0

Under Which Circumstances Can A Purchaser Hold A Property Practioner Liable For Latent Defects In An Immovable Property?

Property practitioners are generally not liable for latent defects in immovable property. A latent defect is a hidden flaw that materially impairs the use, value, or enjoyment of the property and which could not have been discovered through a reasonably careful inspection prior to the conclusion of the sale. Due to the concealed nature of latent defects, a property practitioner cannot ordinarily be held liable for defects of which they had no knowledge or which would have required specialised or expert investigation to uncover.

However, a property practitioner may incur liability where they make a misrepresentation that induces the purchaser to enter into the sale agreement or where they fail to disclose material facts known to them. The distinction between actionable misrepresentation and mere puffery (sales talk or opinion) is often nuanced, and South African courts are frequently required to determine whether a particular statement amounts to a representation of fact or non-actionable opinion.

This issue was recently considered in Fitzpatrick v Latsky NO and Others. In this case, the court among other things was required to determine whether describing a property as “stunning” or “beautiful” constituted a factual representation, or whether such descriptions amounted to puffery.

The facts
The facts of the case are as follows: the plaintiffs purchased a residential property under the belief that it was in good condition. During the viewing, the estate agent described the property as being in “stunning” and “beautiful” condition. Several months after taking occupation, a wooden deck on the property collapsed. The purchasers subsequently instituted action against the estate agent, the agency and the seller for
misrepresentation.

The plaintiffs contended that by describing the property as “beautiful” and “stunning,” the estate agent made factual representations regarding the structural integrity of the property and the absence of latent defects. They argued that such statements conveyed that the property was structurally sound and that no remedial work would be required. They further argued that the agent breached a duty to disclose material facts in terms of the Estate Agency Affairs Act 112 of 1976 (EAAA”), which was the applicable legislation at the time the sale agreement was concluded. This act now is repealed by Property Practitioners Act 22 of 2019. At the close of the plaintiffs’ case, the defendants applied for absolution from the instance on the basis that no prima facie case had been established.

The Court’s Findings
The court found in favor of the defendants. It held that the descriptors “beautiful” and “stunning” did not constitute representations of fact relating to the structural integrity of the property or the absence of latent defects. In the context of property transactions, such commendatory language is generally regarded as puffery and does not amount to actionable misrepresentation.

The court further held that estate agents are under no obligation to conduct technical or expert investigations to uncover latent structural defects. The duty to disclose material information imposed by the EAAA is limited to facts that were within personal knowledge of the estate agent. The court explained that the EAAA prohibited property practitioners from making false or misleading representations regarding the condition, value, or legal status of a property.

Importantly, the court noted that where an estate agent describes a property in positive terms while being aware of a structural defect or where a reasonable agent, exercising due care, ought to have been aware of such a defect the conduct may amount to actionable misrepresentation. In such circumstances, the representation transcends mere puffery and attracts liability. This is particularly relevant where an agent creates a sense of urgency that prevents a purchaser from obtaining an independent professional inspection.
The Property Practitioners Act 22 of 2019
The EAAA has since been repealed by the Property Practitioners Act 22 of 2019 (PPA). Section 67(1) of the PPA imposes additional obligations on property practitioners, including the requirement to provide a mandatory disclosure form to the seller before concluding a mandate, and to the purchaser before an offer to purchase is made. In terms of section 67(2), this disclosure form must be signed by all parties and attached to the sale agreement.

Where no disclosure form is provided, the sale agreement must be interpreted as though no defects or deficiencies of the property were disclosed to the purchaser. This legislative framework significantly strengthens consumer protection and lowers the threshold for holding property practitioners liable for misrepresentation or non disclosure relating to latent defects.

 

Written By:  
Lwando Mazaleni
DKVG Candidate Attorney