In South Africa, when purchasing a property being sold as is it currently stands, there will normally be a “voetstoots” clause cited in the agreement of sale. This means that the property is sold as is and at the purchaser’s risk.
As such, this clause protects the seller from liability for certain defects that exist on the property. These defects are those that are clearly visible or those that can be clearly ascertained upon reasonable inspection of the property, including but not limited to visible cracks, visible damp or clearly ascertainable structural defects. These defects are referred to as patent defects.
On the other hand, latent defects cannot be easily ascertained without the help of an expert. An example of a latent defect would include but is not limited to damp issues which cannot be clearly ascertained; leaking roofs or structural defects which cannot be ascertained upon reasonable inspection by a layperson.
However, the protection afforded by the voetstoots clause will not apply where the seller knew about a latent defect at the time of the sale and deliberately failed to disclose this defect with the intention to defraud the purchaser.
South African courts have always assessed each case on its own merits when ascertaining whether the voetstoets clause applies or not. These assessments can be seen in the cases of Ornelas v Andrews Café and Another and Haviside v Heydricks and Another.
In the Ornelas case, the Court assessed whether the voetstoots clause would apply where the Seller sold a business which was being conducted from a property without having a permit to operate that business from that property. The Court assessed the nature of the thing being sold, being a business, as well as the intentions of the parties. Based on this, the Court came to the conclusion that the Purchasers intended to purchase a business and not just the building on which the business operated from. The Court held that it was an implied term of the sale agreement that the Purchaser receive a business that was capable of being operated in a lawful manner. In this case, the voetstoots clause did not protect the Seller.
In the Haviside case, the Court assessed whether the voetstoots clause would apply where a Seller sold a property without having approved building plans for the garage situated on the property. The Purchasers discovered this fact when they approached the Municipality for permission to build a flat on top of the existing double garage and outbuildings.
The Court held that the Seller was not aware of this defect. The Court also held that the Purchaser bears the burden of proving that the Seller was aware of the defect and deliberately concealed the defect with the intention to defraud the Purchaser. These two elements must be proved in order for a purchaser to escape the voetstoots clause. The Court held that the nature of the building that was purchased was habitable even though approved building plans were not obtained for the garage.
In light of this, there are a couple of ways that purchasers can protect their rights before purchasing a property:
- The first measure of protection for a prospective purchaser is to conduct an inspection on the property itself before signing the sale agreement. The benefit of this approach is that the prospective purchaser can note all of the obvious defects on the property. Once these defects are listed, a purchaser will be in a better position to confirm whether he or she wishes to proceed with the purchase and what price he or she wishes to offer to the seller;
- The second measure of protection is to appoint an expert such as a property valuer to inspect and value the property. This will assist with identifying the latent defects that may be present on the property. This also assists a purchaser to gauge whether the purchase price that the seller asks for is fair;
- The third measure of protection is to check whether the building and any additional structures built on the property were erected and/or constructed legally, and that approved building plans were obtained for these buildings; and
- The fourth measure depends very much on what is being purchased, much like in the Ornelas case above. If a business is being purchased, one should check that the business is conducted lawfully. This can be checked by asking the seller for the permits and zoning certificate for the property.
These measures allow a prospective purchaser to identify and discuss these defects with the seller and to come to a potential agreement with regards to the purchase price or reduction thereof. It is also recommended that these measures be followed in general, irrespective of a voetstoots clause in the sale agreement. Purchasers should also carefully read sale agreements before signing to ensure that all conditions are clear and understandable.