Purchaser's Cooling Off Right
Purchaser's Cooling Off Right - Guidelines for Estate Agents
The following guidelines are issued by the Estate Agency Affairs Board to assist estate agents in discharging their legal and ethical duties when negotiating a transaction which is subject to the cooling off right provided for by the Alienation of Land Act 68 of 1981 ['The Act’]. Clause 2.1 of the Code of Conduct states that an estate agent may not ‘do or omit to do any act which is or may be contrary to the integrity of estate agents in general’, while in terms of clause 2.2 an estate agent must protect a client’s interests to the best of his or her ability, with due regard to the interests of all other parties concerned. Failure to comply with the guidelines may constitute a contravention of these clauses, and/or the other clauses of the Code of Conduct referred to in the guidelines specifically.
1. If a purchaser enjoys a cooling off right, every offer and/or sale agreement signed by such purchaser must state that the purchaser is entitled to revoke the offer or terminate the sale agreement [as the case may be] in terms of s 29A of the Act. Estate agents must ensure that their offer/sale documents comply with this requirement. The Board does not prescribe any specific wording for the relevant clause, except that the expiry date of the cooling off right must be stated together with an explanation of how the date is calculated. The following clause serves as an example:
Purchaser’s Cooling Off Right
1. This clause only applies if s 29A of the Alienation of Land Act, 68 of 1981, is applicable to this offer/agreement.
2. Notwithstanding any other clause in this document, the purchaser has the right to revoke this offer or terminate this agreement by written notice to be delivered to the seller, or his/her agent, within five days after he/she [the purchaser] has signed the offer or agreement. The five day period is calculated with the exclusion of the day upon which the purchaser signed the offer or agreement [as the case may be], and of any Saturday, Sunday or public holiday. If the purchaser wants to exercise the aforesaid right, the notice must therefore be delivered to the seller on or before midnight on ___________________ [date]. This notice will have no effect unless it
[ i] Is signed by the purchaser or his/her agent acting on his/her written authority;
[ ii] Refers to this offer or agreement as the offer or agreement that is being revoked or terminated, as the case may be; and
[iii] Is unconditional.
Stating the expiry date is undoubtedly the best way of avoiding confusion as to when the buyer’s cooling off right expires. An estate agent must therefore take care to fill in the expiry date correctly.
2. In terms of clause 6.2.1 of the Code of Conduct an estate agent must explain to both the buyer and seller the meaning and consequences of the material provisions of an offer or sale agreement, before such offer or agreement is signed by the buyer/seller. If the estate agent is unable to furnish the explanation, the buyer/seller must be referred to a person who can explain the document. A buyer’s cooling off right is a material provision of an offer / sale agreement and estate agents will have to explain to both a buyer and seller what the cooling off right entails, before the buyer/seller signs the document; alternatively, if an estate agent is unable to explain the implications of the cooling off right, the respective parties must be referred to someone who can furnish the necessary explanation. What must be explained are the following:
[a] The fact that the buyer has the right to revoke the offer or terminate the sale agreement within five days after he signed it.
[b] How, and by when, the buyer must exercise the cooling off right, should he wish to do so.
[c] The fact that the offer or sale agreement in question will no longer have any legal effect
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Purchaser's Cooling Off Right
The following guidelines are issued by the Estate Agency Affairs Board to assist estate agents in discharging their legal and ethical duties when negotiating a transaction which is subject to the cooling off right provided for by the Alienation of Land Act 68 of 1981