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Can a Home Buyer's Claim Against a Home Seller For Intentionally Hidden Latent Defects, Prescribe?

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Can a Home Buyer's Claim Against a Home Seller For Intentionally Hidden Latent Defects, Prescribe?

Home buyers often worry about finding a latent defect in their new home, especially if the sellers have tried to conceal the flaws to sell the house. Home buyers should be aware that prescription can affect their rights and prevent them from taking action and seeking compensation from the property seller for their losses caused by the hidden or latent defects.

In the recent Supreme Court of Appeal (SCA) case of Stemmet and Another v Mokhethi and Another the Court had to determine when specifically, the 3-year prescription period (under the Prescription Act 68 of 1969 ) begins to run, when it comes to a claim for latent defects. The Act stipulates that prescription commences when the creditor has the requisite knowledge of both the existence of the cause of action and the identity of the person responsible for the damage.

Facts - What happened:

The Mokhethis bought a house from the Stemmets, which impressed them with its apparent good condition and fresh paint. However, within a few months, awful cracks emerged all over the house. Mr Mokhethi, a former engineer, quickly realized that these were not hairline cracks but structural defects that the Stemmets had hidden with their new paint job.

Mr Mokhethi then tried to get the insurer to foot the bill for the defects, just to be rejected by the insurer who identified the defects as old and gradual and that they had been previously patched. The foundation was inadequately underpinned and supported for the expansion and retraction of the clay on which the property had been built.  

This led the Mokhethis a few years later to sought damages, including the cost of repairs, amounting to R128,423.26. against the Stemmets a few years later. The Stemmets however raised prescription as a defence claiming that prescription had started to run when the Mokhethis first became aware of the defects and not when they received the report from the insurer.

According to the Prescription Act, prescription begins running three years from when the debt is due. In its judgment, the SCA held that it must accordingly be determined when exactly the Mokhethis had acquired the minimum knowledge necessary to institute action against the Stemmets and that the prescription period would start running from such date as the 'due date'. 

Judgement

The Court found that the latent defects were manifest at the time the Mokhethis first became aware of the defects and that they were accordingly in possession of sufficient facts to cause them, on reasonable grounds, to believe there had been attempts by the Stemmets to cover up latent defects in the property

Accordingly, from the moment that such sufficient knowledge of the defects could be attributed to the Mokhethis, the prescription started to run and not, as the Mokhethis stated, from the moment they received the insurer's report explaining the cause of the defects to be the clay ground. The property buyers can therefor not wait until they are fully aware of the extent of their legal rights or possess all the evidence to prove their case.

Unfortunately for the Mokhethis the three-year prescription period had passed before they instituted action - resulting in their claim prescribing.

Conclusion

This case serves as a warning to property buyers to do their homework properly, and if a deal looks too good to be true, it may just be.

Should defects however occur, buyers should immediately contact their attorneys to ensure that they act timeously and avoid an unfortunate situation like with the Mokhethis, where a claim prescribed.

Author Van der Spuy & Partners Attorneys
Published 05 Jan 2024 / Views -
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