The Consumer Protection Act has some serious implications for agents selling property – for one, a disgruntled purchaser can get out of a sale agreement within 5 days of signing it.

Section 16 of the Consumer Protection Act states as follows:

“A consumer may rescind a transaction resulting from any direct marketing without reason or penalty, by notice to the supplier in writing …, within five business days after the later of the date on which

1. The transaction or agreement was concluded; or
2. The goods that were the subject of the transaction were delivered to the consumer.”

However, the CPAs Cooling-Off Period will not help you when you change your mind. People are under the misconception that the CPA protects them, by providing the “cooling-off period”.

The Alienation of Land Act

In terms of The Alienation of Land Act, residential property transactions of R 250 000.00 or less are subject to a “cooling-off” period of five working days, calculated from the date of signature of the Offer to Purchase. It does not apply to residential properties sold for more than R 250 000.00. This provision remains in place and is not affected by the CPA.

A Purchaser who purchases a property, as a result of direct marketing, has the right to cancel the sale within five business days – the “cooling-off” period. This applies only to sales that result from direct marketing.

Direct marketing in terms of the Act includes to “approach” a person (i) in person, (ii) by mail or (iii) by electronic communication (this includes email and sms) for the purpose of promoting or offering to supply goods or services to the person.

The “cooling-off” period does not apply to sales that result from any other form of marketing such as any purchase made by a client that the agent is already working with or conventional print advertising or show houses.

The cooling-off period creates rights for the consumer buying property while regulating closely how suppliers or estate agents operate. Estate agencies and property professionals need to be aware of the implications and prepare for changes in the way they will interact with property buyers and sellers in the future.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Reference List:

• Anderson, AM. Dodd, A. Roos, MC. 2012. “Everyone’s Guide to South African Law. Third Edition”. Zebra Press.
• The Estate Agency Affairs Board. “Purchaser’s Cooling-Off Right: Guidelines for Estate Agents”. [online] Available at: https://www.eaab.org.za/ [Accessed 31/05/2016].
• http://www.privateproperty.co.za/

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The Act does not differentiate between leases for residential, commercial, retail or industrial properties; in actual fact the Act does not discuss lease agreements for immovable property as such. It is clear from the definitions and purpose of the Act, however, that it was intended for lease agreements to fall within the ambit of the Act. The nature of the transaction between the lessor and lessee calls for regulation and protection thereof; consequently sensible to assume that it was intended for the section to apply to all lease agreements irrespective of the property type.

Section 14(2)(b) of the CPA reads “despite the provisions of the consumer agreement to the contrary – the supplier may cancel the agreement 20 business days after giving written notice to the consumer of a material failure by the consumer to comply with the agreement, unless the consumer has rectified the failure within that time.”

The lessor will thus not be in a position to cancel the lease agreement during the subsistence of the lease agreement, unless the lessee is in breach of a material term of the agreement and fails to remedy such breach within the permitted period after having received written notice to that effect. This means, should the lessor wish to take occupation of the property, or sell same, he will not be permitted to cancel the agreement.

Should the lessee be in breach of a material term of the agreement, and the lessor wishes to cancel the agreement, the lessor needs to give the lessee written notice, describing such breach and allowing the lessee 20 business days to remedy same. Further, the lessor should set out in the notice that should the lessee fail to remedy the breach within the stipulated time, the consequence will be cancellation of the agreement.

The CPA has a considerable impact in fixed-term lease agreements. It is vital for property owners to be conscious of the effect of this Act so that they may comply with it and set measures in place to mitigate the potential burden placed on property owners by the Act.

Compiled by: Laura Ames

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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This vital piece of legislation has and will continue to change the manner in which businesses conduct themselves in South Africa.  The Act aims to, among other things, promote a fair, accessible and sustainable marketplace for consumer products and services. The Act also, importantly, aims to establish national norms and standards to ensure the protection of consumers. Further, its objective is to prohibit unfair marketing and business practices.

The CPA applies to the following:

1. every transaction which occurs within the Republic of South Africa;
2. promotion or supply of any goods and services occurring within the Republic; and
3. goods or services which are supplied or performed within the Republic in terms of transactions mentioned in the Act.

The Act is not applicable to credit agreements, defined as such in terms of the National Credit Act.

A ‘consumer’ is defined as a person/s to whom goods or services are marketed, who have entered into transactions with suppliers, users of particular goods or recipients of services.

The Bill of Rights protects the rights of all of South Africa’s citizens, including those of consumers. The CPA further outlines the fundamental rights of consumers, of which all consumers should be aware. Every consumer of goods and services is entitled to the protection of their rights, regardless of the monetary value of a transaction or the significance of the product or service that a consumer buys, even if it is only a loaf of bread. These rights include:

1. Right to Equality in the Consumer Market and Protection Against Discriminatory Marketing Practices;
2. Right to Privacy;
3. Right to Choose;
4. Right to Disclosure of Information;
5. Right to Fair and Responsible Marketing;
6. Right to Fair and Honest Dealing;
7. Right to Fair, Just and Reasonable Terms and Conditions;
8. Right to Fair Value, Good Quality and Safety; and
9. Right to Accountability by Suppliers.

 The National Consumer Commission (NCC) was established in terms of the Consumer Protection Act. The NCC is the chief regulator of consumer-business interactions in South Africa. It was created by the government with the backing of the Department of Trade and Industry (DTI) to safeguard the economic welfare of consumers. Consumers are imperative to the growth of the economy and therefore contribute to the national fiscus and to the development of the country.

The NCC’s mere existence in terms of the Consumer Protection Act, which it administers, is to promote a fair, accessible and sustainable marketplace for consumer products and services, establish norms and standards relating to consumer protection, to provide for improved standards of consumer information, prohibit unfair marketing and business practices, promote responsible consumer behaviour, and to promote a consistent legislative and enforcement framework relating to consumer transactions and agreements. This simply means that the NCC registers and assesses complaints, investigates alleged misconduct by businesses, refers individual complaints to Alternate Dispute Resolution (ADR) agencies for resolution, and represents consumers in the Consumer Tribunal amongst other things.

It is important to remember that every Consumer has rights; any infringement of these rights is an act of non-compliance with the provisions of the Consumer Protection Act.

A consumer may approach the NCC for guidance or assistance with a dispute that cannot be amicably resolved.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

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