The voetstoots clause – should latent defects be disclosed in property sales?

July 1st, 2017
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By Madeleine Truter

Many disputes have arisen from the fact that purchasers and sellers of property do not understand what the voetstoots clause means. The term voetstoots is a Dutch word, and is a principle found in the South African common law. It literally means sold ‘with a shove of the foot’. Even though some purchasers may not be aware of this, when you buy a property, there is an implied warranty that the property is sold free from any defects. It is, however, possible for the seller to contract out of this implied warranty by inserting a clause into the sale agreement that provides for the sale to be voetstoots. This simply means that what you see is what you get, and that no warranties exist. In other words, the purchaser agrees to buy the property as it appears at the time of the sale, and that there will be no claims against the seller for defects, which are discovered later on.

A seller is only liable to the purchaser for defects if the seller knew about a defect, and did not tell the purchaser about it. Most sale agreements contain a voetstoots clause freeing the seller from any liability for patent or latent defects, which the purchaser may later find when taking possession of the property. There are, however, exceptions that allow the purchaser to cancel the sale agreement, or sue the seller for a reduction in the selling price. These exceptions include –

  • the property had the defect at the time of the sale;
  • the seller deliberately concealed the defect as he or she knew that if it was not concealed and the purchaser saw it, the purchaser would either not have continued with the transaction, or the purchaser would have negotiated a more favourable purchase price;
  • the seller knew of the defect and did not disclose the defect to the purchaser; and
  • the seller made a fraudulent or innocent material misrepresentation.

The effect of the Consumer Protection Act on the voetstoots clause

The Consumer Protection Act 68 of 2008 (CPA) came into effect on 1 April 2011. The effect of the CPA on the sale of properties has been far reaching, and specifically includes the right of a purchaser (who is also classified as a consumer under the CPA) to be informed of all the details regarding the property being purchased. Sellers will no longer be able to hide behind the voetstoots clause to save themselves from later claims by purchasers, if they were aware of defects in the property.

The CPA addresses this issue by an ‘[i]mplied warranty of quality’ in respect of each transaction that falls within its ambit. The only way sellers can get past the implied warranty of quality is to describe the condition of the property in specific detail, to make it clear in which condition the property is being sold. The purchaser then has to ‘expressly [agree]’ to accept the property in its current condition. Only if the purchaser knowingly acted in a manner consistent with accepting the property in a less than ideal condition, would the implied warranty of quality fall away. Every defect must be described in the sale agreement that the purchaser signs. This means that sellers will need to amplify their sale agreements in order to make provision for any and all defects that could possibly be present in the property being sold.

Can the voetstoots clause protect a seller against no building plans?

In the case of Haviside v Heydricks and Another 2014 (1) SA 235 (KZP), it was found that the absence of approved building plans constitutes a latent defect, and that a voetstoots clause can protect an innocent seller. The parties in this case concluded a written sale agreement in terms of which the respondents bought a property in Port Shepstone from the appellant. Subsequent to having taken transfer, the first respondent approached the local municipality because he and the second respondent wanted to build a flat on top of the existing double garage and outbuildings. However, on inspection of the municipality’s files, the first respondent discovered that a letter dated 26 June 1991 had been drafted by the municipality for the appellant’s attention, stating that it had come to the attention of the municipality that an illegal structure (which was presumably a carport) was in the process of being built on the property, in the absence of plans having been submitted to the local engineering department for approval. The file also did not contain any plans for the existing double garage that formed part of the property, which the respondents had bought. Subsequent to consultations with an architect and a civil engineer, it was confirmed that not only were there no building plans for the double garage, but the structure which had also been erected, did not meet the usual standards in terms of building regulations.

The first respondent admitted the following, namely that –

  • he did not obtain a copy of the title deeds before buying the property;
  • he did not approach the municipality to inspect the building plans before buying the property; and
  • he and the second respondent had assumed that everything was in order.

The double garage, however, was an illegal structure which did not conform to municipal bylaws.

