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New law favours property cancellations

Mar 07 2011 16:03
I-Net Bridge
Johannesburg - The purchasers of properties marketed to them via direct marketing, such as email, will be able to cancel sales after the properties have been registered and months after the sale agreements were signed under the new Consumer Protection Act.

Seraj Haroun, senior associate in the corporate and commercial practice at Cliffe Dekker Hofmeyr law firm, said on Monday that, in terms of the new act, consumers are entitled to rescind transactions that arise from direct marketing, without penalty or charge.

They would have to give written notice to the supplier within five business days after the date on which the transaction was concluded or the goods delivered.

"This so-called 'right to cool-off' is but one of the consequences that flow from the Consumer Protection Act for transactions concluded as a result of direct marketing," he said.

"The cooling-off right is significant in the context of the real estate market, because delivery of immovable property is constituted by registration of the property into the name of the purchaser in the deeds office."

Registration takes place months after a sales agreement and a consumer can thus rescind an agreement long after the sale.

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 in certain circumstances has 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 said 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, he said.

"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 said.

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