Gauteng Business News

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PROPERTY: No Need to Fear the CPA, Says Aida Chief


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The much-anticipated Consumer Protection Act (CPA) goes into operation this week and will no doubt prompt many estate agents to become more cautious in their dealings with clients.

“Actually the Act only formalises practices that have long been in place in many of the large real estate companies,” says Aida CEO Young Carr, “and it is hard to see how consumers in this sphere could enjoy more protection than that already provided by the Estate Agency Affairs Board in terms of the Estate Agents Act and Code of Conduct.

“But because the reach of the new legislation has not yet been interpreted in practice, and because of the huge potential penalties for those found to have contravened the Act (up to 10% of turnover or R1m), many agents are running scared at the moment.”

The three major areas of concern, he says, are the wording of advertising and contract documents, possible disputes over defect disclosure and how the consumer’s right to “cool off” will be interpreted.

“Looking at the first of these, the implementation of the CPA means that all material intended to market the agency itself (for example a mandate proposal) or a home for sale will have to be very clear and precise so that it is not open to any misinterpretation. For safety’s sake, all contracts will also need to be explained clause by clause to potential signatories, who will need to attest that they understand them.”

Secondly, says Carr, because the new legislation lacks clarity on the issue, agents are worried that they could be held liable, years after having facilitated the sale of a property, for defects that were not disclosed at the time – even if it was the seller who chose not to reveal them to anyone, including the agent.

“However, we believe this difficulty can be overcome by requiring the seller to fill out a detailed disclosure document that would then be included in the sale agreement and signed off by the buyer. In other words, homes would no longer be sold ‘voetstoots’ or as-is, but in an as-disclosed condition.

“Nevertheless, the CPA provides that from now on, no matter what contract is signed, the consumer will have a right to “cool off” and cancel the deal within five working days. Taking this to its logical conclusion, agents fear that homebuyers might be able to “cool off” even after the transfer of a property, which is when a sale actually becomes effective.”

That of course remains to be seen, he says, but in the meanwhile, he anticipates that the immediate effects of the CPA will be much more precise and detailed property advertising; the introduction of “plain speaking” contracts that are much easier to read and understand and possibly, the increased use of independent home inspectors to give all parties to home sales more peace of mind.

“And none of this will be bad for the industry. As Prof Henk Delport said recently, the new Act will probably result in a spate of test cases, but we think that once precedents have been established, the CPA will actually help agents to be perceived by the public as professional service providers, especially if they are also properly qualified in terms of the new industry education framework.”


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