Buying or Selling a House?
|What is Conveyancing?|
|Conveyancing is the legal process of obtaining registered and lawful ownership of fixed property, including improved and unimproved land, houses, farms, flats ‹sectional titles›, as well as registration of bonds and other rights to fixed properties including servitudes, usufructs and the like. It entails the transfer process from the date the deed of sale is signed to the date of payment of finances and delivery of the deeds.|
|Who is a conveyancer?|
|A conveyancer is an attorney specially qualified to deal with such property transactions. Requirements for qualification include admission as an attorney, attending training courses, passing an extensive practical examination and admission as conveyancer by the High Court.|
|Who appoints a conveyancer?|
|In South Africa the seller, in the case of property transfers, and the mortgagee, ‹bank› in the case of bonds, customarily appoint the conveyancer for a transaction. The parties can however agree to the contrary and many banks allow the mortgagor a conveyancer of his choice. The transferring attorney can be the same conveyancer, in which event it may have significant time and cost advantages for both seller and purchaser.|
|Why do you need a conveyancer?|
|Purchasing property is of the larger transaction types a person enters into. A suitably qualified professional person ‹or even persons› should advise on the nature of the transaction. South African law requires conveyancers to attend to property transfers to safeguard the integrity of the South African land ownership system, which is regarded by some as one of the best in the world.|
of conveying ownership in fixed property
|Property can only
be sold by way of a
written deed of sale signed by both the
purchaser and seller, as well as their spouses
if married in community of property. An oral
contract for the sale or mortgage of fixed
property is invalid. If the property is
owned in a corporate
such as a Company or Close Corporation, the
transaction could be structured as a sale of
shares. If it is in a
Trust a resignation of trustees and
appointment of new trustees might be possible
‹depending on the purpose of the trust and the
content of the Trust Deed.› It is a good idea to
get advice and input on the structure of the
The deed of sale must be carefully drafted and read to ensure that it accurately reflects the parties’ full agreement especially with regard to the amount payable, the method of payment, all verbal promises made by the seller or his estate agent, the incorporation of all special conditions to suit the parties' particular needs and the time of the purchaser’s physical occupation of the property, which may coincide with registration of transfer.
The seller must usually provide an Electrical Installation Compliance Certificate in terms of the applicable occupation and health safety laws. The parties may agree that the purchaser has this duty. These laws do not necessarily cover the situation where the sale involves a company, close corporation or trust and the shares are sold or the trustees are changed. It would be a good idea for the buyer of such shares or members interest or the prospective new trustees to insist that the deed of sale or other agreement used, includes a clause dealing with the Electrical Installation Compliance Certificate responsibility. Speak to your conveyancer for proper advice.
If physical occupation and transfer do not coincide, the deed of sale must provide for occupational rental payable between the dates of occupation and transfer. Risk in the property also only passes from the purchaser to the seller on registration unless otherwise agreed in the deed of sale. This must be borne in mind when arranging insurance on the property.
If the sale is subject to the purchaser obtaining a bond, this must be specified in the deed of sale. The minimum amount of the loan the purchaser must obtain to be able to afford the property, must be specified. The same applies to the period within which bond approval must be obtained to avoid the deal being delayed indefinitely. The deed of sale should also specify that if the purchaser is unable to obtain the required bond in time the sale lapses. Any amounts payable by the purchaser in this event should also be specified.
Estate agents have their own deeds of sale, although an attorney can draft one specifically suited to the needs of the parties concerned.
|The Conveyance or transfer of ownership|
of the deed of sale, a conveyancer must effect
registration in the deeds
office. This is a time consuming and
complex process. Upon receipt of the deed of
sale, the conveyancer must obtain from deeds
office records the particulars of the property
and any bonds thereover as well as any possible
legal objections to passing transfer. The
conveyancer must also obtain the title deed of
the property ‹which is mostly in possession of
the seller’s bondholder›. Then the documents are
The parties will be required to sign the following documents:
Power of Attorney signed by the seller to authorise the conveyancer to attend to the transfer on his behalf;
Transfer Duty and Valued Added Tax Declarations signed by both seller and purchaser for the purposes of the Receiver of Revenue;
Affidavits regarding marital status and solvency; Mortgage bond documents.
