Latent defects and the Voetstoots clause
Introduction
An unethical estate agent or unprincipled seller can leave you with badly burnt fingers, a severely bruised ego and a badly dented chequebook. As a prospective purchaser, once you have made the firm decision to submit an offer on a particular property, an offer to purchase will be drawn up. At the risk of repeating ourselves, please be sure to enlist the services of a reputable and properly licensed estate agent for this purpose. You really do need expert advice in handling the many aspects of an offer to purchase – such as the purchase price; payment of the purchase price; date of occupancy; occupational rental; the voetstoots issue; handover of house keys; vacation of the property by tenants or domestic workers; and a host of other matters deemed necessary.
Definitions
What are “latent defects”? What does “voetstoots” mean? Let us begin with specific definitions
Defect is defined in law as “an impairment of the usefulness of the article sold”. The Concise Oxford Dictionary describes it as: “Lack of something essential or required”, “imperfection”, “a shortcoming or failing”, or “a blemish”.
Latent is defined in law as “one which would not be apparent upon inspection by an ordinary, prudent man, even though it would not escape the notice of an expert.” The Concise Oxford describes it as: “concealed”, “dormant”, or “existing but not developed or manifest”.
Voetstoots means “as it stands”, “with all faults” or “taken as it is.”
Working with the above definitions one could describe latent defects as “imperfections, impairments, shortcomings or blemishes which are concealed, dormant, undeveloped or not manifest or obvious”.
Relating to a property for sale, we are dealing with an impairment in the property which is unknown to both the purchaser and seller. It is concealed and not noticeable.
In terms of common law, when a situation arises involving discovery of an impairment of which neither the purchaser nor the seller were aware, the seller in any such transaction gives the purchaser an implied warranty against latent defects. In other words, if any such impairment is discovered it remains the seller’s responsibility. He/she has given the warranty and has to remedy the situation.
The obligation to inform is imported into an agreement of sale by operation of law, regardless of the actual intention of the parties, although it may be excluded by agreement.
The “voetstoots” clause
However, the “voetstoots” clause in your agreement of sale overrides the common law provision. By agreement no such warranty will be applicable and those common law provisions are ousted. Here is an example of a basic standard “voetstoots” clause in an agreement of sale (which, for practical purposes, also deals with ancillary matters).
“VOETSTOOTS
The property is sold subject to all conditions and servitudes mentioned or referred to in the Title Deed relating thereto, and to all other terms and conditions which may exist in regard thereto, and in the condition and to the extent such as it now lies voetstoots and absolutely as it stands. The Purchaser/s acknowledge/s that he/her/they is/are fully acquainted with the property, its nature, condition and locality, and with the conditions recorded in the Title Deed in respect of the property. If the property is erroneously described in the Title Deed, such error shall not be binding on the Seller/s.”
As explained earlier, Voetstoots means “as it stands” or “with all faults”, or “taken as it is”. So the “voetstoots” clause in your agreement of sale records, in effect, that you are purchasing the property as it stands and with all faults. The common law provisions are therefore ousted, and the purchaser is given no warranty against any such impairment. The seller is, in fact, contracted out of his obligation to provide such a warranty.
Obviously, the possibility exists that the “voetstoots” issue may become a point of argument, or even heated debate, between the seller and the potential buyer. The dispute may involve whether the alleged defect is indeed a defect, or whether it is latent and not patent, or whether fraud may be involved. The issue of fraud is dealt with next.
While the inclusion of a “voetstoots” clause is not an imperative by law, an agreement of sale, in practice, invariably includes this clause. In practice, it is not even open to negotation by the purchaser, and it has become absolutely standard practice.
The issue of fraud
It would be opportune at this stage to introduce a very important issue, and that is that the “voetstoots” clause does not protect the seller against fraud.
For example, if the seller knows about a particular problem, is aware of a latent defect, and fails to disclose details of that defect to the purchaser while knowing of its existence, this is pure misrepresentation; and misrepresentation is the essence of fraud. Such misrepresentation can occur in one of two ways – express misrepresentation or non-disclosure. Here are the two scenarios:
- You, as the purchaser, address a specific and direct question to the seller on a particular issue – “is the swimming pool leaking, or are there any problems?” The seller knows there is a problem, but answers “no.” This denial of the existence of a defect of which the seller is aware when asked is an express misrepresentation on the part of the seller.
- You do not direct a specific question to the seller about a potential problem, and the seller knows there is a problem. The seller has a duty to inform you, as the purchaser, about any latent defect of which he/she is aware, even if you have not raised the subject.. If the seller fails to do so, this is a case of non-disclosure.
In both of the above cases the seller has defaulted – by either denying the presence of a latent defect of which he/she is aware when asked, or by failing in his/her obligation to disclose such a defect, although not quesioned specifically on that issue. In both cases there has been misrepresentation by the seller. His/her expressed declaration of silence constitutes blatant dishonesty. A typical example of such a latent defect could be roof leaks. The property is viewed by the purchaser when there is no rain, and the purchaser discovers the roof leaks only when it next rains. The purchaser argues that the seller lived in the house when it did rain, and was aware of the leaks, but kept silent. The seller may deny knowledge of the roof leaks, and this may pave the way for a long and arduous legal process. For the purchaser to have a case against the seller, he/she has to prove that the seller knew about the defect.
But we are dealing with something that is latent, and it may be difficult to prove that the seller was aware of something that was not apparent. Often expert witnesses will testify on whether – based on circumsantial evidence – the seller is likely to have known of the defects or not. Simply stated, one can contract out of common law, like the example of the implied warranty against latent defects discussed earlier. But one cannot contract out of fraud! In the case of fraud, the purchaser will be entitled to cancel the agreement of sale and – whether it is cancelled or not – to claim damages from the seller.
Conclusion
It is not compulsory, but has become standard practice for any agreement of sale – literally without exception – to contain a “voetstoots” clause dealing with the issue of latent defects. It is most important for the purchaser and the seller to understand exactly what this provision means, because it is an issue which could result in lengthy argument, disruption, and the expense of drawn out court proceedings.
Even worse, it could culminate in the breakdown of the entire transaction, and that is the last thing you want, whether you are the buyer or the seller. So be sure to acquaint yourself with the issue of latent defects and the “voetstoots” clause before taking the plunge of making an offer to purchase. From the seller’s point of view, take note of the purchaser’s remedies. If you fail to do so, nobody will win, and a good proportion of both your and the seller’s time and money will be wasted. Bluntly speaking, ensure that you know what you are doing, or nobody wins!