Or is it?
The Consumer Protection Act came into effect from 1 April 2011 and sets out the minimum requirements to ensure adequate consumer protection. With the new Consumer Protection Act (CPA) now in effect, property professionals will be forced to look at the way they do business and how certain procedures affect both them and their clients.
The main objective of the CPA is to promote a fair, accessible and sustainable marketplace, therefore all terms within the property sale agreement must be fair and reasonable for both parties.
Until now parties could agree to any term in the contract, even if it severely prejudiced one party, which in most cases was the buyer. Parties had the freedom to negotiate contract terms at will, but now the CPA will set out to restrict contractual rights and make sure that parties prescribe to specific, just practices in the negotiating and selling of property. In certain cases, risks that were previously assumed by consumers will now be placed on the supplier. This means that South African’s are now among the most protected consumers across the globe.
So what impact will this have on the real estate industry?
The CPA will definitely have an impact on how property professionals draw up contracts. All standard contracts will need to be reviewed and must be brought in line with the requirements of the act. Agents will have to take it upon themselves to ensure that sellers and, more particularly buyers, have fully understood the meaning of the wording and legal effect of such wording contained within all mandate agreements and contracts into which they have entered.
It may come as a surprise to many, that South African conveyancers find themselves faced with buyers who do not appreciate how binding and non-negotiable an offer to purchase is once the seller has accepted it and any suspensive clauses have been complied with, e.g. the sale of another home or the granting of a bond.
It can be painful to have to point out that there is no escape route for the buyer between his offer being accepted and the transfer taking place other than in cases where the seller has breached the terms of the contract. We regularly come across buyers who think that they have a right to veto the transfer – they do not appreciate that the registration of the transfer is simply the verification of the acceptance of the offer.
Should a buyer for some reason, such as a sudden financial crisis or the discovery of a better priced property, want to get out of the deal he can approach the seller for leniency and the cancellation of the agreement and he can offer to pay compensation. However, the seller need not take notice of this and may reject the request.
What all this comes down to is that contracts are immutable in South African law and there can be no going back on them. This applies especially in property, where the law stipulates that contracts must be in writing and signed.