Property buyers will no longer run the risk of losing their deposit if a property sale falls through once the new Consumer Protection Act comes into force. The new Act will be applicable from 1 April next year.
Trudie Broekmann, a senior associate at Webber Wentzel says that estate agents will no longer be able to insert a clause in the offer to purchase allowing the purchaser to forfeit a deposit is the sale is cancelled other than if the purchaser defaults.
She says the act points out that this would be an unfair clause and if it is included in the sale agreement, a consumer court or a magistrate’s court could rule the entire agreement null and void.
Other protection measures for home buyers include the fact that the sale agreement must stipulate that the transfer costs are to be paid by the purchaser because if this is not stipulated then the seller could be made liable for the transfer cost.
Moreover, in terms of the CPA, the purchaser has the right to cancel the agreement without penalty if the seller’s conveyancing attorneys tender transfer at a different date that is either earlier or later than specified in terms of the deed of sale.
According to Claire McGee of Shepstone & Wylie, the CPA provides for a cooling-off period for properties that are offered through direct marketing methods. If a buyer responds to a direct marketing offer and decides to buy the property then, in terms of the CPA the buyer has the right to cancel the sale within five days of taking occupation of the property, regardless of whether or not the property has been transferred.
These conditions do not apply, however, if the purchaser responds to a newspaper advertisement or to a direct approach from an estate agent. McGee says that direct market could apply to newsletters that are sent out to clients listing properties for sale.
The seller has 15 days to refund any amounts paid by the purchaser if the sale agreement is cancelled. If the property has been occupied by the purchaser then the seller can deduct a reasonable charge for occupation.
However, McGee points out that the CPA does not contain any clear guidelines on when a transaction can be considered to have materialised as a result of a direct marketing campaign.
She says that because of this, the purchaser can probably not rely on this cooling off period in the CPA, particularly if there has been a lapse of time between the original approach, the date the sale was concluded and then the cancellation of the agreement.
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