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Consumer Protection Act - Five days to cool off at the pool of your new home

10th March 2011

By: Creamer Media Reporter

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The purchasers of property that was marketed to them via direct marketing such as email, will be able to cancel the sale after the property has been registered, and months after the sale agreement was signed, according to the new Consumer Protection Act (CPA).

Seraj Haroun, senior associate in the Corporate and Commercial Practice at Cliffe Dekker Hofmeyr business law says that in terms of the new Consumer Protection Act (CPA), consumers are entitled to rescind transactions that arise from direct marketing, without penalty or charge, on written notice to the supplier, within a period of five business days after the date on which the transaction was concluded or the goods that were the subject of the transaction were delivered to the consumer.

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“This so-called "right to cool-off" is but one of the consequences that flow from the CPA for transactions concluded as a result of direct marketing. The cooling-off right is significant in the context of the real estate market because, in terms of the South African law of property, delivery (in the sense of transfer of ownership) of immovable property is constituted by registration of the immovable property into the name of the purchaser in the deeds office,” he says.

“Registration, by necessity, takes place some months after a sale agreement is concluded. Thus, a consumer might be able to rescind an agreement in terms of which immovable property is sold long after the sale agreement was signed.

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“This stands in contrast to a purchaser's right to cool-off under the Alienation of Land Act. Under this legislation, a purchaser of immovable property has, in certain defined circumstances, the right, within five business days after signature of an offer to purchase, to revoke the offer by giving written notice to the seller.”

Haroun says that it is conceivable that where the consumer is not given possession of the unit before registration of title in the deeds office, the consumer could take delivery of the unit on registration and, thereafter within five business days, notify the developer in writing that he wishes to rescind the sale. If the consumer does so, he has 10 business days from when the property was delivered to return it to the developer and the developer must repay the consumer within 15 business days after receiving the unit back from the consumer.

“This will give rise to a number of legal, practical and procedural difficulties. For example, the fact that a mortgage bond may also have to be cancelled and the issue of who will pay the attendant costs,” he adds.

 

FOR MORE INFORMATION

Seraj Haroun, Senior Associate, Corporate and Commercial Practice, Cliffe Dekker Hofmeyr,
Tel: +27 (0)21 481 6321 or email: seraj.haroun@dlacdh.com

Andrea Collocott, Head: Marketing and Communication, Cliffe Dekker Hofmeyr,
Tel: +27 (0)11 562 1281 or email: andrea.collocott@dlacdh.com
Angela Graham, PR Consultant, Tel: 084 245 245 2 yeahwrite@worldonline.co.za

Notes to editors:
• Cliffe Dekker Hofmeyr is one of the largest commercial law firms in South Africa with some 115 directors/partners and 250 qualified lawyers located at offices in Johannesburg and Cape Town.
• Cliffe Dekker Hofmeyr lawyers specialise in services covering the complete spectrum of business legal needs in 11 core areas of practice. The firm also has dedicated sector-led teams consisting of lawyers with experience in a wide range of industries and the public sector.
• Cliffe Dekker Hofmeyr is the South African member firm of DLA Piper Group, an alliance of legal practices, which includes firms with offices around the globe that are affiliated to members of the DLA Piper Practice but are not themselves members of it.
• Cliffe Dekker Hofmeyr's Africa practice, in conjunction with DLA Piper Africa Group, is unrivalled in terms of pan-African legal services and geographical coverage.
• DLA Piper is an international legal practice with over 3,500 lawyers located in 30 countries and 69 offices throughout Asia, Europe, the Middle East and the US.
• For further information, please visit www.cliffedekkerhofmeyr.com

 

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