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Buying and selling (Please
Note: The information in this web site and or links, is provided for
information purposes only and is not intended to constitute legal advice).
Legal obligations
Once you agree on the price, you make the
seller an offer by means of an 'Offer to Purchase'. It contains the terms and
conditions of the purchase and sale of the property. Before you sign, read
the Offer to Purchase carefully and ensure that all the agreed upon conditions,
verbally and written is recorded. It should also document the correct
purchase price, date of occupation and the amount of occupational rent. It
is advisable to consult with an attorney or estate agent before signing.
The transfer process will start after signing.
Owners must have the property evaluated before
adding a price tag to the property. Sellers can give an open or exclusive
mandate. With a sole mandate, the agent is contractually bound to do their
best to market your home within a given the period of time. A sole agent
will often obtain a better price when they have time to negotiate with the buyer,
secures a better marketing plan, a concentrated effort and it prevents any
claims for double commission when the same buyer is contacted by different
agents
Valuations
Any valuation carried by the Bank assessors renders the
applicant/borrower for the payment of the valuation fee. The
fee charged is 0,2% on the value of the property on ordinary loans and 0,5% on
building loans. These valuations are done to ensure the bond will be
registered in line with the value of the property. Only a registered
valuator can give a valuation. The method of determining property value
depends on the purpose of the valuation. Lenders
require a valuation to ensure that their loan will be secured against a property
of equal or lesser value. They are interested in the market value.
A Deed of Sale is an agreement in writing
containing the terms and conditions for the purchase and ale of immovable
property. This document is titled ' Offer to Purchase' which, once if
signed by both parties becomes an agreement of the sale.
- The Offer to Purchase should contain all the
material terms on which the parties agreed , such as the occupation of the
purchaser, occupational rent, suspensive conditions etc.
- A written Offer to purchase must be signed
before the property can be registered in the now owners name.
- Read each clause carefully and make sure you
understand the meaning and implications.
- Once you have signed you are legally bound
to the transaction.
- Sign/initial all changes in the Offer to
Purchase and cross out blank spaces.
- Do not rely on verbal assurances by the
estate agent or seller.
Occupational rent
-
To occupy a home before registration has taken
place (i.e. the house is still in the sellers name and has not been transferred
into your name)), the seller could insist on the payment of occupational rent.
- The rent would be payable for the full period
that you are living there before the registration takes place. The amount
and the agreement need to be stipulated before in your offer of Purchase.
Suspensive conditions
- These conditions in an Offer to Purchase can
suspend the sale until these conditions are met.
- The most common suspensive condition is the
delivery of the Bank Guarantee for the payment of the purchase price.
- There is usually a time limit in which the
guarantee is to be delivered.
- It is important to understand that the
transaction cannot proceed unless the suspensive conditions have been met.
Legal aspects of the Offer to Purchase
Particular attention should be paid to the
following:
- The agreement must accurately record the
description of the property sold, the correct purchaser price and the
identity of the purchaser and the seller.
- Delete clauses that are not applicable and
leave no blank spaces. Both the buyer and the seller must initial all
alterations and deletions.
- The agreement must record all the conditions
agreed upon. All verbal undertakings (verbal included) must also be
reflected in the agreement.
- If the sale if subject to a condition that
the purchaser must obtain a loan to finance the transaction, the purchaser
must make every effort to fulfill the condition or else be in breach of the
agreement.
- The agreement must correctly reflect the
agreed date of occupation of the property by the purchaser and the amount of
occupational rent to be paid.. Consideration must be given to the
amount of occupational rent, as this should at least cover the monthly home
repayment. In general, it is calculated at 1% of the total purchase
price.
- In the case of a 'as is' (voetstoots), the
seller cannot be held liable for hidden defects in the property if he/she
was unaware. This clause, however, does not protect the seller who
fails to disclose latent defects aware of and not disclosed in order to
deceive the purchaser.
Beware
- Any clause in the agreement that states that
the estate agent may deduct his commission from the purchasers deposit
before the registration of the property. Delete this clause if you
find this on the agreement contract.
- Also take care when n Offer to Purchase is
subject to a purchaser must first sell his/her property before a certain
date as many problems can arise. Such clauses must be carefully worded
to provide safeguards for both the seller and the purchaser.
- Fixtures and fittings - record the fittings
that may be removed and others that must stay into the Offer to Purchase
(e.g. garden shed, pool cleaner, light fittings).
