In a previous article I dealt with the legal implications of “voetstoots” sales. As a general rule, the voetstoots clause in a Deed of Sale excludes the seller’s liability for latent defects such as leaking roofs, damp, structural and other defects which are not visible to the naked eye.
Another issue which often causes disputes between sellers and buyers is that of non-disclosure of material facts relating to the sale. I have often been approached for advice by buyers who have discovered some fact after the sale, which they claim would have influenced their decision on whether or not to purchase a property and which was not disclosed to them prior to signing the contract. The question of what constitutes a material fact is not an easy one to answer and space does not allow for a detailed discussion. However, in very simple terms, it is a fact which would influence a reasonable buyer’s decision regarding whether or not to purchase a property or the purchase price that they would be prepared to pay for the property.
If a prospective seller is aware of a fact which is material to the sale, the question is whether he is obliged to disclose this fact to a prospective purchaser. If, for example, a seller of a property situated in a quiet residential area is privately aware that they neighbouring land has been rezoned for heavy industry, is he under a duty to disclose this fact to the purchaser? Professor Kerr (one of the leading authorities on the law of contract) is of the opinion that the seller is obliged to disclose such a fact to a purchaser.
Another example is whether a seller who has erected a structure or buildings on a property without obtaining approved plans, is obliged to disclose this fact to a prospective purchaser. In my opinion, he is not.
According to Professor Kerr, a prospective seller’s position is as follows: he is under a duty to disclose any circumstance material to the contract of which he is aware, provided that: (1) he knows, or has good reason to believe, that the buyer does not know of it; and (2) he knows, or has good reason to believe, that the buyer has not had a reasonable opportunity of discovering it; and (3) his knowledge and the buyer’s lack of knowledge, places the parties in a markedly unequal bargaining position. The abovementioned test will have to be applied when a dispute arises between seller and buyer pertaining to the non-disclosure of a material fact by a seller.
As is normally the case with legal issues, each case will have to be judged on its own facts when determining whether or not a seller should, prior to the signing of the deed of sale, have disclosed to the purchaser, a certain fact or facts pertaining to the sale.