Common types of defects in industrial properties and legal implications

The process of finding a property investment, whether it's a warehouse or factory building, can be exciting. However, no matter how amazing it may seem, it's not immune to problems. These defects can cause serious legal headaches for the owners and buyers.

So, before signing the dotted line. It's crucial to examine all aspects, including any potential drawbacks, and also consider the legal consequences that might come into play. Let's break it down for you.

Understanding the Voetstoots clause

The Voetstoots clause is a legal term commonly used in property transactions. It translates to "as is" or "with all its faults" in Dutch/Afrikaans. This clause indicates that the buyer will not hold the seller responsible for any defects found after the sale if the buyer accepts the property as it is in its condition.

It protects the seller from future claims and ensures the buyer assumes any risk associated with potential hidden issues. In any case, buyers need to do thorough inspections and due diligence before agreeing to the Voetstoots clause, as they may have limited options if problems arise later. Detecting such defects requires the expertise of a professional (e.g., rising dampness, rusted pipes, or leaking roofs). Detecting such defects requires the expertise of a professional (e.g., rising dampness, rusted pipes, or leaking roofs).

Common defects in industrial properties

Industrial property buyers must know what to look out for when buying. The most prevalent sorts of faults that might develop. Buyers must be mindful of these defects:

• Structural issues: Building issues in industrial premises might include foundation fractures, roof leaks, sagging floors, or damaged load-bearing walls.
• Electrical and plumbing problems: Most industrial buildings have complex electricity and water systems that can break down over time. Some common electrical issues are old wires, insufficient power, or broken circuits.
• Roofing and insulation: Keeping an eye on the roof and insulation is essential for minimising utility bills and safeguarding your home from severe weather conditions.
• Safety and security: Safety measures such as emergency exits, fire exits, and safety equipment should be installed in industrial facilities.

It's not just about the money involved; these defects can also put employees' safety at risk. Faulty wiring might lead to fires, or a weak foundation could result in disastrous collapses. 

Legal implications 

The legal consequences of concealing or failing to disclose a latent defect to defraud a buyer are determined by some laws and regulations. Some key legal aspects to consider:

• Consumer Protection Act (CPA)

Fair business practices and the protection of buyers are the goals of the CPA. Under the CPA, a buyer may have a legal claim for damages or other appropriate remedies if a seller misrepresents or fails to disclose a material fact about the property. It's essential to note, though, that the Consumer Protection Act (CPA) does not cover private sales.

• Law principles of voetstoots clause

When you buy a property, you agree to accept it "as is". The seller won't be liable for defects or issues after the property is yours. Now, this might sound unfair. But there's a chance the voetstoots clause won't work if the seller hides a hidden flaw, like a plumbing or structural issue. In such cases, the seller is responsible if you can prove they hid the defects from you.

• Fraud and misrepresentation

Concealing latent defects is deemed fraudulent misrepresentation under South African law, a serious violation. If you want to bring a fraudulent misrepresentation claim, you must establish the following:

a) Knew that it was false
b) Had no belief in its truth
c) Was reckless regarding whether it was true or false

Potential remedies for latent defects

The buyer is entitled to compensation if the defect substantially affects the property's habitability, as opposed to its reputation. However, the money spent on property enhancements is irrecoverable. If a buyer is deceived into entering a buyer agreement, they have the right to rescind the contract; however, they must act quickly to preserve this right, as specific property-related actions can foreclose it.

Newpoint Property will help guide you through buying or selling of industrial property. Browse our property listings to find properties for sale, or get in touch with our property practitioners for expert advice today.