A Costly Case of Buyer’s Remorse
“Caveat subscriptor” – old legal maxim meaning “Let the signer beware!’
A recent High Court decision once again highlights the dangers of signing anything without reading, understanding and fully considering it.
A “Renovator’s Dream” and a case of buyer’s remorse
- A couple viewed a house advertised as “a renovator’s dream” and they immediately decided to sign an offer to purchase for R550,000 (R20,000 under asking price).
- The seller accepted the offer that afternoon (after the agent agreed to reduce her commission to R40,000) and the agent emailed a copy of the sale agreement to the buyers with confirmation of the acceptance.
- Early the next morning the buyers emailed the agent saying that the cost of renovations meant the purchase was not feasible for them “Therefore I hereby decline my offer to purchase and thanks for your time.”
- After taking legal advice the agent confirmed that a binding sale agreement had been concluded and that the sale must proceed.
- The buyers’ response was to suggest that the sale was subject to their daughter’s approval, to which the agent countered that had that been discussed, a special condition to that effect would have been inserted into the agreement.
- The seller thereafter sold the house to another buyer, and the agent (having not been involved in the second sale) sued the buyers for the agreed commission of R40,000 in terms of a standard clause in the sale agreement making the buyer liable for commission on breach by the buyer.
“Let the signer beware!”
- The Court dismissed the buyers’ objection that they hadn’t realised that they would be liable to pay the commission if they breached the sale agreement. “It is evident”, held the Court, “that the caveat subscriptor [‘let the signer beware’] rule provides that a person who signs a contract signifies their assent to the contents of the document, and they are bound by the document even if it subsequently turns out that the terms are not to their liking. In that event, they have no one to blame but themselves.” In other words, read and understand any agreement before you sign it – once you sign, you are bound whether you read it or not.
- Nor could the buyers prove that the sale was subject to their daughter’s approval as there was no condition in the agreement to that effect. In other words, make sure that any special conditions you want to form part of the sale are inserted into the signed agreement.
- Finally, there was no evidence of misrepresentation or fraud inducing the buyers to sign – if they were mistaken as to what was in the agreement and in particular in the commission clause, that was due to their failure to read it before signing.
- The buyers must pay the R40,000 commission plus two sets of legal costs.
Bottom line – sign nothing without understanding exactly what you are agreeing to.
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