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Uncertainty about impact of CPA on real estate
Established in 2008, the Consumer Protection Act (CPA) aims to simplify the transaction for both buyer and seller. The question is, how does the Act impact on the real estate market? Trudie Broekmann, commercial director of the legal firm Gunston Attorneys indicates that the only thing that is clear at present is that no final answers as to how various aspects of the act will be interpreted, have been established.
One of the questions currently debated is whether the Act affects an estate agent's relationship with the buyer when the agent's commission is paid by the seller, not the buyer.
"I believe that the Act does apply to an agent's relationship with both the seller and the buyer. In fact, an estate agent should always communicate within the terms stipulated by the Act as a matter of professional conduct," says Bruce Swain, MD of Leapfrog Property Group. He goes on to indicate that the Act, in essence, outlines proper conduct which should already be part of any estate agency's business practice.
Advertisements as direct marketing tool
According to Broekmann, consumer protection deputy director Buyile Nopote, agrees with this view having recently stated that it makes no difference that there is no monetary agreement between the buyer and the agent. All business activities, including all marketing activities, are regarded as being 'for consideration', and are thus governed by the Act.
Agents would do well to note that Nopote considers the insertion of direct advertisements into free community newspapers to be direct marketing which should not be delivered to addresses that exhibit a 'No adverts/junk mail' sign. Agents who follow this practice could be held liable along with the newspaper publisher if these papers are delivered to such an address. One could reasonably conclude that the practice of mail dropping so common with many agents would also be viewed in a like manner.
Possibly one of the biggest changes the Act seeks to bring about relates to the voetstoots clause which has traditionally protected the seller from legal action due to any defects in the property he was not aware of. In terms of once off transactions this clause will still apply. It seems that the CPA will apply in the case of a supply by developers and speculators. In all cases the need for full disclosure by all parties, particularly the seller, when it comes to disclosing problems and defects that they are aware of, but are not readily apparent, is imperative.
