The complainant purchased a property on auction from the Bank and to date has been unable to take occupation. This is due to the previous owners refusing to vacate. The complainant requested a refund of all payments made thus far in terms of the home loan agreement.
When purchasing a property on auction, the purchase and sale agreement usually contains a clause which states that the property is sold subject to existing tenancies, and that vacant possession is not guaranteed.
In this instance, the agreement included such a clause and furthermore referred to the auction rules.
In terms of the auction rules, the agreement stated the following: “Please take note of the following general information on buying this type of insolvent property:
The Seller does not warrant that the Purchaser will be able to obtain vacant occupation of the property. The property is sold subject to existing tenancies.”
By signing the purchase and sale agreement, the purchaser confirmed that he acknowledged and understood the risks related to purchasing the property, specifically the risks in respect of maintenance and vacant occupation.
We were therefore of the view that the Bank took reasonable steps to ensure that the purchaser was alerted to the potential dangers and risks associated with purchasing a property sold in execution, and further, that vacant occupation was neither provided for, nor guaranteed.
As the new owner of the property, the purchaser was at liberty to proceed with an eviction application against the occupants and would need to act on the advice of an attorney and via a court of law.
There was no evidence of any maladministration by the Bank and therefore no grounds on which we could recommend a refund of the purchase price.
PRINCIPLE When taking the decision to purchase a property on auction, it is important that the purchaser understands the risks involved.
