Full Disclosure - Protecting Home Sellers And Buyers Alike

When selling your home, it's tempting to highlight its best features while sweeping any flaws under the rug. However, failing to disclose known issues can have serious consequences down the line.

Since the Property Practitioners Act came into effect in February 2022, it’s become more difficult for sellers to hide defects behind the ‘voetstoets’ clause because property practitioners are now obliged to obtain a ‘disclosure form’ from a seller before concluding a mandate, and to provide it to a purchaser before making an offer.

However, Arnold Maritz, Co-Principal of Lew Geffen Sotheby’s International Realty in Cape Town’s Southern Suburbs, believes that it's not just a legal requirement; it's an ethical obligation that ensures a transparent and fair transaction for both parties involved.

“Whether it's a leaky roof, faulty wiring, or a boundary line dispute, buyers have the right to know about any defects that could affect the property's value or safety – and sellers should protect themselves against the potential repercussions of non-disclosure.

“By being upfront about your home's condition, you build trust with potential buyers and avoid potential lawsuits or disputes after the sale. Moreover, disclosing issues from the outset can actually work in your favour by preventing last-minute negotiations or even the deal falling through due to unexpected discoveries.”

Issues and Faults to be Disclosed:

The seller's disclosure typically covers a range of aspects related to the property, says Maritz: “These include structural issues, plumbing and electrical problems, water damage, roof defects, and approval for previous renovations or additions.

“One common example is the disclosure of latent defects. These are defects that are not immediately apparent but can have a significant impact on the property's value or functionality. The seller is obligated to disclose such defects, allowing the buyer to make an informed decision based on a comprehensive understanding of the property.

“By law, sellers are obligated to disclose any information that might affect the property's value or the buyer's decision to purchase.”

Repercussions of Withholding Information:

The repercussions of failing to disclose faults and issues can be severe, both financially and legally.

South African law recognises the principle of ‘caveat venditor’ which means ‘let the seller beware’. This places the responsibility on the seller to disclose all material facts, and failure to do so could lead to legal consequences.

“Consider the case of a seller who neglects to mention a leaking roof problem. After the sale, the new homeowners discover extensive damage, leading to costly repairs and a potential lawsuit against the seller for fraudulent concealment,” says Maritz.

“In another scenario, a homeowner hides a structural defect in the foundation. When the issue inevitably surfaces post-sale, the buyers face not only hefty repair bills but also the emotional toll of feeling deceived.

“Feeling misled and being out of pocket could well prompt buyers to take legal action against the seller, resulting in a lengthy court battle, further financial loss and unnecessary stress for both parties.”

Buyers who discover undisclosed defects after the purchase may have grounds for legal action to seek remedies such as compensation or even the cancellation of the sale agreement.

However, navigating these legal channels can be complex, highlighting the importance of a thorough understanding of the disclosure process and seeking legal advice if necessary.

The Importance of Due Diligence:

While seller disclosure forms are a valuable source of information, it's crucial for buyers to conduct their due diligence. Relying solely on the information provided by the seller may not be sufficient, especially when it comes to factors beyond the borders of the property like future developments or other external factors.

Maritz advises: “Buyers should consider consulting local authorities, municipal planning offices, and community forums to gather additional information about the area. This proactive approach ensures that buyers have a comprehensive understanding of the neighbourhood and any potential changes on the horizon.”

The Role of Your Real Estate Agent:

“Your real estate agent is your ally in the selling process,” says Maritz, “and honesty is key to a successful partnership. Be open with your agent about any known issues or concerns regarding your property.

“Remember, they're there to guide and protect you, helping you navigate legal requirements and negotiate fair terms with buyers.”

By providing your agent with all relevant information, you empower them to market your home effectively and manage buyer expectations.

“Together, you can develop a comprehensive disclosure statement that accurately represents your property while mitigating potential risks. Trusting your agent with complete transparency fosters a collaborative relationship built on mutual respect and shared goals,” concludes Maritz.