Then the conveyancer collects the costs, pays the local authority for a municipal valuation and rates clearance in the case of conventional erven or outstanding levies to the body corporate of a sectional title scheme and obtains a transfer duty receipt or exemption from the Receiver of Revenue. Upon receipt of all the documentation the conveyancer lodges it, together with the documents of the attorneys registering the cancellation of the sellers bond and the purchasers bond, in the Deeds Office for examination. The Electrical Compliance Certificate should be obtained to be handed to the buyer.
|The Deeds Office|
|This is the
public office where records of property
ownership and related transactions are kept.
There are different deeds offices for different
Once the conveyancer is satisfied that all the legal requirements have been met, the deed of transfer, bond and supporting documentation must be lodged at the deeds office for the region in which the property is situate. This will not be necessary if the transaction was coached in the form of a sale of shares or members interest in a company or close corporation. Then only the mortgage bond ‹if any› goes through the Deeds Office process. The transfer of the shares or members interest will go through the offices of the Registrar of Companies and Close Corporations, now known as CIPRO.
The deeds office staff then begin a process of examination of the documents. They also examine the records of the purchaser, the seller and the property to ensure that there are no legal impediments against the proposed transfer. This process takes approximately two weeks, depending on the deeds office's work load and the availability of staff. Any queries the examiners may have must be addressed and should they rule that the documentation is not in order, the documentation will be rejected. The documents must then be rectified and relodged whereupon the process starts anew.
Once the examiners are satisfied that the documents are in order for registration, the documents are made available for registration. Simultaneously with registration the finances are exchanged between the conveyancers representing the respective parties. Only at this stage is the purchase price, estate agents commission, cancellation costs in respect of the sellers bond, etc. paid out.
Thereafter the documents are numbered, checked and microfilmed and returned to the conveyancer. These processes take approximately four to six weeks, depending on the workload of the deeds office and staff availability.
|Most standard deeds of sale provide for the purchaser to pay the costs of transfer. Similarly, most banks require the mortgagor ‹borrower› to pay the costs attendant on bond registration and cancellation. These costs include the following:|
|Transfer Duty or Value Added Tax|
|If the seller is
a registered vendor in respect of Value Added
Tax for the purpose of selling immovable
property, Value Added Tax to the value of 14% of
the purchase price will be payable by the seller
on registration. In other cases transfer duty
will be payable at a rate of 8% for companies,
close corporations and trusts. Presently
residential exemption is up to R500 000 for
natural persons or 5% on the amount of the
purchase price exceeding R500 000 up till
R1million. For amounts above R1million it is R25
000 plus 8% on amounts exceeding R1million in
the case of natural persons. Exemptions from
transfer duty may be granted in the cases of low
cost housing, government, ecclesiastical,
educational and charitable institutions and
transfers in terms of the laws of succession.
The rate of tax payable often changes and it is
a good idea to check that no fiscal amendments
have affected the rates since this page was
Here again the structure of the transaction could influence the tax payable. For instance if an immovable property on which Value Added Tax ‹VAT›is payable and which is a enterprize conducting business, is sold by a registered VAT Vendor to registered VAT Vendor, that property or so much of it as is utilized for the going concern could be zero rated by proper wording in an agreement. This means that no tax is payable on the transaction ‹or to be technically correct, VAT is paid at 0%›
|Rates and Local Authority Taxes|
|All rates and taxes, as well as arrear service charges, payable to the local authority in the case of property falling inside municipal boundaries must be paid up to the end of the current rates year ‹30 June› to obtain clearance for transfer. All levies payable to bodies corporate in sectional title schemes must also be paid or secured to the satisfaction of the body corporate.|
conveyancers fee is calculated on a sliding
scale based on the purchase price in the case of
property transfers or the amount of a bond, or a
prescribed tariff in other cases. The tariff is
a guideline and the client is entitled to
negotiate a fee with the conveyancer.
Depending on the nature of the transaction, the marital status and solvency of the parties and conditions imposed against the property a number of additional expenses may be incurred. These include valuation fees, clearance fees, inspection fees, postages and petties. Stamp duties are no longer payable on mortgage bonds.