As an estate agent, it’s important to be familiar with the direct marketing laws in South Africa. The Consumer Protection Act South Africa (CPA) makes several provisions that affect marketing issues such as direct marketing.
Although many estate agents use direct marketing strategies in a professional manner, they should still use a careful approach in view of the specific provisions within the Act.
Direct marketing is defined as: “the business of selling products or services directly to the public, for example by mail order or telephone selling, rather than through retailers.”
In accordance with section 44 of the CPA, any person or organisation providing a service, including all conveyancers and estate agents are expected to avoid being accused of omitting any facts known to them if that failure amounts to a deception.
Property defects are covered by the “voetstoots” clause, however, if an estate agent is asked about any specific defects or is asked to obtain such information from the seller, the agent is obliged to investigate and to then disclose any and all defects which have been disclosed to him or her.
This section does not place the agent under any obligation to disclose all defects or the general condition of the property unless the buyer has actually raised these concerns.
However, when it comes to promoting their available properties, agents must always be extremely careful when using catchy or misleading titles.
Agents may find themselves in considerable amounts of trouble if their titles prove to be misrepresentations of the property. Titles such as “will sell quickly” or “in excellent condition” should be avoided as much as possible.
The most effective means of advertising property is to provide several good quality photographs of the property with an elaborate description of what the property offers in terms of bedrooms, bathrooms, garages etc.
It’s advised that estate agents refrain from saying anything about the actual quality of any parts of the property.
Direct marketing includes any way in which an agent uses his or her initiative to personally approach individuals in order to push a sale. This is done instead of using magazines or newspapers or electronic communication to advertise.
Should direct marketing result in a sale agreement, the buyer must be made aware of his or her right to cancel the sale according to Section 32.
Section 16 allows a buyer to cancel a sale agreement without reason or penalty, as long as it is done so within 5 business days from the conclusion of the sale or delivery of goods.
The transfer of property is included in this provision and should the buyer cancel under these circumstances then he or she is entitled to be repaid within 15 working days of the cancellation.
This is not ideal as it creates serious implications for banks who will need to cancel existing bonds or register new ones.
There have been several misleading media reports as well as rumours that have implied that buyers of property have general rights, separate from rights related to direct marketing, to cancel a sale within 5 business days of purchasing their property or receiving their transfer of property.
However, the CPA does not make such a provision. The only law which may apply in such cases is section 29A of the Alienation of Land Act which allows buyers a “cooling off” period of 5 business days on properties which have been sold for R250 000 or less.
In conclusion, estate agents need to exercise extreme caution when using direct marketing tools to promote their properties.
The eventual outcome of sales can be quite uncertain given the rights buyers have as well as the time period they are given to exercise such rights.
Approaching members of the public without having been approached by them first can prove to be a risky business. This includes using direct marketing to clients who originally sold their properties through the respective agency.
Any rights provided by the Act are still applicable to any new direct communication which may take place.
For expert advice regarding direct marketing laws in South Africa, including buyer’s rights to cancel offers to purchase, contact us.
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