life’ claim for child born with medical condition

This claim was brought on behalf of a child with Down’s syndrome for damages flowing from the doctor’s failure to inform the child’s pregnant mother of the high risk of it being born with this condition. The Constitutional Court had to determine whether the common law could be developed to recognise such a claim. H v Fetal Assessment Centre 2015 (2) SA 193 (CC).

http://www.saflii.org/za/cases/ZACC/2014/34.html

This is a summary of what the court found:

Our common law at present does not recognise a child’s delictual claim for damages arising from a negligent pre-natal misdiagnosis in relation to congenital medical conditions or disabilities.  For most people the birth of a child and life itself are causes for celebration.  But that does not mean that the reality of being born into a life with disability should be ignored by the law...The child’s claim has been dubbed here and internationally as one for “wrongful life”.  It has been pointed out that this term is unfortunate and wrong.  And indeed it is.  The legal issue is not the “wrongful life” of the child, but whether the law should allow a child to claim compensation for a life with disability… When a medical expert negligently fails to inform the mother that her child will be born with a congenital disability, this deprives the mother of the opportunity to make an informed choice to terminate the pregnancy.  If the child is then born with a congenital disability and the parents suffer patrimonial loss in the form of an unwanted financial burden in maintaining the child, our law recognises that the mother or parents have a claim in delict against the medical expert.  Recognising a child’s claim asks us to take a step further.  What is the position if, for some reason, the mother or parents fail to make that claim against the negligent medical practitioner?

It must be emphasised that all this judgment determines is that a child’s claim may potentially be found to exist.  Whether it does so exist and in what form, needs to be decided by the High Court.  The High Court must still determine, if the claim is properly reformulated in delict, whether harm, wrongfulness, negligence, causation and damages have been established.  All this judgment lays down is that this must be done within our constitutional imperative that the decision must accord with constitutional rights and values, which must include considering the best interests of the child.  This also applies to any other manner in which the claim may be reformulated.

You can cancel an agreement via the exchange of emails

Cancellation of contract using electronic signature

In Spring Forest Trading CC v Wilberry (Pty) Ltd t/a Ecowash and Another 2015 (2) SA 118 (SCA) (check out the reported judgment here) the Supreme Court of Appeal had to consider an appeal that concerned a series of emails purporting to consensually cancel written agreements between the parties.

The agreements required any ‘consensual cancellation’ to be in writing and signed by them. The Electronic Communications and Transactions Act 25 of 2002 (the Act) gives legal recognition to transactions concluded electronically by email. The dispute between the parties requires us to consider whether their exchange of emails met the writing and signature requirements of the Act thereby constituting a consensual cancellation.

A non-variation clause provided for the cancellation and alterations of a contract to be in writing and signed. In issue was whether the typewritten names of the parties at the foot of an email [cancelling the agreement] constituted valid signatures in the circumstances. Electronic Communications and Transactions Act 25 of 2002 (the Act).

The court found that:

The Act describes an electronic signature – which is not to be confused with an advanced electronic signature – as ‘data attached to, incorporated in, or logically associated with other data and which is intended by the user to serve as a signature’. Put simply, so long as the ‘data’ in an email is intended by the user to serve as a signature and is logically connected with other data in the email the requirement for an electronic signature is satisfied. This description accords with the practical and non-formalistic way the courts have treated the signature requirement at common law.

On that basis, the court found that the exchange of emails did meet the writing and signature requirements of the Act, thereby constituting a consensual cancellation.    

Good news for some property buyers

Courtesy Bowman Gilfillan Newsflash: Transfer Duty Increase

Finance Minister Nhlanhla Nene’s announcement regarding the new tax breaks for purchasing property will be welcomed by middle income buyers in South Africa.

Transfer duty rates were last amended in February 2011. The revised transfer duty rates will apply to properties acquired under transactions concluded on or after 1 March 2015 by any person, including companies, close corporations or trusts. While these rates will ease the burden on the middle class buyers, they will not, however, favour the affluent buyer who will have to pay more.

The transfer duty rates for agreements concluded after 28 February 2011 but before 1 March 2015 were as flollows:

• Value of property R0 - R600 000,00 Rate 0%
• Value of property R600 001,00 - R1 000 000,00 Rate 3% (up to a maximum of R12 000,00)
• Value of property R1 000 001,00 - R1 500 000,00 Rate R12 000,00 plus 5% of the value exceeding R1 000 000,00
• Value of property R1 500 001,00 and above Rate R37 000,00 plus 8% of the value exceeding R1 500 000,00

The revised transfer duty rates will apply to properties acquired under agreements  concluded on or after 1 March 2015 are:

• Value of property R0- R750 000,00 Rate 0 %
• Value of property R750 001,00 – R1 250 000,00 Rate 3% (up to a maximum R15 000,00)
• Value of property R1 250 001,00 – R1 750 000,00 Rate (R15 000,00 plus 6% of the value exceeding R1 250 000,00)
• Value of property R1 750 001,00 – R2 250 000,00 Rate (R45 000,00 plus 8 % of the value exceeding R1 750 000,00)
• Value of property R2 250 001,00 Rate and above (R85 000,00 plus 11% the value exceeding R2 250 000,00)

No transfer duty will be paid on property acquired below R750 000,00. Apart from helping entry-level buyers, Treasury's new rules will also decrease the effective transfer duty payable for all other properties acquired up to about R2 300 000,00 and an increase in property with a value in excess of R2 700 000,00.

This is illustrated by an example below:

Before 01 March 2015

Property purchased amount	Transfer duty payable
R 1,750 000,00	R   57 000,00
R 2,300 000,00	R 101 000,00
R 2,700 000,00	R 133 000,00
R 3,000 000,00	R 157 000,00
R 3,500 000,00	R 197 000,00

With the revised rates, the transfer duty will be as follows:

Property purchased amount	Transfer duty payable
R 1,750 000,00	R  45  000,00
R 2,300 000,00	R  90  500,00
R 2,700 000,00	R 134 500,00
R 3,000 000,00	R 167 500,00
R 3,500 000,00	R 225 000,00

For any enquiries please contact: Bobby Bertrand and Insaaf Davids