The first respondent thereupon approached the court for an order obliging the appellant to pay for his damages, being the cost to erect a new double garage in accordance with approved building plans, which complied with building regulations. The appellant defended the matter relying on the voetstoots clause that was contained in the sale agreement. The appellant alleged that when she bought the property, there was already a carport in existence and she visited the property only once a year, and that after she had purchased the property, her mother and her brother filled in the walls of the existing carport without her knowledge, or without obtaining her consent. She also did not deem it necessary to ask them whether they had obtained permission or submitted plans, as she was not interested in the maintenance of the property as she only bought it for her mother to occupy and she left the maintenance issues to her brother. When she saw that the walls had been erected, it did not occur to her that she should ascertain whether this had been done in accordance with accepted building standards. She also never spoke to the first respondent before he took transfer of the property.

The magistrate found that there was a duty on the appellant to inquire whether plans had been obtained for the double garage and to inform the respondents that it was an illegal structure. It could also be inferred that the appellant did not make such disclosure because she wanted a higher price for the property. The appellant’s silence in this regard fell within the ambit of non-disclosure, which was similar in many respects to misrepresentation, inducing the respondents to buy the property. It was an implied term in the sale agreement that the structure had been erected in compliance with the National Building Regulations and Building Standards Act 103 of 1977, as amended from time to time, and/or with the municipality’s approval.

The respondents were accordingly entitled to judgment on the merits, which the magistrate granted, and the appellant appealed against this judgment on the following grounds, namely:

  • that the magistrate erred in concluding that it was not necessary to make a finding on whether the appellant’s non-disclosure was fraudulent, and that a mere finding of non-disclosure was sufficient for the appellant to attract liability;
  • not concluding that a finding of fraudulent misrepresentation required knowledge of unlawfulness (which the appellant did not have);
  • not following the judgment in Odendaal v Ferraris [2008] 4 All SA 529 (SCA), which judgment was given on 1 September 2008, being one month before the magistrate delivered his judgment in the court a quo; and
  • finding in the respondents’ favour in the face of their failure to have proved that the appellant had deliberately concealed the existence of latent defects with the intention to defraud.

It was contended on behalf of the respondents that the issue, which the court had to determine rested on a crisp legal point, namely, did the trial court correctly determine that it was an implied term of the sale agreement that structures had been erected in compliance with building regulations and with the approval of the municipality, and not on the factual question of whether or not the appellant had knowledge of the illegality of the structure at the time that the sale was concluded?

What constitutes a latent defect?

In the Odendaal case, the Supreme Court of Appeal held that where an illegally erected structure was such that it may require either its demolition or alteration, as a condition for municipal approval of the plans, such facts constitute defects that interfere with the ordinary use of the property, thus constituting a latent defect as understood in the context of voetstoots. Accordingly, a voetstoots clause also covers the absence of statutory authorisations, and the particular structure in this case was not authorised. The absence of statutory permission, necessary to render the building authorised, was thus a latent defect to which the voetstoots clause applied. If a purchaser wanted to avoid the consequences of a voetstoots sale, the onus was on him or her to also show that –

  • the seller knew of the latent defect and did not disclose it; and
  • that the seller deliberately concealed it with the intention to defraud.

There was no evidence that the appellant was aware that the garage had contravened building regulations, and no fraudulent non-disclosure was proved. The court thus concluded that the appellant was protected by the voetstoots clause, and could not be held liable for the defect.

Conclusion

A voetstoots clause included in the agreement of sale will not take away the seller’s liability. The seller has a duty to reveal any latent defects to the purchaser. In such an instance, the seller may be called on to refund part of the purchase price or even accept cancellation of the entire sale, depending on the nature or extent of the defect. The effect of the CPA has been that the voetstoots clause will have little power to save a dishonest seller. Notwithstanding the aforementioned, it is still in the purchaser’s best interests to have a property thoroughly inspected before signing a sale agreement. An inspection of the property should include the structure, any outbuildings plans, as well as the grounds plans. All problems, whether they seem minor or major, need to be recorded in the sale agreement. It has been mooted for a considerable time to put in place legislation that will make inspections mandatory, which will effectively do away with disputes brought about by the voetstoots clause.

Madeleine Truter BLC LLB LLM (UP) is general counsel at Setso Asset Managers in Johannesburg.

This article was first published in De Rebus in 2017 (July) DR 36.

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