"Caveat Emptor" explained.
Category Expert Insight
“Caveat Emptor” is an important concept in property transactions, but what does it mean?
Gerhard van der Linde, managing director with Seeff Pretoria East explains that it is a Latin term which means “let the buyer beware”.
Similar to the phrase “sold as is” or sold “voetstoots”, this term means that the buyer assumes the risk that a product may fail to meet expectations or have defects, he says.
One has to be very sure that buyers and sellers are fully informed by their agents of what is described in the agreement of sale. There is nothing more exciting than getting the keys to your first home, but cautions Van der Linde, make sure you thoroughly understand the offer to purchase before you sign it.
Far from simply being an agreement, an offer to purchase is a binding contract. Once you have made an offer and it has been accepted, it is not easy to change the terms of the agreement afterwards (although it can be done in writing if agreed to by both buyer and seller.)
Van der Linde says buyers should understand everything that they are signing and offers advice:
Fixtures and fittings should be listed
Pay special attention to the section in the agreement that lists the fixtures and fittings that are attached and which items are excluded from the sale. Do not assume that everything you see is included. Fixtures to the property are usually included but if there is any uncertainty, then rather specify the items that you need certainty about.
Property condition report should be annexed to the agreement
Ensure that the property condition report is attached as an addendum to the agreement of sale and note what disclosures have been made by the seller. If there is an undertaking by the seller to repair anything, make sure that the agreement clearly spells out what has to be repaired, at whose cost and by when the repairs must be finalised.
Finances must be in order
Obtain a pre-approval from a bond originator. This makes your offer significantly stronger when it is presented to the seller. Also ensure that the agreement you sign clearly indicates if the purchase of the property is linked to the sale of another property.
Understand what suspensive conditions are and the potential implications
If your transaction is subject to the approval of a mortgage bond, you should allow enough time to obtain the approval of the bond. Often sellers will insist on having the right to proceed with the marketing of the property until the suspensive conditions have been fulfilled. Ask your agent to clearly explain the implications of such a condition.
In conclusion Van der Linde says that the services of a knowledgeable and reputable property consultant will go a long way in giving peace of mind when concluding such an important transaction.
Author: Gina Meintjes
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