- Once the sale has been negotiated, any
deposit should be placed in the trust account of the estate agent or lawyer
until the transfer has been completed, with the interest being to the
benefit of the purchaser.
- Note that written instruction should be
given to pay the interest to the purchaser, failing which will result in a
pay-out to the Estate Agency's Fidelity Fund.
Transfer
Duty is a tax levied on the transfer of property from one owner to another. The
buyer is responsible for paying the transfer duty.
- Transfer duties are likely to be the largest
cost item when purchasing a property.
- It is a fee payable to the Government for
transferring the property into your name. This amount is payable to
the Deeds office by the transferring attorney.
- These fees are subject to change and is
usually announced in the annual Budget Speech by the Minister of Finance.
- The Usury Act provides for the charging, by
deposit taking institutions, or fees for services rendered by the
institution in respect of money lending transactions, installment sales and
leasing transactions, provided that such fees do not exceed the maximum
amount prescribed from time to time by the Act.
As soon as the sale agreement has been
signed it will be sent to the attorneys appointed to transfer the property.
- You are at the liberty to phone either the
conveyancer attending to the transfer or his secretary at reasonable times
for an update on progress.
- It is your express duty to sign all transfer
and bond papers and to pay all required deposits and costs immediately when
called on to do so.
- Any default or unreasonable delay on your
part could lead to action being taken against you once again rendering you
liable for agents commission and seller’s damages.
- It is important to accept that most of the
responsibility for your sale has now effectively passed from the agent to
the attorneys doing the transfer. Your agent is not responsible for
effecting registration of transfer - the relevant conveyancer is - and you
should take up any problems that may arise directly with him. He will
account to you finally on registration.
The property transfer process have a number
of different steps to guarantee an undisputable title.
What information is needed
from the Buyer?
If the property is sold or bought by:
- An individual
- Copies of Identity Documents, Ante nuptial Contract, Marriage certificate,
Divorce order (where applicable).
- A company
- A copy of the Memorandum of Association, A copy of the Articles of
Association, the Certificate of Incorporation, the Certificate To Commence
Business, the original authority to buy on behalf of the company (where
applicable), a copy of the Identity Document for the authorised person.
- A Close Corporation
- Copy of the CK1 Form (The Founding Statement), the original authority to
buy on behalf of the company (where applicable), a copy of the Identity
Document for the authorised person.
- A Trust
- A Copy of the Trust Deed, copies of the Letters of Authority issued to the
Trustees, a copy of the Identity Document for the authorised person.
What information is needed from the
Seller?
- Name of the Bondholder (i.e. Bank, branch
and account number), valid Electrical Certificate of Compliance.
- Your agent may be able to furnish you with
the details of a qualified electrician should you need assistance.
The Transferring Attorneys
The completed and signed offer to purchase is
handed to a conveyancer, also known as the transferring attorney.
- The transferring attorney manages the deed
documents and coordinates the transfer process. He/she will prepare all the
necessary documents that have to be signed by the various parties.
- Instructions are received from the
property owner. (Including names, copy of the offer to purchase, identity
numbers and marital status of the seller and purchaser).The Seller's existing bondholder is
contracted requesting the title deed and bond cancellation figures.
- Rates and taxes or levies are paid in
advance by the seller so that a clearance certificate can be lodged at the
Deeds Office.
- Cancellation figures and the title deeds
are received from the attorneys acting for the seller's bondholders. These
figures are based on the actual amounts plus interest to transfer date.
- Transfer documents and draft deed are
drawn up.
- Draft deed and guarantee requirements are
sent to the new bondholders attorneys, for the drawing up of the
guarantees.
- The Purchaser's new bond attorneys are
advised of the guarantees requirements.
- The Seller and Purchaser sign the
transfer documents.
- The Transfer costs are paid by purchaser
prior to lodgment and registration.
- The Transfer duty is paid to the Receiver
of Revenue - a transfer duty receipt is obtained.
- The Guarantees are received and forwarded
to the seller's existing bond holder's attorneys - with a request that
bond holder sign the consent to cancellation.
- The Transferring attorneys, bond
attorneys, and bond cancellation attorneys arrange to simultaneously lodge
documents in the deeds office.
- Registration takes place - usually 8-14
days after lodgment.
