Latent defects, prescription and your newly bought home
Home buyers are often worried about the risk of discovering a latent defect after they have bought a home, particularly where sellers may have gone to some length to hide the defects to get the house sold. In this article we take a look at the role prescription plays when discovering defects and how this may affect the buyer's ability to take steps against a seller.
In the recent Supreme Court of Appeal case of Stemmet and Another v Mokhethi and Another (681/2022) [2023] ZASCA 127 (04 October 2023) the Court had to deal with the issue of prescription when it comes to a claim for latent defects.
The facts were brief; the Mokhethis had bought a house from the Stemmets, which they had been impressed with as it appeared to be in good condition and had been newly painted. Within a few months, terrible cracks started appearing all over the house. Mr Mokhethi, previously an engineer, immediately recognised that these weren't hairline cracks but structural defects in the house which the Stemmets had tried to cover up 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 and related to the expansion and retraction of the clay upon which the property had been built. This led the Mokhethis to eventually institute action 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 Court 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'.
In this regard, 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 averred, from the moment they received the insurer's report explaining the cause of the defects to be the clay ground. Unfortunately for the Mokhethis the three-year prescription period had passed before they instituted action resulting in their claim prescribing.
This case shows that buyers should take careful note of the complexities surrounding latent defects and also prescription. It also serves as a warning to buyers to do their homework properly, and if a deal looks too good to be true, it may just be. Should defects however occur, it is also prudent to immediately make contact with your attorney to ensure that you act timeously and avoid an unfortunate situation like with the Mokhethis where a claim prescribes.
