There is a common misconception that the Consumer Protection Act (CPA) applies to all property transactions.
The knock-on effect of this misunderstanding is predominantly twofold:
- Parties believe the CPA’s cooling off period of 5 business days applies to the transaction, allowing the purchaser to withdraw.
- Parties assume that the Voetstoots principle in our law has been removed by the promulgation of the CPA.
Exclusion from the CPA
The CPA sets out in clause 5 (1)(a) that it applies to every transaction in the Republic.
The relevant exclusion in the CPA regards whether the transaction we are contemplating falls within the definition of transaction in the CPA.
The CPA defines a transaction to be in respect of a person acting in the ordinary course of business.
This means that a consumer would have to be involved in a transaction with a person or supplier that is doing so in the ordinary course of business.
The crucial distinction as to whether the seller is doing so in the ordinary course of business or not will guide you as to whether the CPA is applicable or not.
Resale of Property
When an individual is selling their home, as the sale of property is not in the ordinary course of their business, the CPA will not apply.
Thus the purchaser will have no right to the protection of the “cooling-off” period and furthermore, the purchaser ought to clearly understand that they are purchasing the property voetstoots.
What a Seller Would Sell In the Ordinary Course of Business?
When a property developer sells immovable property, it is doing so in the ordinary course of its business and accordingly the CPA would be applicable to the transaction.
In these circumstances the purchaser would be entitled to the “cooling-off” period and it would be entitled to receive the property in the condition set out in the agreement and that it could reasonably expect. This would certainly be the case if a purchaser entered into an agreement of sale based off of a plan (prior to/during the construction of the property).
A purchaser should beware though, if it is purchasing a completed product from a developer while a voetstoots is included in the agreement, the developer would be able to rely on the fact that the purchaser has expressly accepted the goods in the condition in which they stand.
This would suggest that if a voetstoots clause is included by a developer in the agreement of sale for an existing property, the purchaser would have no right to demand any repairs or snagging be attended to.