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Estate Agents Calm as CPA Comes into Effect

Practises of disclosure and upfront information ensures agencies safety

Following the inception of the Consumer Protection Act on the 1st of April 2011, there has been a lot of worried mumblings in the various industries; the property market was not an exception. In light of this, Alcocks decided to interview key property experts in order to get a better understanding of the Act’s effects and how it impacted the industry.

The CPA has come about to promote good service and products for the consumer in a bid to protect them against unfair marketing and business practices. Having studied the act and attended several seminars, the agents believe they have little to fear and in this light have not changed or changed very little in their sale agreements. Upon advice received from several conveyancers and attorneys, many estate agencies have kept their old sale agreements in service.

A Durban North based agent stated that in terms of their service, they were always required to disclose information and faults. They would go through the contract with the buyer and seller in an attempt to ensure that both parties fully understood the agreement. This has not changed however they have added a clause stating that this exercise has been done which requires their signature. These sort of practises have safe guarded the agents.

The general consensus among the professionals is that the CPA has had more of an impact on developers rather than the estate agents as a sale is as part of their normal course of business. That said rentals and the mandate process are affected as these require the agency to provide a service as well as active canvassing.

The CPA has also affected property sales in terms of disclosure of faults. Due to the amount of scare-mongering that has been suffered by estate agencies, ideas that the seller had to by law make an account of every detail had to be verified. Various attorneys were consulted and the outcome was that the seller had to disclose all the known faults to the purchaser. Cindy Bogan of Wakefields Mackeurtan Branch in Durban North states "You don’t have to look for what’s wrong, you have to disclose what you KNOW is wrong". A Berea agency has implemented a declaration into their contract that the seller signs and lists the known faults. A similar concept is used by another agency in Durban North for those cases where the seller refuses to sign documents; a "snag list" of faults is ticked, dated and initialled in order to disclose the faults to the purchaser.

Unknown faults fall under "latent defects" which still applies as the "voetstoots" clause has not fallen away. These apply to one off sales but not in the case of developers where purchasers have the right to a comeback even after six months.

Estate agents are safe from this eventuality with the onus still being on the purchaser to examine what he is buying; Pranil Maharaj of Prime Properties Umhlanga states "I can’t see the CPA placing undue pressure on the seller, the purchaser should see and inspect", therefore the onus is still on the purchaser to inspect the property before he commits to purchasing it.

The purchaser however is not pressured as a number of estate agencies offer a "cool down period" which the purchaser can use to think over and finalise his decision to purchase. Different agencies offer various time frames as seen with Prime Properties offering a 21 day cool down while Wakefields offers the seller a 5 day cool down period which is offered with their mandates. In these 5 days the seller may at any time back out of the deal and Wakefields will not post any signs or advertising boards.

All of these practises have ensured the estate agents have nothing to be worried about in light of the CPA, as Gert Voster of Engel and Volkers Ballito says "if you have an honest practise you have nothing to fear".