Acquiring property in your personal capacity


A critical question is whether or not the Consumer Protection Act applies to the acquisition of the property by the purchaser.

When considering this one needs to have regard to the fact that the buyer needs to be defined as “consumer” and the seller a “supplier”.

The Consumer Protection Act, as read with the regulations (“the Act”) provides that a consumer is a person to whom particular goods are marketed in the ordinary course of the supplier’s business. The Act defines a supplier as somebody who markets goods. This would include an estate agent.

A consumer, includes a natural person who has revenue of less than R2 million per annum. Accordingly, if you are a natural person, concluding a transaction for the acquisition of a residential property in circumstances where you have less than R2 million’s revenue per annum, and you do so through an estate agent then you would almost surely qualify as a consumer.

Very often estate agents are parties to the sale agreement for purposes of enforcing their rights in relation to the commission provision therein. This unfortunate structuring arrangement will have the effect of rendering a transaction between a natural person seeking to buy a residential property, and a seller, in circumstances where there natural person earns less than R2 million per annum, a consumer agreement.

The consequence of a sale of property agreement being a consumer agreement means that a number of important protections become available to the purchaser. The most important of these include –

A consumer has the ability to rescind a transaction resulting from any direct marketing, without reason or penalty, by notice to the supplier in writing. This is known as the “cooling off” right afforded to consumers under the Act and must be exercised within five business days after the date on which the deal is concluded or the date on which the goods were delivered to the consumer, whichever is the later.

There is an interesting discussion concerning whether or not a consumer has the right to rescind the transaction within five business days after the date of transfer of the property in the circumstances where the property was acquired as a result of direct marketing. This may be extreme, but certainly the legislation supports this view. For purposes of determining whether or not the property was acquired as a result of direct marketing, it is certainly worth mentioning that any show day at which pamphlets are distributed and to which consumers are lured through a direct marketing strategy in order to participate in a potential acquisition of a residential property, would almost definitely fall within the ambit of direct marketing.

A consumer is entitled, in terms of Section 22 of the Act to receive all notices, documents or visual representations in a manner and a form that is in plain language and capable of being understood by a person with an average literacy skill and minimal experience as a consumer of the relevant goods. This includes the sale agreement itself.

A consumer has a right to fair and honest dealings as referred to in Sections 40 to 47 of the Act. In this regard, a supplier must not by words or conduct express or imply a false, misleading or deceptive representation concerning a material fact to a consumer or shall not use exaggeration, innuendo or ambiguity as to material facts or shall not fail to disclose material facts, if such failure would amount to deception. This protection, which is contained in Section 41 of the Act, extends to representations made to a consumer in respect of any immovable property. Accordingly agents and sellers are bound to make full disclosures of all material facts relating to the property.

Consumers are entitled to, in terms of Sections 48 to 52 of the Act to receive fair, just and reasonable terms and conditions which, by way of example, precludes a supplier from concluding agreements with the consumer which are excessively one sided or which are so adverse to the consumer as to be inequitable or if there are unfair, unreasonable, unjustable and unconscionable terms in the agreement and the fact, nature and effect of those terms are not drawn to the attention of the consumer in a manner that satisfies the requirement of Section 49. Waivers and indemnities are good examples of these types of provisions, all of which must comply with Section 49.

Every consumer has a right to fair value, good quality and safety in terms of Section 53 to 61 of the Act. In particular, Section 56 creates an implied warranty of quality and requires the supplier to receive delivery of the goods back from the consumer within six months without penalty and at the supplier’s risk and expense if the goods fail to satisfy the requirements and standards set out in Section 55 of the Act. These sections of the Act preclude the dreaded “voetstoots” sale.
In a nutshell there are a host of protections available to certain purchasers of immovable property.

Each purchaser is urged to obtain legal advice if and to the extent that they wish to acquire immovable property in order to assist them in understanding what protections are indeed available to them.




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