The Voetstoots clause and its implications

The term voetstoots is a Dutch term which describes buying something “as is”. The inclusion of a “voetstoots” clause in a Deed of Sale for immovable property means that the property is purchased as it stands, together with all defects that it may have.
It is important to note that a voetstoots clause exempts a seller from liability for patent defects only, not for latent defects.

What is the difference between patent and latent defects?

Patent defects are flaws that are visible on a normal inspection of a property, such as wall cracks, sagging gutters, broken windows, missing tiles and visible damp. It is a buyer’s duty to thoroughly inspect a property before purchasing it - he cannot later claim he did not see such defects. The test is an objective one, namely what could be seen on the inspection of the property.

Latent defects are faults that are not obvious and are hidden from view. These include faulty pool pumps and geysers, rusted internal pipes, leaking roofs (except where stain marks make the leak obvious) and defects that have been concealed, such as dampness behind a cabinet. The test is what could not normally be seen on inspection.

If a seller is aware of defects which cannot be seen at inspection of the property, he has to disclose these to a potential buyer. Examples are a geyser which delivers only lukewarm water, defective electrical points, a leaking pool, a sliding door that cannot open anymore or a faulty oven. The seller, who lives in the property, would be aware of these faults.

If a purchaser can prove that the seller had actual knowledge of a latent defect but failed to disclose it, then the purchaser can hold the seller liable for this defect regardless of the “voetstoots” clause. In terms of numerous South African court cases a seller is only excused from liability for latent defects where he was not aware of the problem at the time of the sale. If a seller knowingly conceals a latent defect, he will be liable to the buyer for the cost of its repair.

While buyers may be able to sort such disputes out through the courts, litigation can be a costly and stressful exercise, as the buyer will have to prove that the defect existed at the time of the sale; that the seller knew of the defect; that the seller did not disclose the defect and that the seller deliberately concealed the defect as he knew that if it was not concealed and the purchaser saw it, the purchaser would either not have bought the property, or he would have negotiated a more favourable purchase price.

There is still much uncertainty in the practical application of the Consumer Protection Act 68, 2008 (the “CPA”), particularly how it affects the sale of immovable property. Many buyers assume that the voetstoots clause has lost its validity and that they are fully protected when things go wrong. However, this relatively new legislation remains largely untested in South African courts of law.

The CPA contains various limitations and not all sales of immovable property are covered by this legislation. One of the central exclusions is to be found in the definition of a “transaction”. A transaction only falls within the CPA if that transaction is within the “ordinary course of business” of the supplier of the goods sold. Therefore it would apply to property sold by developers, speculators, and institutional investors with large property portfolios who sell property in their ordinary course of business, but not to once-off property sales between a seller and a buyer.

The question is whether the voetstoots clause may still be inserted in of a Deed of Sale.

The CPA contains a series of fundamental consumer rights. One of those rights is the consumer's right to safe and quality goods. This right includes the right to receive goods which are suitable for the purpose generally intended, of good quality, in good working order and free of any defects.

These provisions do not apply where the consumer has been expressly informed that the particular goods were offered in a specific condition; and has expressly agreed to accept the goods in that condition, or knowingly acted in a manner consistent with accepting the goods in that condition.

In other words, if the consumer is aware that the property is sold in the condition in which it stands at the date of sale and where the consumer has an opportunity to inspect the property, the voetstoots clause will still form part of the agreement.

The relationship between purchaser and the estate agent also falls within the ambit of the Act in that the agent markets to the public and his marketing practices will have to comply with the provisions of the CPA. This will require compliance with the various chapters in the Act in which the fundamental consumer rights are embodied, such including the right to disclosure of information, the right to fair and responsible marketing and the right to honest dealings.

An agent, who is aware of a latent defect, should therefore bring it to the attention of the buyer.

Buyers may have a claim against the agent under the CPA if they can prove that the agent was aware of a latent defect and intentionally withheld the information. Trying to prove that a third party (an agent) was aware of any problems could be difficult.

A buyer who wants to ensure that he is fully aware of the condition of the property, may insert a conditional clause in the Offer to Purchase in terms of which the offer is subject to the buyer obtaining a favourable home inspection report. This will allow the buyer to withdraw from the agreement, should the report uncover any unpleasant surprises.

In the end, upfront disclosure ensures peace of mind for all parties – home buyers, home sellers and agents.

Published in: Linprop Newsletter


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