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Writer's pictureHerman Janse van Rensburg

The ABCs of Property Transfers: What Buyers and Sellers Need to Know About the Costs and Processes

Buying or selling property in South Africa can feel overwhelming. The important thing to know is where to start. We thought we would make it a little easier by explaining the basics that you need to know from signing the offer to purchase to getting successful registration at the Deeds Office. This blog post will help you understand compliance certificates, transfer duty, conveyancing fees, and everything else you’ll encounter on the way. Let’s get started.


Offer to Purchase (OTP):

The transfer process starts when the buyer makes an offer to buy a property. The offer must contain all of the material terms, like the price, deposit payable, special conditions and the requirement for a mortgage loan. Once the seller accepts the written offer by countersigning the document you have an agreement known as a deed of sale. The deed of sale becomes valid once the conditions are fulfilled. If it is a condition that the buyer must receive approval for a loan and the loan is not approved, the sale won't proceed. When signing the OTP, ensure that it is signed with in ink and not electronically. An OTP that is signed electronically will be invalid. There are Advanced Electronic Signatures that can be used, but we don't recommend trying it for now. Simply print, sign and scan the OTP. Make sure to keep the original document.


Conveyancer:

A conveyancer is an attorney who mainly deals with the legal aspect of transferring property ownership. This includes handling all necessary paperwork and formalities to register the property transfer with the Deeds Office. Typically, the seller appoints the conveyancer, but the buyer and seller can agree on a different conveyancer in the OTP.


Bonds:

Just settling a bond doesn’t cancel it automatically. If there’s still a bond registered over the property that is being sold, it will have to be cancelled. Bond cancellation costs are paid by the seller. The cancellation will cost around R4 000 or more, depending on the number of bonds. If you're unsure about the status of your bond, we can check the database and let you know.

Bond approval and registration usually form part of OTP conditions. If the buyer needs to finance the property through a loan, the buyer will have to apply for a mortgage bond.


The bank will appoint attorneys who will deal with all the bond registration or cancellation requirements. The bond registration attorneys will communicate all their requirements to the buyer and will inform the buyer of the costs. It helps if you let us know who the bank appointed. We can contact them and get regular updates and provide them with planned timelines.


We submit the bond cancellation and registration documents along with the transfer paperwork to the Deeds Office all at once.


Conveyancing fee:

The conveyancing fee is usually paid by a buyer. This includes drafting documents, ensuring compliance with laws like the Alienation of Land Act and the Deeds Registries Act. The fee is prescribed and based on a sliding scale, and the higher the value/purchase price of the property, the higher the fee – check out our website and use our conveyancing cost calculator to get a fee estimate. In some instances a conveyancer can decide to give discount on a conveyancing fee, but aiming for discount might not incentivise a conveyancer to do their best work.


Transfer Duty:

SARS needs to collect its dues. To move forward with the property transfer at the Deeds Office, we need to submit a transfer duty receipt or a transfer duty exemption. Transfer duty is a tax paid by the buyer. The amount you pay depends on the property’s value/purchase price. The buyer pays the transfer duty into the conveyancer’s trust account, and the conveyancer makes the payment to SARS. After the payment has been made SARS will provide a transfer duty receipt.


There are some instances where transfer duty is exempted. For example if the seller is VAT registered, VAT will be payable rather than transfer duty. Transfer duty exemption on the other hand isn’t a one-size-fits-all deal and depends on a few specific factors. We can walk you through the details, answer your questions, and help you understand if you qualify for an exemption or how we can make it happen.


Rates Clearance Certificate:

The Rates Clearance Certificate verifies that the seller has paid all municipal rates, taxes, and utility charges up to the date of the property transfer. This is to ensure there are no outstanding payments that could impact the new owner, and that a seller doesn't get away with an unpaid utility account. The certificate is issued by the local municipality. While the buyer covers the application costs for the certificate, the seller is responsible for paying any outstanding rates, taxes, and utility charges before the transfer takes place.


Your conveyancer will contact the municipality where the property is located to establish what amount needs to be paid for the certificate to be issued. Once the conveyancer receives confirmation from the municipality, they will inform the seller. The seller must then pay this amount directly to the conveyancer, and they will make the payment to the municipality. After the payment is made, the municipality will issue the Rates Clearance Certificate. We’ll include this certificate with the transfer documents at the Deeds Office. This process ensures the property has no outstanding debts, making the transfer smooth and trouble-free for the buyer.


Compliance Certificates:

Before the property can be transferred, the seller will need to obtain several compliance certificates. The seller also covers the costs for these certificates and any necessary work to get them. The conveyancer needs the original or electronic versions of these certificates before registration can occur. It’s best to get these certificates as soon as you’ve signed the OTP. Here’s what’s typically required:


• Electrical Certificate of Compliance (COC): This shows that the property's electrical system meets safety regulations.

• Electric Fence Certificate of Compliance: Required if the property has an electric fence and verifies that the electric fence meets safety regulations.

• Gas Certificate of Compliance: Required if the property has gas installations and verifies that the gas installations meet safety regulations.

• Water Compliance Certificate: Required in terms of certain municipal by-laws and ensures the water installations meet municipal regulations.

• Beetle Certificate of Compliance: Required if requested and confirms the property is free from beetle infestations.


Some of these certificates are legally required, while others are often requested by buyers. We’ll guide you on which certificates are necessary based on local laws and buyer requirements.


Deeds Office process:

Once we have all the signed documents from both the buyer and the seller, and we’ve received all required guarantees, deposits, and payments, the transaction is ready for lodgement. The draft deed and accompanying supporting documents are then submitted to the Deeds Office.


The draft deed and supporting documents are carefully reviewed by junior and senior examiners to ensure all the details are correct and that there’s no legal reason the transaction can’t move forward.


If the draft deed is approved it moves to the preparation stage where it is finalised for registration. The entire Deeds Office process can take up to 10 working days, so you will unfortunately have to hang tight for just a little longer. Once the conveyancer signs the title deed and the registrar countersigns it, the property is officially transferred from the seller to the buyer. If there is an existing bond on the property, it will be cancelled on this day. If the buyer has a new bond, it will also be registered at the same time as the transfer. That’s it—on this day, the buyer officially becomes the proud owner of their new property.


The Deeds Office will finalise their internal processes and once all the information is captured they will send the new original title deed to the conveyancer or the bond registration attorneys. After all guarantees have been paid out, the conveyancer will provide the parties with a final statement, pay the seller the amount owed, and issue any applicable refunds to the buyer.


Conclusion

Given all the people involved, it is the conveyancer's responsibility to manage the relationships and registration process to ensure that the transaction proceeds smoothly. The conveyancer will provide you with regular updates to keep you informed and ensure a successful handover.


If you are thinking of buying or selling property and you need a conveyancer, book a consultation with Van Zyl Scheepers Attorneys. We are passionate about property transfers and take great joy in seeing smiles after the registration process is completed. We will handle the nitty-gritty so you can relax and enjoy the process.


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