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We made an offer and the seller lied to us!

16 Sep 2015

A Property24 reader asks:

A Property24 reader says they made an offer in March on a house with tenants and the seller ‘lied’ about the lease end date. What to do?

We put in an offer to purchase in March on a property with tenants. We were assured by the estate agent that the tenants’ lease contract ended 30 June 2015 and they’d be out on or before that date. On the day of signing, the agent did not have a copy of the lease agreement (after numerous requests beforehand) because he “could not get hold of the owner…” 

After signing the Agreement of Sale – which clearly stated that the tenants’ lease agreement was until 30 June 2015 – we queried in July why they had not moved out of the property yet, before went  ahead to sign final transferring papers. The agent then referred us to the transferring attorneys, after which we were told telephonically to sign the papers in the meantime, and that the tenants will be out in the weeks to come as they were handling the situation. We obviously refused as we knew that something was not right. After once again requesting a copy of the lease agreement, we were told by the transferring attorneys that we may not see the lease contract, as this was confidential. 

After struggling to get hold of the agent, branch manager and transferring attorneys for weeks, we then found out in mid-August that either the estate agent or the seller lied in the contract, and that the lease agreement date was until 31 August 2015. This was found out after we complained to the agency’s head office and were then sent a copy of the lease agreement. After lengthy emails and requests to answer concerns that we didn’t understand as first-time home buyers we were then told by the transferring attorney that the matter was being taken to court and that they’ll handle the situation and keep us updated in the interim. 

Seeing that this has been coming on since March – and we’re getting married in October and obviously need a property to stay in - what rights do we as home buyers have? The estate agent, managing agent as well as the sellers lied in a binding and legal document, which we all signed. Are we able to claim from the agency or seller in this regard? Can they be held responsible for finding a suitable place for us to stay in for the meantime, of which they will have to bear the costs? What should we do? 

Jaco Rademeyer, from Jaco Rademeyer Estates, responds: 

In terms of the Agreement of Sale which you had signed with the Seller, they had falsely misrepresented to you as the Buyers the situation at hand and unfortunately you are being severely prejudiced by the situation where the Agent and Sellers where not forthcoming on the true stance pertaining to the property.

You as the Buyer could approach the court to set aside the contract seeing as the Seller did not disclose certain material facts to you. In terms of the agreement, one would also have to assess whether the Seller in fact confirmed that vacant occupation of the property would be granted on registration of the property to you as the Buyer. 

There is the underlying principle that where there has been a (reasonable or justifiable) mistake for which one contracting party can be blamed then the "innocent" contracting party has the option to escape the contract. Termination of the contract and return of the deposit, plus payment of reasonable expenses, which may include the cost of title examination, preparation of the survey and attorney's fees can be claimed by the purchaser.

You will also have a claim for breach of contract in that there was a material breach of a contractual term in that the tenants did not vacate the said property at the time stipulated in the contract. Monetary damages for breach of contract are generally measured by the difference between the contract price and the market value of the property. However, ordinary contract damages for the seller's breach, which is the failure to fulfil contractual obligations, will not be available unless the seller has acted in a dishonest manner or has been unwilling to perform. Under this rule, the seller acting in an honest manner who is unable to perform will only be liable for return of the down payment plus interest and reasonable expenses. Damages claimed by the purchaser must, however, be able to be successfully proved in court.

Readers may submit questions to Property24’s Guest Expert panel and/or comment below. We may not be able to answer all questions received, but all will be considered.

About the Author
Jaco Rademeyer

Jaco Rademeyer

Jaco Rademeyer is the owner and principal of Port Elizabeth-based Jaco Rademeyer Estates (JRE). He obtained an LLB from Stellenbosch University with a special focus on contract law, and is a multiple Institute of Estate Agents award winner in the Eastern Cape. In 2012, Jaco won the Eastern Cape Property Icon Award and also won the business and law category of the Mail & Guardian’s 200 Young South Africans competition. He was also named in the Nelson Mandela Bay Business Chamber’s Top 40 Under 40 business people in the region. Follow Jaco on Facebook at JRE - Jaco Rademeyer Estates, or on Twitter at @jacorademeyer, or visit www.jacorademeyer.co.za.

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