The Transfer Process
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 Seller and Purchaser.
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's 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 obtain an undertaking from the conveyancers who are attending to the transfer of the Purchaser's property to pay over the proceeds of that sale on registration.
Once the suspensive conditions are fulfilled, the Conveyancer will be instructed to proceed with the TRANSFER PROCESS. This involves certain steps.
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 as 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" ie. 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 are payable by the Seller and are 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.
To enable the Conveyancer to prepare the transfer documents, he will require the Purchaser and Seller's details together with copies of their Identity documents, marriage certificate, ANC's, divorce order, etc. After receiving these documents and the original Title Deed, the Conveyancer will prepare the transfer documents and 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 have proof that 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 rates clearance certificate from the Rates Department. However, on receipt of the rates figures the Seller will be required to effect payment of the amount due and will be refunded the Purchaser's share in the final statement of account. 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 ALSO be obtained.
- Deeds Office fee: The Deeds Office charge a lodgment fee for all documents lodged for registration.
Once the costs are paid and the documents are signed, the Conveyancer will apply for Rates Clearance Certificate and pay Transfer Duty to obtain the transfer duty receipt. Once these and other formalities are complied with, and the purchase price has been secured in full (by receipt of cash payments from the purchase and for guarantees from the Purchaser's bank and/or undertakings by other conveyancers) the documents will be sent to the Deeds Office for lodgment.
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 docs are drawn and are 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. MEUMANN WHITE INC register bonds for all the major banks. 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 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 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.
The transfer, bond and 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 lodgment, it usually takes 7 working 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.
A conveyancer is a qualified attorney who has passed an extra examination in conveyancing. Only a conveyancer can prepare and do registrations of an ownership and bonds. The documents are complicated and the conveyancer must comply with all the rules and regulations of the Deeds Office and the Deeds Registries Act. It is thus important that the parties choose a reputable firm of conveyancers who work accurately and quickly. MEUMANN WHITE INC has been conveyancers for over 50 years and has an excellent reputation for accuracy and speed.
A TITLE DEED: This document is also known as a Deed of Transfer and it records your ownership of the property. It contains a description of the property and the details of the owner. The conveyancer will prepare the new title deed which records the Purchaser as owner of the property. From the date of registration of this document in the Deeds Office, the Purchaser will be the registered owner of the property.
THE DEEDS OFFICE: The function of the Deeds office is to maintain a land registration system in South Africa so as to ensure security of title to owners of immovable property. All property transfers, bond registrations and bond cancellations must be registered in the Deeds Office. There are 8 Deeds Offices in South Africa. All registrations in KwaZulu-Natal are recorded in the Deeds Office in Pietermaritzburg.