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Concerns over how new Consumer Protection Act will affect property are exaggerated.

The Consumer Protection Act becomes binding law at the end of this March 2011. There is a lot of uncertainty and confusion surrounding regarding the Act and how it will impact people.

Some of the uncertainty and confusion is valid, however the problem that occurs when rumours precede facts and when available information is misunderstood, is that much of that which is feared, is in fact unlikely to take place.Description: http://gunstons.com/wp-includes/js/tinymce/plugins/wordpress/img/trans.gif

While it is true that the Consumer Protection Act could make certain contracts and agreements invalid and possibly subject to penalties, pre-existing agreements will be largely unaffected – with one exception: any contract concluded before the commencement date of the Act (31st March 2011) which is still in operation after 31st March 2013 will become partially subject to the new Act.

It should be of some comfort to know that those who sell rent or buy a property on a one-off basis, i.e. not as part of an on-going business, will not be subject to the Act. In today’s circumstances it means that the vast majority of residential property deals will not be covered by the Act. However, the jury is still out as to whether voet stoots clauses will survive the Act. Estate agents, for whom this type of work is their daily business, will need to study and observe the conditions of the Act as they will definitely not be exempt from it.

The clause that rentals (or other fixed term contracts) should be limited to two years, coupled to the new ruling that tenants will now be allowed to give 20 business days’ notice of cancellation subject to a 10% (maximum) penalty, has indeed raised concerns. However, it should be noted that these particular provisions do not apply to juristic persons, only to individuals.

A juristic person is defined in law as a bearer of rights and duties that is not a natural person (that is a human being) but which is given legal personality by the law for example, a company or close corporation. In the Consumer Protection Act, “juristic person includes body corporates, partnerships or associations and Trusts (registered in terms of the Trust Property Control Act of 1988).

Comments

  1. says

    So if I rent a property out to an individual for 12 months begining 1 May 2011 at R10 000 per month, can the tenant give me one months notice at any stage and just pay 10% penalty? And if so is it 10% of the outstanding lease vlaue or 10% of 1 months rent?

    • Gunstons Attorneys says

      There is still some debate as to whether or not (long-term) lease agreements will fall within the ambit of the CPA? we suspect that they will, but we will have to wait to see how courts interpret the relevant section. In the event that the CPA does apply, section 14 would apply to your scenario as both parties are not juristic persons. This would mean that the tenant can give notice of cancellation on 20 days notice. Significantly the Final Regulations have done away with the 10% penalty. In terms of the Final Regulations the penalty must be reasonable. Certain factors are stipulated to guide the assessment of what a reasonable penalty is. The penalty therefore depends on the facts of each case. The Final Regulations imply that the the penalty cannot be the balance of the rental which would become owing in terms of the lease. We would argue for a penalty amount as close to the balance of the rental as possible.

  2. harry wright says

    i bought a piece of land of person A person B comes along and says he already says he owns the piece of land do i ask person A for my money back or do i fight person B for the right to the land

    • Gunstons Admin says

      Assuming “B” does own the land that “A” sold you, you would have a claim for damages against “A” because “A” would not be able to transfer the land to you.

  3. tari says

    i bought a house on 2 March which had plumping defects that the estate agent and seller knew about but did not disclose,in conditions to the purchase i stated all plumping should be working but they are claiming the voestoots clause..am i protected by the consumer protection

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