Andrew
Legal Matters with Arthur Marara
There is a duty of care imposed on estate agents in handling business for their clients. Some people lose money in their attempt to acquire immovable property.
The courts are inundated with cases where innocent title owners are seeking orders to reverse fraudulent transfers of their property.
There are relevant legal provisions under which the real estate profession is governed and regulated.
It is in recognition of its professional nature that Section 5 of the Estate Agents Professional Conduct Rules, 1987; Statutory Instrument 200 1987, states: “An estate agent shall act bona fide and in a fiduciary manner towards all persons with whom he has dealings in his professional capacity.”
The statute places obligations of good faith and duty of care on estate agents. Breach of the duty arises either by omission or commission. An omission will be considered wrongful only if it occurs in circumstances the law regards as sufficient to give rise to a legal duty to avoid negligently causing harm.
In “A Guide to the Zimbabwean Law of Delict”, Professor Geoff Feltoe states: “Where patrimonial loss accrues as a result of harm caused by an omission as opposed to positive physical conduct, there are special rules which apply. In general terms, there is no delictual liability for an omission unless, in the circumstances, the law recognises that there is a legal duty to take positive action to prevent the harm from occurring.”
Considerations of legal duty of care and legal convictions of the community are critical.
The circumstances of each case must be considered on their own merits.
In Daphine Nyandoro versus Deep Horizon Real Estate Agents and Voster Sawaya HH 461/18, Chitakunye J held that there was no negligence on the part of the purchaser.
The responsibility was on the second defendant, as the face and agent of the seller, to ensure that he had verified the true identity of the seller and that he had not been given a mandate to sell by a fraudster or imposter. Any failure in that regard was bound to have devastating ramifications as the plaintiff was bound to rely on his professional diligence in that regard.
Chitakunye J further held that it was upon the estate agent to verify the identity of the seller and confirm with the authority responsible for approving cessions that he had been given the mandate by a true owner with the title, rights and interest in the property. The plaintiff relied on him to professionally handle the transaction.
Estate agents, by virtue of being in the real estate business, are aware of numerous cases of fraudsters selling properties they do not own, and should, therefore, not take chances by not verifying with all the offices.
In Ruth Chirimuuta v Action Property Sales (Pvt) HH 5/07, the estate agent had drawn up an agreement of sale before confirming that the seller had the authority to sell the property, and had proceeded to release part of the purchase price before verifying the authenticity of the seller’s title in the property being sold. It later turned out that the purported seller was an imposter, and transfer could not go through.
The purchaser sued the estate agent for damages on the grounds that the agent had been negligent in failing to uncover the true identity and authenticity of the sellers and their title in the property.
In the Chirimuuta judgment, Hon Patel J opined: “I am of the firm view that the defendant owed the plaintiff a duty of care not only to confirm the seller’s identity and authority to sell, but also to verify the authenticity of the seller’s title in the property being sold. In the circumstances of this case, it was reasonably foreseeable that the plaintiff would be prejudiced if the defendant’s duty of care was not complied with before the sale was concluded and especially before the purchase funds were transferred.”
A similar position was arrived at in Alex Masiya and Another v Roland Takawira Sadomba and Another HH 28/12. I had the privilege of arguing this case. In this case, the plaintiffs sued for damages against the defendants (real estate agents) on the grounds that they had breached their duty of care in the sale of a piece of land, which turned out not to belong to the purported sellers introduced to the plaintiffs by the first defendant. By the time the plaintiffs discovered the true position, part of the purchase price had already been paid to the purported sellers.
In arriving at the conclusion that the estate agent owed the purchasers a legal duty of care, and had, in fact, breached that duty, Mutema J stated: “In the real estate industry, can an estate agent or property consultant/negotiator be held liable for negligently breaching a duty of care which occasions financial loss to purchasers to whom he had made assurances that they would not be defrauded by the prospective seller?”
The judge further reasoned: “The first defendant assured them that he was a professional, who had been in the business for a long time and that their money would be safe. In other words, the first defendant assured the plaintiffs that he would protect their interests. He, therefore, owed the plaintiffs a duty of care. I say so because, between the defendants and the plaintiffs, there was created a sufficient relationship of proximity such that in the reasonable contemplation of the former, negligence/carelessness on their part might be likely to cause damage to the latter.
“Every person has a right not to be injured in their property by the negligence of another. The transaction in the instant case took place at a time when the real estate industry was awash with prospective innocent purchasers being conned of their hard-earned money by fraudsters who thrived on the innocence or gullibility of the former.
“Where, therefore, a purchaser entrusts his/her money to a professional estate agency/property consultant who assures him/her that the money would be safe, a duty of care is thereby established. If the estate agency negligently breaches the duty of care so created, it must be held liable in damages for the ensuing harm where a diligens paterfamilias would have foreseen the danger and guarded against it.”
The judge stated: “On the totality of the evidence adduced, the probabilities and the law, I find it not only equitable but good law that in the real estate industry, an estate agent or property negotiator/consultant can be held liable for negligently breaching a duty of care which occasions financial loss to a client.”
Anyone who wants to purchase properties is advised to exercise due care and diligence. Players in the industry also need to do likewise.
LEGAL DISCLAIMER: This article has been written in good faith for general guidance in raising legal awareness on topical issues that affect most people on a daily basis. It is not meant to create an attorney-client relationship or constitute solicitation. No liability can be accepted for loss or expense incurred as a result of relying in particular circumstances on statements made in the article. Laws and regulations are complex and liable to change, and readers should check the current position with the relevant authorities before making personal arrangements.
Arthur Marara is a corporate law attorney practising law in Harare.
He is also a notary public and conveyancer. He is passionate about labour law, commercial and family law, and promoting legal awareness and access to justice. He writes in his personal capacity. You can follow him on social media (Facebook Attorney Arthur Marara), or WhatsApp him on +263780055152 or email: [email protected]
Tinaye Agere
Online Reporter