- The consultant, seller and purchaser are
advised when the property is registered.
- The existing bond is cancelled and
repaid, the commission is paid and the seller receives the balance.
- Generally it is recommended that you, as
a seller, nominate an attorney specializing in conveyance. Please discuss
the conveyance process with your Property Network Agent , who will be able
to assist you.
- In instances delays during the transfer
may occur. In order to speed up the process, please respond as soon as
possible to any request from the attorney.
-
Payment of Deposit and
Costs
- At this point the buyer will need to pay the
deposit (if applicable), the initiation fee (for processing the home loan),
the assessment fee (for the valuation of the property), bond registration
costs (includes registering the bond and stamp duty), transfer costs
(includes transfer duty, transfer fee and stamp duty)
- After collecting the transfer duty and fees
from the Purchaser, the Conveyancer pays such transfer duty to the Receiver
of Revenue and obtains a Transfer Duty receipt.
- The attorneys will call on the buyer to sign
various documents required for bond registration and the property transfer.
- To speed up the process, the Seller may be
asked to furnish the Conveyancer with the funds required to obtain the
Clearance Certificate (discussed above) from the Municipality (or Managing
Agent) prior to signing the documents.
Deposits
- If asked to put down a deposit, you need
ensure that you are placing the money into a lawyer's or estate agent's
'trust account".
- Never hand over money if you are not sure
that it is protected. Feel free to ask for advice from a banking group
or lawyer. The Bank may require you to pay a deposit (depending on your
financial standing).. The deposit may be seen as the difference
between the purchase price of the property and the amount of the loan.
- Example - you may qualify for a loan to the
value of 80% of the property value and then will be required to provide a
deposit of 20%.
- In some instances you will earn interest on
the deposit when you purchase a house. This interest is paid to p you
by an attorney until the house is transferred to your name.
Local Council deposit
- Certain authorities require a deposit
regarding Utilities (such as Water and Lights) and also a monthly fee
towards rates and taxes.
- The amount varies among the authorities.
- As of 1 August 2004 the Act on Local
Government Municipal Services provides for sellers to pay six months worth
of rates and taxes upfront before a clearance certificate will be issued to
the transfer the property to the new
The Deeds Office
- Once all documentation has been drafted and
signed and all guarantees are in place, and the attorneys are prepared for
canceling the existing bond on the property (if applicable), registering the
new bond (if applicable) and transferring the property from the seller to
the buyer, the documents (the deeds) are all lodged with the deeds registry,
better known as the deeds office.
- At the deeds office, the documents are
carefully scrutinized and examined. If everything is in order, the documents
are now available for registration. within about seven to ten days.
- By agreement between the transferring
conveyancer, the bond attorney and, if application, the cancellation/release
attorney, the documents will be handed in for registration.
Disbursements Of Funds
- After the attorneys have made application to
the deeds office, the existing bond is cancelled, the new bond registered
and the property transferred into the buyer's name. At this point the
attorneys will notify the lending institution, who will pay out the funds
relating to the purchase of the property.
- Registration is effected by the new deed of
transfer and mortgage bond being signed at the Deeds Office by the
conveyancer and the Registrar of Deeds. The conveyancer also attends to
finalisation of the financial arrangements including settlement of the
balance of the Seller's bond, recovering payment from the Purchaser, paying
the Estate Agents and Beetle and Electrical inspectors and finally
accounting to the parties.
- Guarantees are payable at a specific bank
after 15h00 p.m. on the day of transfer. In practice payment is usually made
the following working day.
- The Conveyancer will then draw a final
account and pay the Seller the proceeds from the sale as well as the balance
of rates and taxes. If necessary, payment will also be made to the Purchaser
in respect of any credit or interest that may have accrued to him from his
deposit and he will also pay the Estate Agent's commission.
Transfer
- From the moment that the Registrar signs the
title deed, the Buyer is now the owner of the property and his/her title
deed is documentary proof of this.
- On registration, the buyer, seller and agent
will be contacted by the transferring attorney and notified of the
successful transfer. The buyer will receive a final statement of the
account.
- The bondholder will inform the buyer of the
registration of the bond in writing and indicate the date of the first
repayment.
Successful Transfer Process
- Transfer normally takes around three
calendar months from the date of the sale to completion.
- If there are no complications, registration
may be effected within two months.
