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    The Effect of the New Consumer Protection Act (Act 68 of 2008) on Property Brokers
 

THE EFFECTS OF THE NEW CONSUMER PROTECTION ACT (Act 68 of 2008) ON PROPERTY BROKERS
21 April 2011

The Act came into effect on 1 April 2011 and its main purpose is to promote and advance the social and economic welfare of the consumers in South Africa. The Act applies to all transactions occurring within the Republic of South Africa in respect of supply of goods or services for consideration, in the normal course of business of a supplier. The Act does not apply if the supply of goods or services by a supplier is not in the normal course of his business e.g if a person decides to sell his residential home.

If a consumer is a juristic person as defined in the Act and at the time of the transaction has an asset value or annual turnover which exceeds R2 million, then the provisions of the Act do not apply. A juristic person is defined to include, trusts, partnerships or associations and body corporates. A person is defined to include juristic person.

In terms of the Act the term service is defined to include, inter alia, any work or undertaking performed by one person for the direct or indirect benefit of another, irrespective of whether the person promoting, offering or providing the services participates in, supervises or engages directly or indirectly in the service. In the light of this definition, it is clear that services provided by estate agents and property brokers are subject to the provisions of the Act and these entities are suppliers as defined in the Act.

In terms of the Act a consumer has a right, without furnishing reason or attracting any penalty, to cancel a transaction resulting from any direct marketing, by notice in writing or another recorded manner to the supplier, within 5 business days after the date on which the transaction or agreement was concluded or the goods were delivered to him, whichever is the later. In the case of a sale of property the date of delivery will presumably mean the date of transfer. We do not believe that the legislator could have intended this provision to apply to property transactions and we expect that this will be amended in due course.

Where the Act applies, the traditional voetstoots clause will need to be amended and the seller will need to provide a list of any defects of which he may be aware bearing in mind that the Act will not apply in the case where the purchaser has an annual turnover or asset value which is more than R2 million and is a juristic person. In calculating the annual turnover or asset value the value of the property that is being purchased will be excluded.

The consumer also has a right to information in a plain and understandable language and therefore if the Act applies it may be necessary to amend certain provisions of the standard agreements of sale used before the commencement of the Act.

Any queries to the above should be referred to Simphiwe Maphumulo of Garlicke & Bousfield Inc.

Simphiwe Maphumulo
Director

 
 
Garlicke & Bousfield Inc.
Registration No. 1977/003506/21
7 Torsvale Crescent, La Lucia Ridge Office Estate, Durban
P.O. Box 1219, Umhlanga Rocks, 4320
Docex 5, Umhlanga
Tel: 031-570-5314 (direct line)
Fax: 031-570-5302/3
Email: simphiwe.maphumulo@gb.co.za
Web: www.gb.co.za

 
A related subject has been opened in the Discussion Form.   see: The Consumer Protection Act for more.......

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