INTRODUCTION

If you are trying to move house, the last thing that you want is for the process to be hampered by red tape. It is with this in mind that this pamphlet was designed to tell you all you need to know about buying, selling and owning property as well as a summary of the procedure to be followed in a typical transfer of urban residential property from the conclusion of the sale agreement to the registration of the various transactions in the Deeds Registry and the subsequent release of the title deeds from the Deeds Registry.

Due to the complex nature of conveyancing procedures, it is often evident that the parties involved in a particular property transaction, namely the seller and purchaser, do not understand the procedure to be followed, hence are frustrated at the length of time it may take for a transaction to be registered in the Deeds Registry. We, as conveyancers understand the frustration, as fixed property is generally the largest single asset that a person owns and the transaction for the purchase or sale of fixed property is probably the most important contract undertaken by individuals. To assist the parties in overcoming the so-called “red tape”, we offer, as do many other law firms, a service offering advice and help on buying and selling your home and to this end we hope that this process will be simplified and that you, as owner and buyer, will begin to understand the concept of home ownership.

What is Conveyancing?

Conveyancing is the legal procedure in terms of which a person becomes the registered and lawful owner of fixed property and ensures that his ownership cannot be challenged. In order for this to happen, certain preliminary juristic acts are executed in relation to the registerable fixed property. The process comprises the registration of the relevant documents in the Deeds Office. Example: If “A” sells his house or flat to “B”, the preliminary juristic act is the entering of the Deed of Sale in which the terms and conditions of the transaction are set out.

The aforementioned preliminary juristic act creates personal rights: Example: the right of the Seller to claim payment of the purchase price and the right of the purchaser to claim ownership of the fixed property. Therefore, to give effect to the said preliminary juristic act, the purchase price must be paid to the seller and ownership of the fixed unit must be transferred to the purchaser. Such transfer can only be effected by the registration of transfer in the given Deeds Office. Conveyancers attend to this registration, as well as the arrangement with regard to payment and related matters.

Who is a conveyancer and who appoints him / her?

A Conveyancer is an attorney who has acquired the additional qualification of “Conveyancer” who specialized in property law and related matters. Once qualified, the Conveyancer is able to attend to the registration in the Deeds Office of various transactions involving fixed property, which mainly consists of the transferring of houses, farms and/or flats (fixed property) and the registration of mortgage bonds. It may, however, also include other registrations e.g. Partition transfers, expropriation transfers, the transfer of ownership by way of endorsements of title deeds, the taking out of special title deeds and registration of servitudes.

In South Africa, the usual practice is for the Seller to appoint a conveyancer for a property transaction, although this, like other aspects of the sale agreement, can be varied as a result of negotiation between the parties. The purchaser may also appoint a conveyancer to advise him but his charges will be over and above the conveyancing costs submitted by the Seller’s conveyancer, who will be attending to the transfer.

What is the first step in the sale of fixed property?

The first prerequisite is the agreement of sale. This must be a written agreement which is signed by both the seller and the purchaser. A written “offer to purchase” signed by the purchaser and accepted by a seller also constitutes an agreement. A verbal contract for the sale of fixed property is not valid.

The deed of sale is an important document which must be carefully examined. The parties must check that the price is what has been agreed on, that the terms of payment are acceptable to both parties and that the arrangements in respect of financing agree with the terms of payment.

Occupancy of the property does not necessarily have to coincide with registration of transfer. If occupation takes place prior to registration, the deed of sale must provide what rent is payable until registration.

Risk in the property usually passes to the purchaser when occupation of the property takes place by the purchaser, although the consequence can be (and often is) changed in the deed of sale itself. The purchaser must, therefore, take out insurance in appropriate cases.

The purchaser is usually responsible for payment of transfer costs. These are recommended by tariff and the purchaser will be able to know in advance, to within a few rands, what the costs will be.

Finally, most agreements of sale contain suspensive conditions, the most common being the raising of a loan by the purchaser to help him pay the purchase price. This condition must be specified in the agreement of sale. At this stage the property still does not legally belong to the purchaser, although he does have the right to require the seller to transfer the property to him.

What happens next?

The property must be registered in the deeds office. This is a lengthy and complex process, conditions must be fulfilled and the title deeds must be obtained.

Both the seller and the purchaser will be required to call at the office of the conveyancer to sign certain documents which have been prepared by the conveyancer and which will enable the conveyancer to effect the transfer. The following documents have to be signed:

a) The Power of Attorney

This must be signed by the seller and it authorizes the conveyancer to attend to the transfer on the seller’s behalf.

b) Declaration in respect of status and solvency

In this document the purchaser and seller declares his or her marital status and solvency. This deals with such questions as to whether he or she is married in or out of community of property which determines whether the property is to be registered in his or her name or in the name of both spouses. Unmarried adult persons, whether never married, divorced or widowed, are granted sole rights of ownership.

c) Transfer Duty Declaration

Transfer duty is a form of tax payable to the state and is calculated on the value of the property. A declaration must be signed by the purchaser and seller as to the value of the property. No transfer can be registered unless there is proof that the transfer duty has been paid and the conveyancer will pay the transfer duty on behalf of the parties after he has been put in funds to do so.

d) FICA Declaration

Both the Seller and the Purchaser will be required to sign an Affidavit in respect of Financial Intelligence Credit Act, whereby they are to be properly identified by the conveyancer and their current residential address stipulated.

