Industry Members

The Consumer Protection Act (CPA) will also affect estate agents

The home buyer is a consumer when dealing with the estate agent and will enjoy protection under the CPA as regards implied warranties and rights.

Under the CPA the seller of a property, or the estate agents acting on their behalf, must not express or imply to the purchaser any false, misleading or deceptive representations concerning a material fact.  The seller or agents may also not use exaggeration, innuendo or ambiguity regarding a material fact concerning the property.  Also the seller or agent may not fail to disclose a material fact concerning the property and may not fail to correct an apparent misapprehension on the part of the buyer.

The CPA specifies that it is misleading to falsely state, imply or fail to correct a buyer’s misapprehension that any property has characteristics which it does not have, may lawfully be used for, or is capable of being used for.

In cases where the seller has been forced by the courts to compensate the buyer in terms of the CPA then the estate agent may also be at risk.   This is because, should the estate agent have been at fault regarding the information communicated to the buyer, then the estate agent may find themselves liable to the seller for all or part of the losses of the seller.  This is because the estate agent is providing a service in the ordinary course of business and so the relationship between the seller and the estate agent will also be governed by the CPA.

Under the CPA the seller will be a consumer when dealing with the estate agent and will therefore enjoy all of the implied warranties and rights enjoyed by the buyer when dealing with the estate agent.

Direct Marketing:

Property in South Africa is often purchased as a result of direct marketing by real estate agents.  For example estate agents will deliver fliers en masse, putting these into people’s post boxes under doors and into email inboxes.   The CPA gives consumers the right to rescind a sale which resulted from direct marketing, without reason or penalty.

Upfront disclosure ensures peace of mind for all parties – home buyers, home sellers and agents

A simple way to circumvent the current debate over the effect of the CPA on property sales lies in having an independent inspection of the home prior to the sale and including this inspection report as part of the sales agreement.