- In cases where there are complications, such
as lost bonds, lost deeds or other complications, transfer can be delayed
and take longer than three months.
The Registration Process
Offer to purchase
- The registration of transfer is triggered by
the acceptance of an offer to purchase by the seller.
- The Offer to Purchase should contain all the
essential details regarding the Purchaser, the Seller, the property
description and the payment of the purchase price.
- The said document should contain particulars
of the existing bondholder over the property.
Bond application
- Almost immediately after the acceptance of
the Offer to Purchase an application for the finance of the purchase price
must be made by the Purchaser or his representative to a financial
institution.
Instruction to the transferring
attorney
- In order to activate the registration of the
transfer process a copy of the signed Offer to Purchase should be handed
over to the transferring attorney upon acceptance thereof by the Seller.
Cancellation figures
- After opening the file by the Transfer
Attorney, last mentioned immediately requests cancellation figures from the
Seller's existing bondholder.
- Upon the receipt of the said request the
existing bondholder will supply the outstanding amount required for the
cancellation of the bond and simultaneously instruct the attorneys to attend
to the cancellation thereof.
- At the same time the existing bondholder
will also forward the Title Deed which was kept by them as additional
security to the cancellation attorney.
Clearance certificate
- Simultaneously the transfer attorney will
apply for a Rates Clearance Certificate from the local authorities/Body
Corporate.
- Once last mentioned has calculated the
outstanding balances, the transferring attorney will be advised accordingly
and must then make payment thereof in order to obtain the necessary Rates
Clearance Certificate.
- No transfer may be lodged with the Deed
Office unless accompanied by the said Rates Clearance Certificate.
- Upon approval by the financial institution
of the purchasers' finance an instruction will be forwarded to the attorney
of their choice (usually the transferring attorneys) to attend to the
registration of the necessary bond.
Transfer duty receipt
- The transferring attorney submits an
application for a Transfer Duty receipt from the Receiver of Revenue.
- No transfer may be lodged with the Deeds
Office unless accompanied by the said Transfer Duty receipt.
- The attorneys attending to the registration
of the bond immediately requests from the transferring attorney the draft
Deed of Transfer. This is necessary to obtain details regarding the title
conditions, purchase price, dates of sales etc. (This is only done if the
financial institution instructs an attorney other than the transferring
attorney.)
- After instruction to register the bond has
been given by the financial institution the transferring attorney may now
proceed to draw all documents regarding the transfer and arrange for the
signature thereof by both the Seller and the Purchaser.
- Similarly the bond attorney upon receipt of
the Draft Deed proceeds to draw all documents pertaining to the registration
of the bond and has the same signed by the Purchaser.
- The bond attorney then issues the necessary
guarantees in favor of the Seller and / or the existing bondholder of the
Seller to procure the cancellation of the existing bond.
- By this time the transferring attorney would
already have received both the Clearance certificate as well as the Transfer
duty receipt and will now be in a position to lodge the documents for
registration in the Deeds Office.
Lodgement
- The transferring attorney then contacts the
bond attorney as well as the cancellation attorney in order to effect the
simultaneous lodgment of the various deeds in the Deeds Office.
- The transferring attorney attends to the
registration of transfer of the property from the name of the Seller to the
Purchaser whilst the cancellation attorney attends to the cancellation of
the existing bond of the Seller and the bond attorney on the other hand sees
to the registration of the new bond to be registered over the property as
security for the Purchasers' loan.
- The set of three registrations is then
submitted simultaneously in the Deeds Office and after being examined by the
examiners in the Deeds Office, placed on preparation where the attorneys;
both transfer and bond cancellation attorneys; attend to any notes made by
the examiners in respect of the documents. This normally takes 10-14 working
days.
- After the documents where cleared by the
examiners on prep, i.e. all the notes where attended to by the various
attorneys, last mentioned are forwarded for registration the following day.
- Upon registration the attorneys involved
attend to the following:
- Present the guarantees for payment of
the purchase price, which is then allocated towards the payment of the
existing bond in the balance in favor of the Sellers, being the proceeds
of the sale.
- Adjustment and apportionment of rates
payments are made and the various parties debited or credited as the
case may be. The local authority is advised of the registration.
- Agent's commission is paid to the estate
agent.
- The transfer attorney then forwards the
Title Deed to the Bond attorney/Bond holder who retains the same together
with the registered bond documents.
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