The first of April 2011 will be a watershed date for consumer rights, as the highly anticipated, but repeatedly delayed, Consumer Protection Act (CPA) is scheduled to come into force.
Guest expert Jaco Rademeyer is the owner and principal of Jaco Rademeyer Estates in Port Elizabeth, and is the Nedbank Property Professional of the Year for 2010. He obtained an LLB from Stellenbosch University with a special focus on contract law, and is a multiple Institute of Estate Agents award winner.
It was initially published in the Government Gazette on 29 April 2009, with the focus on protecting consumers against exploitation and unfair marketing practices, and to empower them to make informed purchasing decisions.
However, unless you’re a legal expert, or have an inherent affinity with legal matters and the complicated jargon associated with this field, the hundreds of pages contained in the Act will be of little value or interest to Mr and Mrs Average. Yet it has important implications for every South African, whichever side of the fence you’re on.
Let’s get the basics out they way. Firstly, the Act refers to suppliers, goods and consumers. A supplier is “a person who markets any goods or services” in their “ordinary course of business”. In the property context, this applies to the likes of estate agents, property developers, attorneys, banks, as well as investors letting property on a continuous basis, or those who buy, renovate and sell houses as a business.
Goods, in this case, are identified as “a legal interest in land or any other immovable property”, or related service.
And now it gets a bit more technical: a consumer is “a person to whom goods or services are marketed in the ordinary course of the supplier’s business”, and “who has entered into a transaction with the supplier”. It also includes a “user of those particular goods or a recipient or beneficiary of those particular services”, irrespective of whether they were party to the transaction or not.
Thus, in short, it covers every transaction between a supplier and consumer involving the supply of goods and/or services, the promotion of such goods and services and, naturally, the actual goods and services themselves.
It’s easy, then, to accurately deduce that property developers naturally fall under the Act, and are legally obligated to provide a final product – the erf, house, townhouse, sectional title or apartment for example – that meets all the specified requirements and quality standards, and accurately reflects the agreement signed with the purchaser. The marketing of the property also has to match the actual product, eliminating the ambiguity that often arises in advertising.
The consumer will then have recourse against the developer, by means of a Consumer Tribunal or court, should they wish to contest any of these issues.
As far as estate agents are concerned, it gets rather more complicated, as the agent is primarily facilitating the transaction between the buyer and seller, and isn’t actually the supplier of the goods – so do they fall under the CPA?
Of course they do, as the agent’s job is service-oriented, and involves marketing the goods (the immovable land or property) on behalf of, and on instruction by, the seller in the ordinary course of their business. Equally, it applies to an agent instructed by a buyer to find a property for him or her.
The Act entrenches the consumer’s right to fair and responsible marketing. This includes respecting the consumer’s rights to equality, privacy, choice, fair and honest dealing, reasonable terms and conditions (with the mandate agreement provided in plain and understandable language), fair value, quality and safety, while underlining the supplier’s responsibility, accountability and honesty.
Any reputable estate agent will typically fulfil these requirements as a matter of course, but it certainly poses hefty implications for those that don’t and are inclined to exaggerate specifications, features or property values, or may renege on a signed agreement.
By virtue of the Act, the agent must ensure that the mandate signed by the seller (or the rental agreement signed by an owner for that matter) encompasses all of these requirements, including the consumer’s right to a cooling-off period that allows them to cancel the agreement within five days.
What the CPA doesn’t cover in property transactions is the actual deed of sale between the seller and buyer, as this is a once-off transaction, and is not conducted in the stipulated “ordinary course of business” – a clause which is aimed at protecting the consumer’s relationship with a business entity.
This brings up an interesting question: does the CPA draw a bright red line through the much-debated “voetstoets” clause that eliminates the seller’s liability to defects that are not clearly visible or evident to the ordinary person? The simple answer is no, as far as a once-off property transaction between buyer and seller is concerned, as this is excluded from the Act.
The buyer still retains the right to contest the issue of latent defects, but the burden of proof is still on them to show that the seller knew of, or intentionally concealed the defect, which makes it an extremely difficult case to win.
Nevertheless, the CPA makes the makes it impossible for developers, estate agents, investors and other property-related entities to rely on the voetstoets clause to exclude their liability for defects.
In essence then, the Consumer Protection Act is an extremely valuable and important piece of legislation that protects consumers from abuse and exploitation. It ensures that every type of business, including those in the property industry, will be responsible and accountable for the services they render, and the products they supply.
Jaco Rademeyer is the owner and principal of Jaco Rademeyer Estates in Port Elizabeth, and is the NedBank Property Professional of the Year for 2010. He obtained an LLB from Stellenbosch University with a special focus on contract law, and is a multiple Institute of Estate Agents award winner. Jaco can be contacted on 041-367-1151, via email or visit the website.
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