11 July 2024

This is Part 4 of a five-part series. Law firm STBB hosted a webinar on the topic of ‘caveat emptor’ and the following is the transcript:

…continued from Part 3

While the Property Practitioners Act imposes stringent requirements on estate agents, its applicability is not universal across all property transactions:

  • Private sales: Transactions conducted without the involvement of estate agents are exempt from the Act’s requirements. In such cases, buyers must conduct their own due diligence to ascertain the property’s condition and any associated risks.
  • Legal interpretations: There remains legal debate about the Act’s scope, particularly whether it extends beyond movable property to include immovable property. This uncertainty underscores the need for further judicial clarification to definitively interpret the Act’s applicability in property transactions.

Buyers in property transactions governed by the Property Practitioners Act benefit from enhanced transparency and the right to accurate property disclosures. However, the Act does not absolve buyers from conducting their own due diligence:

  • Legal remedies: In instances where estate agents fail to provide the Immovable Property Condition Report or adequately disclose material defects, buyers may pursue legal recourse. This may include seeking damages for losses incurred due to non-disclosure or misrepresentation.
  • Challenges in enforcement: While the Act establishes clear obligations for estate agents, enforcement can be challenging, particularly in proving that losses were directly caused by the estate agent’s negligence or non-compliance.

Understanding remedies available to purchasers

When a latent defect is discovered in a property after purchase, purchasers typically have two primary legal remedies available:

Actio Redhibitoria (Restitution):

  • Nature of the remedy: This remedy allows the purchaser to cancel the sale and claim restitution of the purchase price or any payments made.
  • Conditions for application: It requires proving that the defect substantially impairs the property’s value or utility. Examples include significant structural issues like sagging roof trusses or damp walls.
  • Time frame: The defect must have existed at the time of the sale, although it may only manifest later.

Actio Quantitatis Minoris (Reduction in Price):

  • Nature of the remedy: This remedy seeks a reduction in the purchase price based on the discrepancy between the value of the property as warranted and its actual value due to the defect.
  • Conditions for application: It requires proving the defect’s existence and its impact on the property’s value.

Challenges in Proving Latent Defects

Proving the existence and impact of latent defects can be challenging due to their nature:

  • Evidence requirement: Purchasers must provide factual evidence demonstrating that the defect existed at the time of sale. This often involves expert testimony and detailed documentation.
  • Discovery timing: Since latent defects may not be immediately apparent, disputes can arise regarding when the defect became known and its impact on the property.

Practical Examples and Challenges Faced

Illustrative examples highlight the practical challenges in enforcing remedies for latent defects:

  • Roof leaks: For instance, discovering roof leaks post-sale, particularly during rainy seasons, illustrates the difficulty in proving that the defect existed at the time of sale without clear documentation or prior knowledge from the seller.
  • Seller knowledge: Instances where sellers had prior knowledge of defects, such as obtaining repair quotes or insurance assessments before sale, can support claims of non-disclosure or fraud.

Steps Involved in Legal Proceedings

Enforcing remedies typically involves legal proceedings:

  • Issuing summons: Purchasers initiate legal action by issuing summons against the seller, outlining the claim and evidence supporting it.
  • Court proceedings: Proceedings involve presenting evidence, including oral testimonies and expert reports, to substantiate claims of latent defects and seller knowledge.
  • Adjudication: The court assesses credibility and evidence to determine the validity of the claim and the appropriate remedy.

Continued in Part 5…

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