In our last article we looked at the property practitioner’s role in obtaining a Mandatory Disclosure Form as required by Section 67(1) of the Property Practitioners Act as well as the consequences if a property practitioner fails to obtain such disclosure. In this article we will focus on what impact, if any, the Mandatory Disclosure Form has on the voetstoots clause.
- VOETSTOOTS CLAUSE:
The vast majority of sale agreements for immovable property have a voetstoots clause, in terms of which the purchaser acknowledges that:
- He or she has been informed that the property is sold in the condition that he or she sees it;
- He or she is acquainted with the property’s nature, extent, and condition; and
- He or she accepts the property as is.
Essentially the voetstoots clause therefore serves to indemnify the seller of the property against claims for damages in respect of any defects in the property, whether latent or patent (patent defects being those defects that are visible, and latent defects being defects which are hidden and not visible through reasonable inspection).
In order to provide some relief for purchasers, and to prevent sellers from abusing the voetstoots clause our Courts have found that a seller cannot rely on the voetstoots clause in order to escape liability for damages in situations where:
- It can be shown that the seller was aware of a latent defect in the property; and
- That the seller deliberately concealed or failed to disclose such defect with the intention to defraud the purchaser.
The key question is therefore whether a seller had subjective knowledge of a latent defect in the property as at the time of the sale agreement being signed. If a seller cannot be shown to have had such knowledge, then the voetstoots clause will indemnify him or her from a claim for damages should an issue be identified after registration of transfer.
- MANDATORY DISCLOSURE FORM:
In terms of Section 67 of the Property Practitioners Act a property practitioner must obtain the Mandatory Disclosure Form in the prescribed form (author’s emphasis). The prescribed form for the disclosure form is then set out in Regulation 36 of the Regulations to the Act.
In the prescribed form a seller is required to make 11 “Statements in connection with Property”, all of which statements begin with the specific phrase “I am aware of…”. Based on this wording it is clear that the purpose of the disclosure form is for a seller to make declarations regarding his or her personal knowledge of the state of the property. The seller is therefore not making a declaration that there are no issues with the property in question, but rather that there are no issues of which he is subjectively aware.
- CONCLUSIONS:
Based on the prescribed wording as per the Regulations it is submitted that the disclosure form has no impact on the voetstoots clause in a sale agreement. A seller who has no knowledge of a particular defect in a property will declare this in the form, and should an issue subsequently arise he or she will be indemnified against a claim for damages from the purchaser by virtue of the voetstoots clause.
The only time the seller will not be entitled to rely on the voetstoots clause is where it is shown that the declaration in the disclosure form was false, and that he or she did in fact have knowledge of an issue and concealed same. This would however be the position regardless of whether the disclosure form was signed or not.
Article by David Campbell