Property buyers are being deceived by sellers who fail to disclose material defects, and problems with the properties they are selling. These defects usually result in substantial and unexpected costs for property buyers.
The good news is that buyers are now protected against sellers who misrepresent the condition of a property.
A recent case law has established a guideline and protection for consumers placed in this position. The consumer is provided with relief where disclosure of the aforementioned would have played a role in the purchaser’s decision to acquire the property.
In the Supreme Court of Appeal decision of Rossouw v Hanekom (741/2017) [2018] ZASCA 134, the seller failed to disclose a defective roof and sewerage system – the purchaser experienced serious leaks in the roof and the drains were constantly blocked.
The seller had also hidden alterations to the sewerage system with a concrete slab above which an entertainment area was built. Furthermore, the seller failed to obtain municipal approval for the alterations that had been done to the property.
In order to occupy the house, the purchaser was forced to replace the defective roof structure and to re-route the sewerage line around the house – the costs of these changes were claimed as damages by the purchaser.
The seller had represented to the purchaser that the issues with the roof had been repaired. He furthermore failed to disclose that the alterations had not been approved by the local authority, or that the sewerage system had been altered and rendered inaccessible by the modifications.
In this matter, the seller acknowledged that he was aware of the defective roof.
He was also cognisant that the repairs undertaken to repair the said roof would have been wholly ineffective. The seller knew that he was obliged to obtain the prior approval of the local authority for alterations. However, he stated that his financial position at the time rendered him incapable of complying with this statutory requirement.
He failed to disclose that the sewerage system had been buried under a concrete floor and, as a result of the above, caused the purchaser significant financial loss.
The purchaser successfully sued for damages – her claim was based on fraudulent misrepresentation (in terms of the leaks in the roof), and fraudulent non-disclosure (in respect of the failure to obtain the required statutory approval for amendments to be made to the property).
Considering the above, it can be established that the misrepresentation and non-disclosure was made in order to induce the sale.
This constituted fraud and the seller was therefore liable for the damages suffered by the purchaser.
The decision held by the Supreme Court of Appeal placed the onus on the seller to disclose all material defects. Should a buyer become aware of material defects to the property after the registration of the transfer, there is a legal recourse available to the buyer to claim for damages and costs.
Article compiled by Ricardo Machial, candidate attorney in litigation at Lagarto Bhana Attorneys. Contact them on 011 568 9326.
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