Introduction
After signing an offer to purchase, it’s common for a buyer to move into the property before the transfer of ownership is officially registered. However, upon moving in, buyers might discover defects in the property that were not disclosed by the seller prior to signing the sale agreement.
The Dilemma
Often, the buyer will demand a reduction in the purchase price due to these undisclosed defects, while the seller denies any prior knowledge of the defects and refuses to reduce the price. This can create a significant conflict between the two parties. A common question arises: can the buyer instruct the bond attorneys to suspend the bond registration to cancel the transaction?
Understanding Your Sale Agreement
The buyer cannot deliberately delay the transfer process due to undisclosed defects unless the sale agreement explicitly states that the seller will make specific improvements or that the property will be in a certain condition on the transfer date.
A misconception exists that if a buyer’s bond is withdrawn after initial approval, the sale agreement becomes void due to the non-fulfilment of suspensive conditions. However, once the bank initially approves the bond, the suspensive condition is fulfilled, and the agreement is unconditional. Withdrawing the bond afterward does not invalidate the agreement.
Buyer’s Options for Recourse
If the buyer discovers undisclosed defects and the seller refuses to negotiate a price reduction, the buyer has three main courses of action:
Proceed with the Transfer: The buyer can complete the transfer and then take legal action against the seller for damages or to reduce the purchase price due to the defects.
Cancel the Agreement: If the buyer can prove that the seller made a material misrepresentation, they can cancel the agreement, return the property (if they have taken occupation), and seek damages through litigation.
Invoke Aedilitian Remedies: If the seller knew about the defects and concealed them, the buyer can invoke the voetstoots clause and use aedilitian remedies:
Actio Redhibitoria: To cancel the sale due to the defects.
Actio Quanti Minoris: To reduce the purchase price as compensation for latent defects if the buyer proves the seller’s knowledge of the defects.
Risks of Suspending Bond Registration
Instructing the bank to suspend the bond registration as a tactic to pressure the seller could backfire. It may signal to the seller that the buyer no longer intends to proceed with the purchase, possibly leading to immediate cancellation by the seller.
Consult with an Expert
Property transactions are intricate and can involve sensitive issues like undisclosed defects, requiring professional guidance. Our experienced conveyancers are known for their excellent client service and are ready to assist with any property-related concerns or queries. Always seek expert advice before taking any action.
Conclusion
Dealing with undisclosed defects in a property is a complex issue that requires careful consideration and often legal expertise. By understanding your rights and options, you can take appropriate steps to resolve the matter.