COOLING-OFF RIGHTS TO
By Fanie Botes
Director: Commercial – Millers Inc
A purchaser should be 100% sure that he
or she wants the immovable property before signing any contract. As soon as the
offer to purchase has been signed by both the purchaser and seller, it
immediately becomes a legal and binding sale agreement. The question often
asked by purchasers or consumers is whether goods can be returned after being
purchased, and whether a contract can be cancelled after being entered into.
The answer to this question is simple; yes. As a purchaser or consumer you have
a right which allows for the cancellation of a contract or the return of goods
within a certain period of time. This right is known as the cooling-off right.
In terms of section 16(3) of the
Consumer Protection Act (the CPA) and section 29A of the Alienation of Land Act,
the cooling-off period is only available in instances of direct marketing,
which includes approaching a person either by mail, electronic communication or
in person. The consumer has a period of five (5) business days from the date of
the conclusion of the agreement or delivery of the goods purchased to cancel
the agreement. Written notice must be given to the seller within 5 business
In respect of the above, the consumer
can return the goods, cancel the entire contract without penalty, and receive a
full refund as long as the goods are returned or the agreement is cancelled
within 5 days from the date of the purchase. This is also applicable in respect
of the purchase of immovable property.
The Alienation of Land Act (the Act)
makes provision for the cancellation of a sale agreement between the purchaser
and seller within five (5) days of signature of the agreement. The date from
which a purchaser may exercise the cooling-off right should be the date of
conclusion of the sale agreement, and not the date of delivery i.e. the date of
registration of the immovable property in the name of the purchaser.
Section 29A of the Act only allows for a
cooling-off period in instances where the immovable property was bought in
terms of direct marketing, and where the purchase price of immovable property
or land is less than R250,000. It does not apply to residential properties sold
for more than R250,000.
The seller will have ten (10) business
days after the cancellation of the agreement by the purchaser to refund the
purchaser of the purchase price in full or refund any monies paid by the
purchaser. Every offer and/or sale agreement must state that the purchaser is
entitled to revoke the offer or terminate the sale agreement.
The cooling-off period is only
applicable if the purchaser is a natural person and the immovable property is
bought for residential purposes. A purchaser of agricultural land does not
enjoy a cooling-off right.
The cooling-off period will not apply
where the purchase was at a public auction; the seller and purchaser have
previously entered into a deed of alienation of the same land or a similar
transaction for the same land; the purchaser has reserved the right to nominate
or appoint another person to take over the rights and obligations of the
agreement; and the purchaser purchased the land by the exercise of an option.
Other than the CPA and the Alienation of
Land Act, section 121 of the National Credit Act also allows for a cooling-off
period of 5 business days to terminate lease- or installment agreements.
It is important for purchasers of
immovable property to know when the cooling-off period applies and also to know
that it can only be used in certain instances. Many people can relate to the
feeling of regret or despair after spending hard earned money. As a purchaser
you should ensure that you conclude the sale agreement in a considered manner
in order to avoid any obstacles associated with buyer’s remorse.