Handling Hidden Property Defects: Essential Steps for Buyers

Upon signing an offer to purchase, buyers often take possession of the property before the official transfer of ownership is completed. During this period, it's not uncommon for buyers to discover defects that were not disclosed by the seller prior to signing the sale agreement.

When such issues arise, the buyer might request a reduction in the purchase price due to these undisclosed defects. However, sellers often deny any knowledge of these defects and refuse to lower the price, leading to disputes between the parties. A critical question then arises: can the buyer instruct the bond attorneys to halt the bond registration, effectively cancelling the transaction?

Understanding Your Sale Agreement

It's important to be well-versed with the terms of your sale agreement. Unless the contract specifically states that the seller will make certain improvements before the transfer, or that the property must be in a specified condition at the time of transfer, the buyer generally cannot delay the transfer process due to undisclosed defects.

There is also a common misconception that if the buyer's bond is withdrawn after initial approval, the sale agreement becomes void. In reality, once the bond is initially approved by the bank, the suspensive condition is fulfilled, making the agreement unconditional. A subsequent withdrawal of the bond does not nullify this fulfilment or void the agreement.

Options for Buyers Facing Undisclosed Defects

If a buyer discovers defects and the seller refuses to negotiate a price reduction, there are several courses of action available:

1. Proceed with Transfer and Seek Damages: The buyer can complete the transfer and then file a claim against the seller for damages to address the defects or for a price reduction.
2. Claim Material Misrepresentation: The buyer can argue that there was a significant misrepresentation by the seller, cancel the agreement, return the property (if they have already taken occupation), and seek damages through litigation.
3. Invoke Aedilitian Remedies: If the seller knowingly withheld information about the defects, the buyer can use the voetstoots clause to invoke aedilitian remedies such as:
   • Actio Redhibitoria: Cancel the sale due to defects.
   • Actio Quanti Minoris: Seek a reduction in the purchase price as compensation for latent defects.

It is crucial to note that instructing the bank to suspend the bond registration in an attempt to pressure the seller could backfire. This action might signal to the seller that the buyer no longer wishes to proceed with the sale, potentially justifying an immediate cancellation of the agreement by the seller.

Consult an Expert

Property transactions can be intricate and often involve sensitive issues like undisclosed defects, requiring professional guidance. Consulting with experienced property practitioners, conveyancers and property law experts can provide valuable assistance and ensure that your interests are protected throughout the process.

Disclaimer: The information provided here is for general purposes only and should not be considered legal advice. Always consult a qualified attorney for specific legal concerns or issues.