Risk of Exposure under the Consumer Protection Act (CPA)
The Consumer Protection Act 68 of 2008 (CPA) safeguards consumers’ rights to fair value, quality, and safety. Its effect on property transactions depends on whether the sale is part of the seller’s ordinary course of business.
When the CPA Applies
The CPA governs transactions where the seller is a developer, investor, or property trader who sells as part of a business. In these cases, the voetstoots clause cannot be used to shield sellers from liability for defects.
- When the CPA Does Not Apply
- If a homeowner sells a property once-off (e.g., a residential or holiday home), the common law applies:
- Without voetstoots: Seller is liable for latent (hidden) defects not disclosed, but not for patent (obvious) defects.
- With voetstoots: Seller avoids liability for defects, unless they knew of the defect and failed to disclose it.
- Estate Agents and the CPA
- Estate agents fall within the CPA definition of intermediaries.
The CPA applies to:
- The mandate agreement between seller and agent.
- The agent’s marketing practices, which must be honest, transparent, and fully disclose prescribed information. The CPA does not extend to the final once-off sale agreement between seller and buyer.
- Risk Management for Agents
- To reduce exposure:
- Record the seller’s duty to disclose latent defects in the Mandate Agreement.
- Obtain a Property Condition Report from the seller.
- Have buyers acknowledge the voetstoots clause in writing.
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- Agents should avoid making assurances about property value, development potential, or zoning unless verified—misstatements can result in CPA liability or referral to the Consumer Affairs Ombudsman, which may impose fines.
- Contact Bert Smith Incorporated Attorneys for professional guidance on navigating documentation and compliance for your development project.
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