South African Conveyancing - The property transfer process does require patience
Time, being inconvenienced by transfer delays and rescheduling are just a few problems that most home buyers face when doing property transfers. Most of these problems are more typical in Cape Town because of the delays at the city’s rates department.
The Property transfer process requires a lot of patience because it does take longer than expected. There are many factors that can cause delay, but if you comprehend the process you will be helping yourself to avoid surprises and prepare yourself for a quick and smooth transition to your new home.
Satisfying the regulations and the applicable laws of the transfer process have to be in place when buying a new home. These include the Transfer Duty Act, Municipal Property Rates Act, include the Financial Intelligence Centre Act (FICA) and the Value Added Tax Act. On the other hand, you will be required to follow the process of satisfying your bank’s demand for documentation, should you need a bond from a bank to finance your purchase.
This long process starts with attaining the finance on order after your offer to buy a house has been granted by the seller. After that, your estate agent will help you by getting a bond originator, but if you have the means; you can approach whichever bank you want.
But should you see that things are going slow, try by all means to be patient. It’s just that the property transfer procedure is lengthy.
THE TRANSFER PROCESS
Once the suspensive conditions are fulfilled, the Conveyancer will be instructed to proceed with The Transfer Process.
The Sale Agreement
Buying or Selling property is the biggest financial commitment most of us will ever undertake. It is thus very important that the Estate Agent and Conveyancers are chosen carefully. The Estate Agent will explain the terms of the sale agreement to the parties - who must ensure that they ask questions and understand all the terms before signing the agreement. Once the agreement of sale is signed, it is a binding contract between the Seller and Purchaser.
What are Suspensive Conditions?
The Sale Agreement must contain “Suspensive Conditions”. These are conditions which must be fulfilled before the transfer process can begin. The most common suspensive condition is the granting of a bond to the Purchaser. A bond is a loan of money to the Purchaser by a bank to enable him to pay the purchase price of the property, on security of the property purchased. It records that if the Purchaser fails to make the bond repayments, the bank will be entitled to sell the property to recover the money it has lent. Another common suspensive condition is that the agreement is subject to the sale of the Purchaser property. This happens where the Purchaser is selling his property and needs the funds from the purchase price of that property to pay for the new property. The Seller, in this case, must realise that the transfer of the Purchaser’s property will have to be registered before or simultaneously with the transfer of the Seller’s property. The conveyancers will then correspond closely with and usually obtan an undertaking the conveyancers who are attending to the transfer of the Purchaser’s property to pay over the proceeds of that sale on registration.
Cancellation of the Existing Bond
If the Seller still owes money to his bank in respect of his bond, because he borrowed money to buy the property himself, then that bond will have to be cancelled at the same time the property is transferred to the Purchaser. The Conveyancer must obtain the original title deed to the property from the Seller’s bank, who will be holding the title deed as security. The Seller’s bank will also let the Conveyancer have the “cancellation figures”, i.e. the exact amount still owing by the Seller under his bond. When the property is registered in the name of the Purchaser and the Seller’s bond is cancelled, the seller’s bank will be paid the outstanding amount and the balance of the purchase price will be paid to the Seller. The cost of cancelling the bond is payable by the Seller and is thus deducted from the purchase price before the Seller receives the balance. The Seller’s bank decides which Conveyancer will attend to the cancellation of the bond. If this is not the same Conveyancer who is attending to the transfer of the property, then the Transferring Conveyancer must correspond closely with the Cancellation Conveyancer to ensure that the transfer documents and the cancellations documents are lodged in the Deeds Office together.
Registration of a new mortgage bond
If the Purchaser is obtaining a bond to pay the purchase price, this bond will also have to be registered simultaneously with the registration of the transfer and the cancellation of the Seller’s bond. The bank which is granting the bond will appoint the Conveyancer who is to attend to the registration of the bond. If this is not the same Conveyancer who is attending to the registration of the property, then the transfer Conveyancer must cooperate closely with the bond Conveyancer to ensure that the bond and transfer documents are drawn up and lodged at the Deeds Office together. If the Bank appoints the same Conveyancer who is attending to the transfer, then the process is made much simpler and quicker - because the bond and transfer documents will be prepared and signed at one office. The Conveyancer attending to the transfer will obtain guarantees from the Purchaser’s bank to ensure that the money being lent to the Purchaser is available on the date of registration of the bond. The various banks have different conditions which must be met before the bond can be registered. These conditions include the signing of various documents by the Purchaser; obtaining insurance on the building that is erected on the property; obtaining and ceding a life assurance policy; the signing of suretyships; etc. The Bank will not allow the bond to be registered until all the conditions are met and it is thus in the interest of the Purchaser to take all steps necessary to comply with the Bank’s requirements.
Transfer of the Property
To enable the Conveyancer to prepare the transfer documents, he will require the Purchaser’s & Seller’s details together with copies of their Identity documents, marriage certificates, ANC’s, divorce orders, etc. After receiving these documents & the original Title Deed, the Conveyancer will prepare the transfer documents & his proforma account. The Parties will then be called upon to sign the documents and the Purchaser will be called upon to pay the Conveyancer’s costs.
These costs will include:
- The Conveyancer’s fees: these fees are charged in accordance with a tariff issued by the Law Society;
- Transfer Duty: this is a tax payable to the state on all transfers of immovable property and is calculated as a percentage of the purchase price. No transfer can be registered until the Deeds Office has proof that the transfer duty has been paid;
- Rates: the purchaser will be liable for rates from the date of registration of the property in his name. Approximately 3 months’ payment in advance will be required by the Conveyancer to enable him to obtain a rates clearance certificate from the rates department. No transfer can be registered until the Deeds Office has proof that the rates have been paid. If the property is a sectional title unit, then a levy clearance certificate must be obtained.
The transfer, bond & cancellation documents must be lodged in the Deeds Office at the same time to ensure simultaneous registration. If different conveyancers are attending to the registration of the Purchaser’s bond, the cancellation of the Seller’s bond and/or the transfer of the property, then all these conveyancers must collaborate. From date of lodgement, it usually takes 7 days until date of registration. The parties are notified on the day of registration and the Seller is paid out on the following day. The parties are furnished with final accounts reflecting the final adjustments between the parties in respect of rates, levies, occupational rent and other matters.
Source: Meumann White
Courtesy: The EAAB - Estate Agency Affairs Board
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