If you were buying a 2nd hand car there would be a range of questions you’d be asking. You’d want to be 100% sure of exactly what you were getting so that you fully understand what value you are getting, and what your risks are.
The same applies when purchasing a property – with the exception that your risks are far greater given the significantly higher price ticket. As a purchaser you are counting on your seller and agent to disclose any defects or facts relating to the property you are offering on, as these have a direct bearing on the value you perceive it to have.
If you’re the seller, you want to achieve the highest price possible and you may have concerns that disclosing all defects will reduce the value of your property. So what do you do?
The seller has a legal duty to disclose any and all defects that a purchaser may not, on reasonable inspection, become aware of. There are the obvious ones such as a roof leak, structural faults that may be concealed or hard to pick up, and areas of damp.
A seller also has a duty to disclose whether or not the property has approved building plans for the structure as it currently stands. Perhaps there were renovations or improvements made, possibly even by a previous owner, which were not approved by the local council.
If you are aware of this then you have a legal duty to disclose this to your agent and potential purchaser. Unfortunately, for a dishonest seller, concealing information on known defects can be a costly matter. Your purchaser will have a legal claim against you should they be able to prove you withheld the information that you should have disclosed. Honesty is always the best policy.
In some countries it is customary for a property inspection to be carried out on a property prior to an offer being concluded. The inspector will list all faults on the property and then the purchaser enters into an agreement of sale knowing exactly what they are getting. This isn’t law yet in South Africa, but it will be coming one of these days. The proposed Property Practitioners Bill, if approved, will make it mandatory for such an inspection to be done for every property and attached as an annexure to every Deed of Sale.
That begs the question: how much disclosure is enough? Simply put, it’s always best to err on the side of caution. Be completely transparent and disclose everything you are aware of. If it’s of a serious nature, record in the Offer to Purchase that a matter has been disclosed, as it will relieve you of the obligation to rectify it.
If unsure then put yourself in the position of the purchaser and ask what you would like to know before making an offer. Be sure to disclose in full and in writing to your selling agent who has a legal duty to communicate any defects to a purchaser. Be safe, not sorry.