AUGUST 2011 - WHAT DOES THE CONSUMER PROTECTION ACT MEAN FOR PROPERTY BUYERS

Lola Kramer 083 252 1023
Principal Agent
Property Expert

Theres some good news and some bad news
The legal principle around buying and selling has always been “caveat emptor” – “let the buyer beware”. In terms of the Consumer Protection Act (CPA), which came into force on April 1 this year, that changes: its now the seller who has to make sure all goes smoothly.
This fundamentally changes the way business is done, in that it puts the burden on busesses to transform themselves into “customer-friendly” operations, making all interactions fully transparent. If a customer feels cheated or ripped of, it’s the seller or service provider who is presumed guilty until proven innocent.

The new Act, at its heart, is thus about protecting vulnerable and less well-informed consumers, who may be prejudiced by complex contracts or loaded bargaining positions. In this, its been hailed as a piece of legislation that makes South African consumers amonghst the world’s best protected.
What does it mean when you’re buying property?
The new Act protects property buyers from unscrupulous estate agents. For instance, estate agents now have to ensure that potential buyers are fully informed regarding the condition of any property they buy. The “voetstoots” clause in an Offer to Purchase will no longer protect estate agents from the perilds of non-disclosure.
Another benefit for buyers is that agents can be prosecuted for making false claims about a property, for instance that it has been zoned for certain uses, or that plans have been approved to make alterations.
An imp;ortant point here is that the CPA is limited to transactions concluded as part of regular business. Private sellers therefore, are not held to the terms of the CPA, so in the case of a private sale, you would do well to be extra-scrupulous about the terms.
Are landlords countrywide about to get a horrible surprise?
In terms of the CPA definitions, landlords are suppliers, and tenants are consumers. Again, however, this is true only if landloring is part of one’s regular business.
Still, there is much nervousness about what the CPA means. For instance, a clause that prohibits discrimination on any grounds, including income, suggests that a landlord cannot “discriminate” against a tenant who cannot pay his full rent. It remains to be tested in court whether the obligations of the rental agreement would weigh less than a tenant’s changed circumstance.
There’s also a clause in the new Consumer Protection Act that – no matter what the contract says – allows the tenant to give the landlord 20 business days’ notice of intention to terminate the lease.