After signing an offer to purchase, a buyer will often take occupation of the property before registration of transfer has been affected into their name. Upon moving in, the buyer may find defects in the property that they were not made aware of by the seller prior to signing the sale agreement.
READ: Hidden defects and unjustified claims: Legal protections for homebuyers and sellers
According to conveyancers and property Law attorneys at Abrahams & Gross it is common for the buyer to demand a reduction in the purchase price of the property due to the undisclosed defects, while the seller denies awareness of the defects and refuses the reduction. The parties are now at odds. In order to cancel the agreement, may the buyer instruct the bond attorneys to suspend the registration of the bond, thereby terminating the transaction?
Know your sale agreement
Unless the agreement provides that certain improvements will be made by the seller prior to transfer, or that the property will be in a certain condition on the date of registration of transfer, then the buyer may not intentionally hold up the transfer for reason of undisclosed defects.
It is also a common misconception that if the buyer’s bond is withdrawn after initial approval, then the sale agreement is automatically void or cancelled due to non-fulfilment of suspensive conditions. When the bond was initially approved by the bank, the suspensive condition was met, and the agreement became unconditional. A subsequent withdrawal of the bond under these circumstances will not undo the fulfilment of the condition or cause the agreement to be void.
Recourse available to the buyer
If the buyer has made the seller aware of undisclosed defects and the seller refuses to negotiate a reduction in the purchase price, the buyer has three available avenues of recourse, namely:
- Proceed with the transfer, and then bring an action against the seller for damages to address the defects or for a reduction in the purchase price; or
- Claim that there was a material misrepresentation by the seller, cancel the agreement, and return the property to the seller (if the buyer has already taken occupation). The purchaser may then recover any damages he may have suffered by way of litigation; or
- Where the seller was aware of the defects and wilfully withheld the information from the purchaser, the seller will not be protected by the voetstoots The purchaser may invoke the aedilitian remedies of the actio redhibitoria (to cancel a sale on consequence of defects in the object of the sale) and/or the actio quanti minoris (reduction of price as compensation for latent defects in the object of sale) where the buyer has successfully proven that the seller withheld the knowledge of the defects.
By instructing the bank to suspend the registration of the bond with the intention of putting pressure on the seller to negotiate or meet his/her demands, the buyer runs the risk that this action may give a clear and unequivocal indication to the seller that he/she no longer wants to proceed with the sale, which justifies immediate cancellation by the seller.
Always speak to an expert before taking action
Property transactions are complex and often involve delicate issues between the parties, such as allegations of undisclosed defects, which warrant expertise and care. Our experienced Conveyancers and Property Law attorneys at Abrahams & Gross are renowned for providing quality client service and are available to assist with any property-related issues or queries.
READ: Weighing the risks of home defects that have been repaired
* Disclaimer: The articles on these web pages are provided for general information purposes only. Whilst care has been taken to ensure accuracy, the content provided is not intended to stand alone as legal advice. Always consult a suitably qualified attorney on any specific legal problem or matter.
Readers may submit questions to Property24’s Guest Expert panel. We may not be able to answer all questions received, but all will be considered.
Want all the latest property news and curated hot property listings sent directly to your inbox? Register for Property24’s Hot Properties, Lifestyle and Weekly Property Trends newsletters or follow us on Twitter, Instagram or Facebook.
Print
