CPA's impact on property
| The new Consumer Protection Act (CPA), which came into effect on 1 April 2011, could see property sellers and estate agents exposing themselves to great risk should they attempt to market and sell a property without letting a buyer scrutinise all relevant documentation prior to the signing of a sale agreement.|
Implications on property transactions
Implications for property sellers
Sellers are quite often in a rush to sell their properties, but do not consider the impact of the costs of repairs related to plumbing, beetle damage, electrical faults and full disclosure of the condition of their property.
Property buyers may attempt to hold sellers and their estate agents responsible for defects or non-disclosure of property faults, even months after ownership has passed to the buyer. Sellers now have to ensure that properties being sold are inspected and evaluated by accredited or registered service providers, which can be a time-consuming and laborious exercise. The results of these inspections have to be made available to potential buyers, giving them an objective description of faults or defects to the property. The buyer has to agree to purchase the property in that condition, should they wish to, or can request that the seller repair these faults before the buyer signs the deed of sale.
Implications for property buyers
Buyers, who are usually led by the emotions of buying a new home, often do not focus on the administrative details required to finalise a transaction. They are generally unaware that they are able to obtain comprehensive due diligence information on the property on which they are to spend thousands or millions of rands.
Buyers now have the right to information that will help them to make an informed decision about the property they are planning to buy. However, they have just as much responsibility to request the required documentation from the seller as the seller has to obtain and present it to them. Once presented with all the facts the buyer can then decide to buy the property as is, ask the seller to adjust the asking price or ask the seller to repair the faults to the property and cover those costs.
Having all available information pertaining to the property at hand also helps buyers to strengthen their applications for a home loan. The structural condition and construction of a property, according to the approved building plans (which are included in the information that buyers should have access to), are important factors considered by a bank before granting a loan.
Implications for estate agents
Sale agreements must be prepared in simple and understandable language. A buyer with average comprehension skills and education must therefore be able to understand the sale agreement presented to him for signature. In many instances, the "voetstoots" clause will also no longer be applicable as the term "voetstoots" must be explained in simple and clear language to the buyer.
Property Transaction Kit
A new service, aimed at protecting property buyers, sellers and estate agents equally during the course of a property transaction, addresses and ultimately provides a transparent process in purchasing a property.
Property Transaction Kit (PTK), the brainchild of conveyancing attorney Meyer de Waal, was developed in consultation with key industry associations and service providers, and offers a structured process through which to gather required compliance material in order to ensure a smooth transfer. The service is available to buyers, sellers, estate agents and property attorneys, and enables them to either compile or have secure online access to all the documentation and certificates of compliance related to the sale of a property.
"Once a seller registers for the service the PTK team will access a database of accredited service providers to source all the relevant documentation and issue certificates of compliance pertaining to the property," says De Waal. "The documents are then loaded onto a virtual 'property vault' on the PTK portal. There the seller, his estate agent, buyer, attorney or bank can securely access the information.
"The seller can, after viewing the various reports, either decide to improve the propertys condition or simply share the documentation with the potential buyer so as to disclose the true condition of the property. Potential buyers can also request access to this comprehensive report to help them decide whether or not to put in an offer on the property."
De Waal explains that, for years, the lack of strong consumer protection laws have left ill-informed property buyers at the mercy of sellers and estate agents who often sold properties voetstoots. The voetstoots clause used to protect the seller from defects that the buyer could identify during a viewing of the property, but not against defects that the seller did not know about and thus could not disclose to the buyer.
Without knowing the true condition of the property many buyers had to fork out a substantial amount to repair their homes, resulting in serious implications on their budget and their ability to meet other financial obligations after taking ownership. In addition, most buyers do not have the knowledge or experience to request relevant information about a property in which theyre interested and seldom ask for even basic documentation such as a copy of the title deed, current and approved building plans or zoning certificates.
Article from: www.iafrica.com