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THE MATTER OF DISCLOSUREAlthough many sellers may be tempted to keep quiet about known defects in their property in the hope of selling it faster and for a better price, advice from Peter Gilmour, Chairman of RE/MAX of Southern Africa, is that honesty is always the best policy. "Eventually, buyers who have been misled through non-disclosure will become aware of the property's defects, and there is a good chance that they may take the matter to court to recover money they have spent on fixing the problem. This could turn what was supposed to be a quick and profitable transaction into a long and expensive nightmare," he explains. Rather, says Gilmour, sellers should disclose any defects and take the financial knock upfront. "This may even work in their favour, as the majority of buyers will appreciate their honesty and will be relieved to have prior knowledge of what the repairs to the property will cost." He says that of course, it is any estate agent's duty to inform potential buyers about any defects in the property that they are aware of. However, he notes that this largely depends on how honest the seller has been with the agent in the first place. As a result, many agents require sellers to sign disclosure documents to protect them against any future litigation. Gilmour explains what the duty of disclosure entails: "The duty includes any facts affecting the value or desirability of the property, as well as any other relevant information pertaining to the transaction, such as the other party's bargaining position, the identity of all potential purchasers, information concerning the ability or willingness of the buyer to offer a higher price, and any intent to subdivide or resell the property for a profit." However, it is important to remember that the majority of properties in South Africa are sold voetstoots, says Gilmour, which relates to buying a property "as is". This clause places the onus squarely on the buyer to check the conditions of a prospective property purchase thoroughly before committing to the sale. "Before any deals are signed, it is highly advisable that any interested buyer hires the services of a professional home inspector, who will be able to inspect the property in detail and draw up a thorough report on their findings. This report will give the buyer a clear understanding of exactly what kind of property they are buying structurally, and this serves as a great bargaining tool for the buyer. If the buyer is concerned about any of the property's defects, they can add relevant clauses to the sale agreement." It is possible however, to buy a property without the voetstoots clause, and subsequently protect yourself from potentially expensive problems, says Gilmour. "The voetstoots clause is not compulsory for buyers and can in fact be written out of an agreement of sale. While there is nothing fundamentally flawed in the voetstoots clause, if accepted by the buyer, it does place the onus on that buyer to ensure that the property is in good condition or, if not, that all defects have been declared and a price agreed accordingly." However, Gilmour says that whether or not the voetstoots clause is included in the agreement of sale, buyers should still have the property they are interested in inspected, as fighting the battle in court can be costly, time consuming and difficult to prove. "If a seller is legally taken to task for non-disclosure of a latent defect, the buyer has to be able to show that not only was the seller aware of the defect, but that he or she deliberately avoided disclosing it with the intention of defrauding the buyer. "Perhaps the best option would be for the seller sign a ‘seller's declaration' of all known defects and have it countersigned by the buyer. In this way when the offer is presented it is done so with both eyes wide open and will substantially reduce issues arising post sale. It is a far better option to dot all your ‘I's and cross all your ‘T's before agreeing to any property sale, and avoid any court cases down the line," Gilmour concludes.
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