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The voetstoots clause and what it means for property buyers and sellers.
A well-known term that every buyer and seller of immovable property may have encountered is that of the voetstoots clause. The term originates from Dutch and translates directly to ‘with the shove of a foot’. What the term in effect means is that the product, in this context the immovable property, is sold “as is” or “as it stands”.
An example of voetstoots in action:
For instance, person X sells a cellphone to person Y. Person X stipulates in the contract of sale that the cellphone is sold voetstoots (or ‘as is’). Person Y, once having purchased the cellphone, cannot subsequently return the cellphone and ask for a refund if it transpires that the phone was defective due to the voetstoots clause which allowed the person to contract out of the implied warranty that the cellphone was free from defects.
Latent and patent defects
There are two types of defects:
• A latent defect is a fault that would not readily be revealed by a reasonable inspection of the property being sold; and
• A patent defect is a flaw that is not hidden and ought to be easily identified upon reasonable inspection.
A patent defect is therefore clearly identifiable on ordinary inspection of the property as opposed to a latent defect that cannot be seen upon ordinary inspection of the property. The voetstoots clause shields the seller from incurring liability in respect of both latent defects and patent defects. There are however certain qualifications to this in respect of latent defects.
The property seller is in fact liable for a latent defect regardless of the voetstoots clause if the seller knew about the defect in the property being sold and omitted to inform the prospective buyer of such defects. This omission is almost tantamount to fraud.
Case law and the voetstoots clause:
This was confirmed in the case of Odendaal v Ferraris (422/07) [2008] ZACA 85; [2008] 4 All SA 529 (SCA) where the court stated that if a seller conceals a latent defect in the property intentionally, the seller cannot rely on the voetstoots clause. Contrastingly, if the defects are brought to the attention of the purchaser, the purchaser cannot go back and claim from the seller.
Summarily stated, the instances when a seller can in fact return the item/property or ask for a reduction in the price irrespective of the voetstoots clause exists when:
The defect was deliberately concealed and if the buyer had seen the defects, they would have stopped the sale or negotiated a lower price.
The seller made a fraudulent misrepresentation that was material.
The property or product had the defect at the time of sale, and the seller knew of the defect and did not disclose it.
The onus is consequently placed on the buyer to prove the deliberate concealment with the intention to defraud and that the seller knew of the defect and did not disclose it.
Effect of the Consumer Protection Act on the sale of immovable property
The Consumer Protection Act (CPA) applies to all transactions that occur within the Republic of South Africa as well as to the supplier of any goods or services in the Republic. Importantly, it states that the purchasing of goods or property comes with an implied warranty that the thing being purchased is sold free from defects and of good quality. Similarly, this position is expressed in our common law as well.
As such, the general rule is that the voetstoots clause cannot apply to transactions that fall within the ambit of the CPA. For purposes of the CPA, a ‘transaction’ that will be excluded from the operation of the voetstoots clause is an agreement that occurs in the ordinary course of business between a supplier and consumer.
A consumer, in terms of the CPA, is defined as a person to whom those particular goods or services are marketed in the ordinary course of the supplier’s business as well as but not limited to a person who has entered into a transaction with a supplier in the ordinary course of the supplier’s business.
In the context of the purchase of immovable property, the immovable property is a good that is being marketed to the public. A company that has its core function in the buying and selling of immovable property would, for purposes of the CPA, be considered a ‘supplier’ of goods and services as the transaction of buying and selling immovable property occurs in the ordinary course of its business.
Consequently, the CPA would find applicability to those companies that primarily buy and sell immovable property and as such the voetstoots clause cannot be inserted in its sale agreements.
The Voetstoots rule exception to the CPA
An exception to this general rule found in the CPA is that the voetstoots clause can be used in relation to the private sale of immovable property. This is owing to the fact that a private sale generally does not fall under the CPA’s qualification of the transaction having to occur in the supplier (seller’s) “ordinary course of business”. Therefore, when a party who is not a supplier in the ordinary course wants to embark on the private sale of his/her immovable property, he/she can insert the voetstoots clause into his/her sale agreement. In effect the voetstoots clause therefore allows the seller to contract out of the implied warranty as found in the CPA.
Seller and buyer obligations when selling property
In conclusion, it is suggested that when a seller wants to sell immovable property privately with the inclusion of the voetstoots clause, he/she has the duty to disclose all defects of the immovable property that he/she is aware of. A seller can further mitigate potential liability by attaching a condition report to the contract of sale. The condition report would essentially be the seller setting out the quality of the property as well as listing all the defects thereof.
The purchaser similarly has the duty of properly inspecting the property as the condition report is not a warranty to the purchaser. The seller may dispute that he/she truthfully did not know of a defect and consequently, did not list the defect.
The purchaser is not barred from outsourcing independent professionals to properly inspect and ensure the safety of the property or from requesting an electrical certificate of compliance, water installation certificate, gas certificate of conformity or the like.
