Buying property: Cooling off period

The Consumer Protection Act has some serious implications for agents selling property - for one, a disgruntled purchaser can get out of a sale agreement within 5 days of signing it.

It creates rights for the consumer buying property while regulating closely how suppliers or estate agents operate. Estate agencies and property professionals need to be aware of the implications and prepare for changes in the way they will interact with property buyers and sellers in the future.

Section 16 of the Consumer Protection Act states as follows:

“A consumer may rescind a transaction resulting from any direct marketing without reason or penalty, by notice to the supplier in writing …, within five business days after the later of the date on which

  1. The transaction or agreement was concluded; or
  2. The goods that were the subject of the transaction were delivered to the consumer.

The section further provides that the supplier has 15 days within which to return any payment or property after receiving the cooling off notice. 

Insofar as the following definitions are applicable to the property industry we may just have a problem:

  • A Supplier includes an Estate Agent;
  • A Consumer include a Purchaser;
  • A transaction refers to the supply of goods in return for payment;
  • Goods refer to a legal interest in land or immovable property, and;
  • Of course direct marketing includes approaching a person, either in person or by e-mail for the direct or indirect purpose of promoting or offering to supply of any goods.

On a literal interpretation of this section a disgruntled purchaser can get out of a sale agreement within 5 days of signing it, or even worse, 5 days after taking transfer of the property in the event that this agreement was concluded as a result of an estate agent simply doing what she does in the ordinary course of business - namely looking for a purchaser to buy a client’s property.  The supplier has 15 days to return any payment or the property after receiving the cooling off notice

Source: Marlon Shevelew and Associates 

  



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