Answer to a question from a reader

Can a seller change their mind about the cost of the house and sell it for more than it's worth?

The short answer

The seller can name their price for their property but cannot change their mind after the offer to purchase has been signed.

The whole question

Dear Athalie

I have been renting my friend's RDP house for a year and a half. She has never lived there in the 10 years that she's owned the house and she didn't make any improvements in or around the house. I spent a lot of money making upgrading and maintaining the house. When I couldn't afford to pay the rent after it was increased by my friend, they offered to sell the house for R200,000. When I went to sign the offer to purchase documents, she insisted that she had said she would sell for R350,000. I later found out from the council that the house is only worth R240,000. Can my friend ask me to pay that much more for the house if she never did anything or even lived in it?

The long answer

There are two issues here:

  1. Whether the owner lived in the house for the required eight years before selling it; 

  2. If she can ask for R350,000 when she had originally asked for R200,000 and has done nothing to improve the house which is valued at R240,000.

Question 1: It is illegal to sell an RDP house before you’ve lived in it for eight years. It is also illegal to rent out an RDP house.

It has always been illegal to rent out an RDP house, and the law has not changed. The problem is that the authorities don’t seem to be able to enforce their own rules and often turn a blind eye to illegal renting out of RDP houses. There have also been many allegations of municipal officials themselves profiting from illegal rentals of RDP houses. 

But in terms of section 26 (2) of the Constitution and section 9 of the Housing Act, municipalities have an obligation not only to provide RDP houses to people who qualify, but to prevent fraudulent activities and to take steps to resolve issues that are brought to it by applicants for RDP houses. 

You could ask the council if the law on renting out RDP houses no longer applies, when it was changed, and what the law is now. You should always keep a note of whom you speak to, the date of speaking to them and their reply. 

You could also ask the council what the consequences are for a person who failed to live in her RDP house for eight years before selling it, as required by law.

If the council is unhelpful, you could write a letter to the MEC of Human Settlements. In the Western Cape, this is Tertius Simmers. The letter should set out your complaint against the council, giving names and dates, and ask him to clarify what the law is in regard to renting out RDP houses and what the consequences are, if any, for individuals and municipalities that disregard the law. 

The contact details for the Human Settlements Head Office in Cape Town are: 

Tel: 0860 142 142. 

Please Call Me: 079 769 1207. 

Email: [email protected] 

Question 2: Can she ask for R350,000 when she had originally asked for R200,000 and the house is valued at R240,000.

Although it seems unfair that she should change her mind about the R200,000 she offered to sell it for, until the Offer to Purchase (OTP) is signed, she can change her mind. Once it is signed, it is a legal document that neither seller nor buyer can back out of.

She can also ask for more than the value of the house if she thinks she can get it from a buyer. 

Although you have made so many improvements to the house while renting it, she is not legally obliged to take that into account, as she can say you made the improvements of your own free will.

Wishing you the best,
Athalie

Answered on Dec. 10, 2021, 10:27 a.m.

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Please note. We are not lawyers or financial advisors. We do our best to make the answers accurate, but we cannot accept any legal liability if there are errors.