The CPA – seller and agent may be liable

The CPA – seller and agent may be liable

Private Property South Africa
Ismael Laher

In terms of the Consumer Protection Act (CPA), should the courts determine that a transaction or agreement was, in whole, or in part, unconscionable, unjust, unreasonable or unfair, the court may make any order it considers just and reasonable in the circumstances. This includes, without limiting the power of the court to make any order it could possibly deem fit, ordering that the seller return money to the purchaser, compensate the purchaser for losses or expenses relating to the purchaser or even the court proceedings. The fact that this is not limited means that the courts, if deemed fit to do so, may also order that the entire transaction be cancelled and so registration of the transfer only being cancelled after the court process has been finalised.

One of the knock-on effects of this is that, should the estate agent be at fault, they may then find themselves liable to the seller of the property for all the losses of the seller. The estate agent is providing a service in the ordinary course of business and so the relationship between the seller and the estate agent will also be governed by the CPA. The seller will be a consumer when dealing with the estate agent and will therefore enjoy all the implied warranties and rights enjoyed by the property purchaser when dealing with the estate agent. The liability of economic loss would also extend to the trade industry and all services and goods provided by electricians, builders and plumbers and other such tradesmen will be governed by the CPA.

The CPA also prohibits a seller from charging a price that is unfair, unreasonable or unjust, The powers of the courts to order the seller to return money to the purchaser may also come into effect if it determines that the price of the property purchased in the ordinary course of business us unconscionable, unjust, unreasonable or unfair. This means that the court can unilaterally change the purchase price of the property and require the seller to return part of the purchase price to the purchaser. Despite protecting the purchaser, this could be problematic for sellers who are the purchasers in transactions that are reliant on the first one. A seller may have relied on a specific amount and so may not be able to make payments when these fall due in a reliant transaction.

The CPA also now gives the purchaser the right to assume that the seller is fully liable for any charge of encumbrance pertaining to the property in favour of any third party unless the seller has disclosed those charges or encumbrances in writing to the purchaser prior to the transaction being concluded. Sellers should make it practice to provide written notices to purchasers with a breakdown of all charges that the purchaser will pay and all encumbrances on the property, or the seller will be liable for these undisclosed costs, charges or encumbrances. This could end up being extremely costly for the seller if, for example, they are required to pay on-going charges that will be charged on the property every month for the foreseeable future.

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