The CPA – the marketing of property

Private Property South Africa
Ismael Laher

The Consumer Protection Act (CPA) will test the bounds of marketing property. Under the CPA, the seller of a property, or the real estate agent acting on their behalf, must not, through either their conduct or words, express or imply any false, misleading or deceptive representations concerning a material fact to a purchaser. The seller or agent may also not use exaggeration, innuendo or ambiguity regarding a material fact. Additionally, the seller or agent may not fail to disclose a material fact if such failure to disclose that material fact would amount to deception. The seller or agent may not, through either their conduct or words, fail to correct an apparent misapprehension on the part of a purchaser which would amount to a false, misleading or deceptive representation.

The CPA specifies, without limiting the general nature of the right, that it is misleading to falsely state, imply or fail to correct a purchaser’s misapprehension that any land or other immovable property has characteristics that it does not have, may lawfully be used or is capable of being used for a purpose that is in fact unlawful or impracticable, or that the property is close to any facilities, amenities or natural features.

The seller and agent will have to be sure that any specifics that the purchaser asks for can be done on the property. If the purchaser buys the property and, for example, cannot operate a business there as specifically required, the seller may be required to pay for and deal with the licensing application or compensate the purchaser for dealing with the application. This may even include the purchaser specifically mentioning that they require a gym within walking distance and the gym being an unreasonable distance away to walk to and so the transaction being cancelled.

The CPA now protects any purchaser who enters into a transaction in the ordinary course of business when relying on a false, misleading or deceptive representation or any opinion provided or on behalf of the seller that is to the detriment of that purchaser. Any such transaction or even one of the terms or conditions of that transaction will be considered as unfair, unreasonable or unjust if the purchaser entered into the transaction under such a reliance.

The right provided to consumers in terms of the CPA to rescind a transaction which resulted from direct marketing, without reason on penalty, will also have an impact on the sale of property. Property is often purchased as a result of direct marketing by real estate agents. For example, real estate agents will deliver fliers en masse, putting these in people’s post-boxes, under doors and in email inboxes, marketing property by both physical mail and email on behalf of sellers followed up by an approach to the potential seller.

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