The Consumer Protection Act and the Sale of Property
The Consumer Protection Act and the Sale of Property
CONSUMER PROTECTION ACT COMPLIANCE CHECKLIST FOR SALE AND PURCHASE OF PROPERTY (TO BE PRESENTED BY ESTATE AGENTS TO BUYERS)
WHEN DOES THE CONSUMER PROTECTION ACT (CPA) APPLY?
The CPA regulates the relationship between suppliers and consumers. A ‘supplier’ is defined as a person who supplies goods or services in the ordinary course of business. ‘Business’ as defined by the CPA means ‘the continual marketing of any goods or services’ (goods include property). A Supplier in the property industry includes:
- Property developers (suppliers of goods);
- Investors who buy, renovate and sell houses as a business (suppliers of goods);
- Estate Agents (suppliers of services);
- Conveyances (suppliers of services);
- Contractors such as electricians, plumbers etc (suppliers of services).
The Act does not apply to sale agreements between persons who do not sell their property in the “ordinary course of business” such as individuals that occasionally sell their home to buy a new one. The Act does, however, apply to Estate Agents who in terms of the Act may not make false, misleading or deceptive representations on behalf of the seller. Estate Agents need to cover themselves by soliciting from the seller and presenting to the buyer as much information as possible on each and every property that they sell.
To protect all parties (seller, agent and buyer) in each deal the Estate Agency Affairs Board of South Africa and most reputable estate agencies in South Africa request sellers to fill in and sign the immovable property condition report /checklist as set out below:
Property condition report/Checklist:
- Is the Seller selling the property in the ‘ordinary course of business’?
- Is there a bond registered over the property? / What amount is outstanding on the bond?
- Has the Seller given notice to the bondholder to cancel the bond?
- Does the Seller have the original title deed (if the property is unbonded)?
- What is the Seller’s marital status? Single, Married, Divorced, in the process of getting a Divorce? If the Seller is married, is he/she married ANC / COP?
- What is the Purchaser’s marital status? Single, Married, Divorced, in the process of getting a Divorce? If the Purchaser is married, is he/she married ANC / COP?
- Has the Seller’s marital status changed since taking ownership of the property? Married / Divorced / Widowed
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Is there a valid electrical clearance certificate in place (issued less than two years prior to putting the property on the market)?
- If yes, has any electrical changes been made to the property in the last two years?
- Does the Seller have a certificate for any of the electrical work done in the last two years? -
Does the property have an electric fence? If yes, is there a valid Electric Fence System Compliance Certificate (issued less than two years prior to putting property on the market?)
- have any changes been made to the electric fence e in the last two years? Does the Seller have a certificate for any of the work done on the electric fence in the last two years? -
Are there any gas installations on the property?
- If yes, does the seller have a Gas Certificate of Compliance?
- If not, the seller must obtain a Gas Certificate of Compliance to present to the Purchaser prior to occupation or transfer (whichever event takes place first). -
Is the property situated within the municipal boundaries of the City of Cape Town?
- If yes, does the Seller have a Plumbing Certificate of Compliance?
- If not the Seller must obtain a Plumbing Certificate of Compliance to present to the Buyer prior to occupation of transfer (whichever event takes place first). - Latent defects: Is the Seller aware of any leaks, water damage, damp, cracks etc. Record these in detail hereunder:
- Is the Seller aware of defects in the roof?
- Is the Seller aware of any defects pertaining to the swimming pool?
- Is the Seller aware of defects in the heating and / or air conditioning systems, including air filters and humidifiers?
- Is the Seller aware of defects in the septic system or other sanitary disposal systems?
- Is the Seller aware of any defects to the property and / or in the basement or foundations of the property, including cracks, seepage and bulges? Other such defects include, but are not limited to, flooding, dampness, or wet walls and unsafe concentrations of mould or defects in drain tiling or sump pumps?
- Is the Seller aware of any structural defects in the property?
- Is the Seller aware of any boundary line disputes, encroachments or encumbrances including a joint driveway?
- Is the Seller aware that a structure on the property has been designated as a historic building?
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Has the Seller affected any work on the property in the last two years?
If yes, detail the work affected on the property:
Can the Seller present the buyer with warranties for any of the work affected? -
Is the Seller aware of the property’s current zoning status?
Can the Seller prove the zoning status? -
Is the Seller aware of any restrictive title conditions registered over the property?
Should the Buyer wish, the Seller undertakes to present to the Buyer a copy of the title deed which will enable the Buyer to confirm acceptance thereof. -
Are all the structures on the property built according to approved municipal building plans?
Should the Buyer request such, the Seller undertakes to supply the Buyer with approved building plans of all the structures on the property (where required by council) - Is the Seller a non-resident for tax purposes, and is the purchase price over two million Rand (applies to Sellers as individuals or entities)?
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Is there a tenant currently residing in the property?
If yes, a copy of the lease agreement has to be obtained to present to the Buyer. - Is a special levy payable (if sectional title)? Note that this is payable by the Seller if raised before transfer, unless otherwise agreed. Special levy:
- If the signatory to the contract is signing under a power of attorney, a copy has to be obtained.
- If a Company or Close Corporation is selling or buying, is the signatory authorized to sell or buy the property – obtain a copy of the resolution prior to signing the contract. (Resolution must be dated prior to the Agreement of Sale)
- If a Company or Close Corporation is selling or Buying is it still on the register of Companies and not deregistered?
- Is the Seller a VAT vendor?
- If yes, is it a VATABLE sale (i.e. forming part of the VATABLE Enterprise?)
- If the Seller or Buyer is a trust, there must be a resolution for the Trustee to bind the trust, dated prior to the sale (or alternatively, all trustees to sign the Agreement of Sale). Obtain the latest letters of authority to ensure validity of the sale, prior to Agreements being signed.
- The Seller confirms that all rates and taxes are up to date.
- Is there a Home Owners Association involved?
- If yes, the Seller agrees to obtain and present the Buyer with all details relating to the Home Owners Association, including House Rules and the Code of Conduct.
Signed at _________________________ on this ___ day of ______________________ 20______
The Seller hereby acknowledges and agrees that the aforementioned information is, as far as his knowledge, is a true and accurate reflection of the condition of the property.
Seller
Signed: ________________________________
Print name: ____________________________
Signed at _________________________ on this ___ day of ______________________ 20__
The Purchaser hereby acknowledges that he has read the aforementioned information and is willing to enter into a Sale Agreement with the Seller, based on this.
Purchaser
Signed: ________________________________
Print name: ____________________________
