A voetstoots clause in a contract of sale provides that the buyer accepts the thing sold ‘as it stands’ with all existing defects and that the seller, who does not act fraudulently, is not responsible for any hidden defects. The buyer can however have recourse if the seller intentionally conceals the known defects or provides false information about the condition of the land or goods sold, which would amount to fraudulent misrepresentation.
A December 2023 high court judgment, set aside a sale of a plot which was subject to a voetstoots clause. A purchaser bought a plot on auction under the impression the plot had water rights for a dam that was on the property. The court sought to determine whether the purchaser had made out a case of intentional misrepresentation to justify the cancellation of the sale of the plot despite a voetstoots clause being in place.
The voetstoots clause in the sale agreement provided that the property was sold “subject to all conditions, servitudes, current or forthcoming land claims, legal or illegal occupants and/or expropriation applicable to the property”. The purchaser acknowledged that he was not induced into the agreement by any explicit or implied misrepresentation. The agreement stated further that neither the auctioneer nor the seller purported to be experts about defects of the immovable property and therefore their failure to specifically point out a specific defect could not be seen as any form of misrepresentation.
The question to be decided was whether the misrepresentations by the auctioneer, which bound the seller, were intentional. The auctioneer was auctioning a 15 hectares plot, and he indicated in the bidding process that 4 hectares of the 15 hectares consisted of a dam. When asked for further detail, the auctioneer indicated that there were a few servitudes but that there was enough water for the land in question. The purchaser of the property bought it under the impression that the dam formed part of the property. His evidence was that, had he known that there was no physical connection between the dam on the plot and the Olifantsnek dam, that the dam was controlled by other people, and that people would have access to the property to administer the dam, he would not have purchased the plot.
The buyer had to prove that the auctioneer was aware of the defects and that he had deliberately concealed them. During the bidding process, the auctioneer made reference to the dam to make the offer of the plot more appealing to the bidders and did not answer any of the questions asked with reference to the dam. It appeared that he lacked knowledge on the circumstances surrounding the existence of the dam on the plot. The auctioneer did not adjourn the auction to get more information on the rights tied to the dam and instead chose to cut the discussion short and to proceed with the sale. The court held that his statements were made recklessly as to whether they were true or false and his actions misled the bidders to believe that the dam formed part of the property. On this basis that he was found to have had the indirect intention to misrepresent the plot to the bidders.
This blog was co-authored by Thabo Kolele, Candidate Attorney.