Property inspection

Why a property inspection is important

Whether you are a first-time buyer or trading up for more space, if you are buying a property there are many things to consider: location, size, layout and price. Unless you are buying a new build, you should pay particular attention to the condition of the property and check for hidden defects.

A recent court case – Gortzen v. Moolman – offers valuable lessons on what can go wrong when sellers fail to disclose faults, even with a “voetstoots” clause in place. Voetstoots means “as is” and refers to an agreement whereby the buyer purchases a property in its current condition, accepting all defects, visible and hidden, without recourse to the seller. This case is also a clear demonstration of the importance of carrying out a property inspection before making an offer on a home.

Background to the case

Ms. Moolman bought a property from the Gortzen family in December 2013. After moving into the home, renovations revealed serious damp problems that had not been disclosed during the sale process. The seller had used a voetstoots clause in the sale agreement, which typically limits a seller’s responsibility for hidden defects. However, the court found that the sellers had deliberately concealed the damp issue.

Disclosure form

When buying a property, buyers typically sign a disclosure form in which the seller lists any known issues with the property. In the Gortzen v. Moolman case, the sellers had failed to disclose the damp problem. Failure to disclose defects on the disclosure form is considered fraud and could have legal consequences for the seller, but it’s unwise to rely blindly on the document. Some sellers may feel it is worth the risk of hiding problems rather than bearing the cost of repairs if they think the buyers either won’t find the issue or won’t take action.

Hidden defects

In this case, the damp was considered a “latent defect”. This means it was hidden and not obvious when the buyer viewed the property. To ensure latent defects are found before you make any final decisions, it’s advisable to have a professional inspection done.

Mortgage bonds and property surveys

While property surveys are not required by law in South Africa when selling a house, lenders generally require a property valuation. This is a limited check on the property carried out by your bond provider to ensure the property is worth the money they’re lending you. This valuation is for the benefit of the lender, not the home buyer or owner, and it won’t include the same level of detail as a full property inspection. But some lenders may also require a property inspection to check the property does not require significant repairs and is mortgageable. There may be problems in the property that would be costly to put right but are unlikely to appear in the valuation report.

In some countries, inspections are required by law. In Scotland, any house for sale requires a Home Report, which includes details about the condition of the home and valuation, an energy report and energy efficiency rating, and a questionnaire containing information on the property rates band, parking arrangements and electricity supplier, as well as other general information. The Home Report must be arranged by the seller of the property before it is marketed, and must be available to all prospective buyers and their agents. Historically, surveys were required but carried out by buyers, so if six buyers were interested in one property six surveys were conducted. This inefficient system was good for surveyors but not for the market, and was replaced by the Home Report. The Home Report is not mandatory in England and Wales, though an inspection is widely recommended and usually carried out by buyers, but the energy efficiency rating is a legal requirement in all countries of the UK.

Until South Africa implements a similar process, buyers are strongly encouraged to commission a thorough inspection by a property professional. If problems are found, the property may still be a suitable purchase, but the buyer can negotiate with the seller either to carry out repairs pre-sale or reduce the purchase price. While undisclosed defects can be addressed with court action after the sale, the cost of the inspection can save a lot of inconvenience and stress later on.

The voetstoots clause and the Gortzen v. Moolman case

A voetstoots clause in a property sale agreement protects the seller from being held accountable for unknown issues after the sale is completed. However, a seller can’t use this clause to hide known defects or to mislead the buyer. If a seller hides problems intentionally, it is considered fraud. In the Gortzen v. Moolman case, the court believed the seller concealed the issue, which is known as “dolo malo” (a legal term for dishonesty or fraud).

How to ensure transparency in the buying process

As we have stressed above, the most reliable way to determine the condition of the home you propose to buy is to hire a surveyor to carry out a property inspection. The scale of that inspection will depend on the age and visible condition of the property. For example, if you are buying an old or listed building or a run-down property for renovation or remodelling, you might want a more comprehensive survey than if you are buying a property 10 or 20 years old that is still in good shape. An in-depth analysis of the property’s condition will include advice on defects, repairs and maintenance options.

If you prefer to rely on the disclosure form, it’s important to make thorough enquiries. Ask the seller detailed questions about the condition of the property, such as:

• Has the property ever had any issues with damp, flooding or pest infestations?
• Are there any major repairs that have been made in the past, and are they documented?
• Is there a history of structural or electrical problems? How old is the wiring?
• When was the roof last inspected?

Sellers are legally obliged to answer truthfully. If they are evasive, it might be a red flag. In that case, if you really love the home and are determined to proceed, a professional inspection is critical.

Hidden defects found post-sale

If you find something wrong with the property after buying it, legal recourse is available. In Gortzen v. Moolman, the court ruled the buyer should be compensated for the cost of repairing the damp damage, which amounted to almost R250,000. If you discover a hidden fault, you may be entitled to compensation for repairs.

If you believe you have been misled or the seller has not disclosed significant concerns, you have options. The court can help you recover compensation if you’ve been wronged. Keep all relevant records, such as invoices or inspection reports, to support your claim.

The Gortzen v. Moolman case contains lessons for anyone buying or selling property. Buyers should be aware that sellers don’t always disclose everything, and latent defects can significantly affect a property’s value. Sellers should remember that failing to reveal or repair a defect at the time of sale can cost them much more in the long run. If the buyer takes them to court, they are likely to have to pay the court costs as well as the reparations.

For further information

Simon Dippenaar & Associates, specialist property attorneys in Cape Town, Johannesburg and Durban, can answer your questions about property purchase or assist if you think your seller has failed to disclose a defect in the home you have bought. Contact one of our attorneys on 086 099 5146 or simon@sdlaw.co.za.

Further reading:

• How to buy a distressed property in SA – while avoiding the many, many pitfalls

SD Law

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