The conveyancer will also prepare an application for a Rates Clearance Certificate to be sent to the local authority and a “pro forma” account informing the purchaser of the costs of the transaction payable by him.

Value Added Tax

If the Seller is a registered Vendor and VAT is payable on the purchase price, then transfer duty is not payable.

Mortgage or Bond Documents

If the purchaser obtains a loan from a financial institution (bank or building society) or from his or her employer, the lender will insist that the purchaser register a mortgage bond over the property to secure the loan. To enable the bond to be registered, the purchaser will be required to sign written authorization for the conveyancer to do so.

To enable the conveyancer to draw up all this documentation correctly, the purchaser must submit his or her identity documentation, marriage certificate and if applicable, antenuptial contract to the conveyancer as well as other documents required by the bank.

What are the costs involved?

The costs relating to the transfer of fixed property fall into three main categories:

a) Transfer duty which is payable to the State. The amount payable can be divided into two categories:

• Purchase by a natural person is 0% on the first R500 000 (incl) of the value of the property, 5% on R500 001.00 up to R1 000 000.00 and R25 000.00 plus 8% on R1 000 001.00 and above.
• Purchase by a Company, Close Corporation, Trust or other legal person is 8 % of the value of the property.

b) A portion of the rates payable on the property as determined by the relevant authority;

c) The conveyancer’s fee, which is calculated on a sliding scale based on the purchase price. If you want to know what fees are payable, go onto our Bond and Transfer costs link on our website and this will be worked out for you very easily.

Where a bond has to be registered, the purchaser will have to pay an amount charged by the financial institution for the inspection of the property, provisional interest and insurance premiums and the conveyancer’s fee (also calculated on a sliding scale based on the amount of the bond.

Who arranges these transactions?

What happens with Trust monies?

What happens at the Deeds Office?

The conveyancer will lodge the documents that he has prepared in the Deeds Office for registration. The deeds office is a government registry of all fixed property and rights in fixed property. If there is a bond to be registered, the conveyancer attending to the bond (who is usually not the conveyancer attending to the transfer) will also lodge the bond documents in the deeds office for registration simultaneously with the transfer documents.

The examiners in the deeds office scrutinize the documents to ensure that they comply with all the relevant legislation and regulations. When they are satisfied, they inform the conveyancer that the transaction is ready for registration and thereupon, in the presence of the conveyancer and the registrar of the deeds office, the property is registered in the name of the purchaser. The bond is registered simultaneously.

On registration, the purchaser becomes the lawful owner of the property and his title cannot be upset by anyone unless it has been obtained by fraud. The title deed reflecting ownership will be released from the Deeds Office after registration and will be handed to him by the conveyancer, unless a bond has been registered, in which case the title deed is retained by the bondholder.

How long does this process take?

Having read the above, you will now be aware that conveyancing is a complex field requiring extensive knowledge, skill and attention to detail on the part of the conveyancer. There are a number of parties and steps involved in a conveyancing transaction and delays are possible at any stage of the transaction. It is important, therefore, that the purchaser should sign all the documents and pay the required amounts as soon as the conveyancer calls on him or her to do so; this helps to ensure that there are no unnecessary delays.

The length of time it takes to register the transaction in the deeds office is dependent on various factors such as the making of the necessary financial arrangements, the delay at the Receiver of Revenue office and rates department. On average, the time taken to register the transfer of a property where a bond is involved will be two months from the time that the conveyancer is instructed. Unforeseen difficulties may cause the period to be extended.

Why is a conveyancer necessary?

Most people are accustomed to doing much of their personal business without the need of a legal or other advisor. However, a great deal is at stake in the transfer of fixed property.

The law therefore provides that only qualified conveyancers may attend to the transfer of fixed property and related transactions. This is not only to give proper protection to the rights and interests of the public but also to safeguard the integrity of the South African land registration system, which is universally regarded as one of the best in the world.

When all the checks have been made, all the procedures followed by the conveyancer and the property has been registered in the name of the purchaser, he can be assured that he has a good and unassailable title to the property.

Conclusion

We as a firm are committed to the needs of our clients and have considerable experience in corporate property transactions, Sectional Title and Share Block Schemes and property financing. We are fully computerized and electronically linked to the Financial Institutions, which enables an efficient and speedy service to be supplied to all. Our department has the following divisions:

General Conveyancing
Sectional Title Share Block Conversions and transfer
Commercial and Industrial Developments
Township Developments
Acquisitions in general
Residential developments

Our conveyancing department is headed by Anthony Whatmore who specializes in Conveyancing and Property Law and has been practicing as a conveyancer for twenty years. He is ably assisted by highly skilled paralegals. You are welcome to give us a call and we will gladly assist you with all your property queries. We offer you a free initial appointment on any aspect of home ownership and we are only a phone call away.