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Consumer Protection Act and the Sale of Property

Consumer Protection Act and the Sale of Property

The Consumer Protection Act Number 68 of 2008, dictates every transaction as defined by the act between a consumer and supplier who promotes and sells services or goods to generate an income in South Africa.

The consumer is also protected for the quality and efficacy of the goods and services after the sale is successfully concluded.

Consumer Protection Act – CPA Property

The CPA only covers transactions where remuneration is received in return as per the usual course of business.

Once a transaction falls under the statutes of the CPA, the fundamental rights of the consumer are automatically protected and the supplier is obliged to comply with all the requirements stipulated in the CPA.

Buyer’s Rights When Buying a House

The inclusion of an estate agent in the sale and purchase of a property gives rise to two transactions:

  • The “mandate agreement” - which authorises the agent on behalf of the property owner to market the property to potential buyers
  • The “sales agreement” - where the agent secures a willing buyer during the usual course of business which results in the purchase of the owner’s property under the terms of the prescribed mandate. The marketing and sales efforts are therefore rewarded only after the sales agreement is concluded

Laws Protecting Home Buyers

The Estate Agency Affairs Board of South Africa advises its agents to stick to simple plain terms and text, that can be easily understood when setting up and concluding mandates with prospective sellers. They are also advised to follow the directives of a transaction as stipulated in the Consumer Protection Act.

A written contract, or mandate, is entered into between the agent and seller. The mandate is a written authority to act on the seller’s behalf to market the property for sale to prospective buyers under specific conditions.

Furthermore, a mandate should contain fair, reasonable terms and conditions and should express notice of any terms that may potentially limit risk or liability to the agent, seller or purchaser. Where applicable, a cooling off period is clearly set out in the mandate.

Since the agent’s marketing and sales activities are directed at the general public, the CPA ensures the agent complies with the provisions of the act in order to protect the interests of the seller as well as the buyer.

The CPA offers the consumer full and fair protection including:

  • Equality
  • Privacy
  • The right to choose
  • Disclosure of information
  • The right to fair and reasonable marketing
  • The right to ethical honest engagement

All of which apply when agents are marketing their services through advertising or listing properties for sale.

Consumer Protection Act and Property

If a property owner sells his home privately to a willing buyer, this transaction does not form part of his usual course of business and is not deemed to be a business “supplier” to “consumer” transaction.

Therefore, this transaction is not covered by the Consumer Protection Act.

An estate agent usually markets and promotes its listed properties for sale through direct marketing, either by email, or via advertising in local newspapers, internet websites and other social media platforms.

The willing buyer will have the right to a cooling off period which allows him or her to cancel a sale within a stipulated number of days from date of signing of the sales agreement. Cooling off periods do not, however, apply to the seller.

Van Deventer & Van Deventer Incorporated – Property Attorneys in Johannesburg and Cape Town

The Consumer Protection Act and its relation to the seller, an estate agents mandate and the sale of immovable property may not relate to estate agents’ mandates as they are not transactions as prescribed within the Act.

It should be clearly understood that the CPA applies to the marketing techniques applied by agents when engaging with the consumer in order to sell their listed properties.

The CPA does not include protection for the seller who sells his property privately as part of his usual business income generation process.

For further legal assistance with matters related to property law in South Africa, contact us.

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