A Property24 reader asks:
A Property24 reader asks if the 5-day cooling off period applies now that the buyer has changed her mind about purchasing the property.
I'm an estate agent and I met someone who asked me to advise her on a property matter.
They made an offer to purchase on a property in Kempton Park three days ago via an unnamed agency for an amount of R750 000. However, they have subsequently changed their minds and want to back out of the deal, as they feel that they have made an error and would like to look closer to the schools that their children are in. Apparently the estate agent is trying to hold them to the contract, due to obvious reasons.
I had a chat to my manager hoping that he could confirm the 5-day cooling off period, and he said that they cannot use the cooling off period as the value of the contract is over R250 000. I beg to differ as when I completed my NQF4 course last year the CPA was brought up in-depth and the cooling off period of 5 days was mentioned by the lecturer.
The new CPA (Consumer Protection Act) now protects consumers more than ever before - and rightly so as we are all consumers at some time or other.
Please could you answer my question regarding the 5-day cooling off period.
Jaco Rademeyer who is the owner and principal of Jaco Rademeyer Estates in Port Elizabeth and has an LLB with a special focus on contract law, advises:
When considering the cooling off period and it comes to property we have to analyse the definition as stated in the Consumer Protection Act 68 of 2008. When it comes to the selling and buying of real estate the formalities are much more stringent and therefore when applying the Consumer Protection Act we have to look at it in more detail.
To answer the question about the monetary threshold in terms of the Consumer Protection Act, the instance where your manager said that the cooling off period does not cover the matter as the amount was over R250 000 is untrue and highly incorrect. As per Section 6 of the Consumer Protection Act the monetary threshold will change at intervals of not more than five years by notice in the Gazette. As per Government Notice No. 294 dated 1 April 2011, Dr Rob Davies, Minister of Trade and Industry, stated that the monetary threshold applicable to the size of the juristic person in terms of section 5 (2) (b) is R2 000 000. This means that the cooling off period will cover a person that falls into the definition of “consumer” as per Section 1 of the Consumer Protection Act and has a turnover of R2 000 000 or less.
The Consumer Protection Act section 16 governs the terms of the cooling off period. In terms of Section 16(2) the cooling off period applies in addition and does not substitute any rights to rescind any transaction that would apply in the normal course of business. Section 16(3) states that a consumer may rescind a transaction resulting from any direct marketing without reason or penalty, by notice to the supplier in writing, or another recorded manner and form, within five business days after the date on which:
- The transaction or agreement was concluded; or
- The goods that were the subject of the transaction were delivered to the consumer.
Now this is where it can get complicated and the courts might have to decide on some of the issues. Direct Marketing in terms of the Consumer Protection Act means to approach a person, either in person or by mail or electronic communication, for the direct or indirect purpose of promoting or offering to supply, in the ordinary course of business, any goods or services to the person. So this means that the cooling off period would be applicable for real estate transactions when done in the ordinary course of business.
Now the question is when will the 5 days for the cooling off period commence? Will the 5 days begin on transfer of the property or will it begin on the day of signing the sale agreement? This will still have to be determined by the courts.
So the Consumer Protection Act will apply to the sale and transfer of property when done in the normal course of business of an estate agent. Therefore the 5-day cooling off period will apply if it complies with the definition of the Act. I hope the above explanation has helped.
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