The process consists of the following stages:
- The signing of the Offer to Purchase by the Purchaser and the Seller.
- The Purchaser in most cases applies for a bond at one or more banks once his offer is accepted and signed by the Seller.
- The outcome of this process can take up to 4 weeks, which is the time frame the banks require to process the application and to adhere to all the legislation, particularly the National Credit Act.
- The transfer attorney (conveyancer) can only start with the steps to transfer the property, once the bond of the Purchaser has been approved.
- Therefore, even though the attorney might be in receipt of the contract, the process will only start once the bond is approved.
- The Seller’s bank takes 7 – 10 working days to furnish the amount required to pay their bond off(called cancellation figures)
- The municipality issues the amount required by them for payment to issue the clearance certificate The municipality takes 14 days to issue this (clearance figures)
- The bank that granted the bond, sends an instruction to its attorneys to draft and register the bond. This takes about a week from date of grant of the bond.
- The transfer documents are drawn and signed by the Purchaser and Seller. This process takes approximately 2 weeks
- Once all the documents have been signed, and the transfer costs paid, the municipality and SARS are paid and the clearance certificates and transfer duty receipt issued.
- Guarantees are issued to cover the cancellation of the bond.
- Failure to have all the required documents ready for the bond application
- If self employed, not having updated financial and management statements for the financial year prior to the purchase of the property
- Bad credit ratingsFailure to disclose marital status correctly at the time of signing the offer to purchase
- Attempting to register companies or trusts after the offer to purchase have been signed
- Spouses, or co owners residing overseas or in remote places
- Outstanding tax returns, VAT returns and non registration as tax payers.
When you decide to start house hunting, find out from your bank or a bond originator what documents are required to apply for the bond. Make a file with all these documents, as well as a copy of your Id and ante nuptial contract if you are married out of community of property.
If you are self employed, instruct your bookkeeper or auditor to finalise your financial statements if it has not been done yet, and prepare a set of management statements as a back up.
Do a credit search on yourself as well as your partner/spouse if they will be involved in the transaction. If you have a judgement on your name or a bad credit rating, take steps to have this fixed and attended to, as this will create a problem with your bond application.
Make sure what you marital status is, are you married in or out of community of property, or according to the laws of another country such as Zimbabwe, Swaziland or the United Kingdom. If you are married in community of property, the bond will be applied for in both your names, and thus all the information required by the bank will be applicable to both parties.
If you are married out of community of property or according to the laws of another country, the property will be registered in the name of the person who signed the offer to purchase, which can be one or both of the marriage partners. This is also the case with partners in a relationship but not married, or married according to a civil union.
In case of a traditional marriage, all such marriages concluded are regarded as in community of property, and the offer to purchase as well as the bond will have to be signed by the husband as well as the wife.
We will also require a certificate of the Department of Home Affairs confirming that the marriage was registered
If your property is registered in the name of a Company or Close Corporation, ensure that the Company or Close Corporation is still active and has not been deregistered by SARS
If you want to buy the property in the name of a company or trust, make sure that you have an updated Letter of Authority that reflects the correct Trustees, and that the correct persons are registered as directors of the company or members of the Close Corporation.
It can take more than 6 weeks to register a company or Trust, which can severely delay a transfer. It is thus recommended that you immediately attend to any registrations of trusts and companies if you decide to start hunting for a property.
Ensure that your tax returns and Vat returns are filed up to date and that you are registered as a tax payer, unless you are exempted from registration.
The purchaser pays for the transfer of the property into his name, as well as for the registration of the bond.
The transfer of the property and the registration of the bond are two separate processes, and can be handled by one firm, or by two firms.
Only attorneys that are on the panel of a bank, may register bonds for that bank, therefore you will often find that the attorney registering the property will not register the bond as well.
On each transaction of transfer, the fee is the amount paid to the attorney for the work done being the transfer process.
All properties with a purchase price more than R 600 000.00 are subject to payment of Transfer Duty. This is a form of tax payable to SARS, and is payable in addition to the transfer fee.
The Purchaser is also responsible for a proportionate payment of rates and taxes to the municipality, and levies to the Body Corporate or Home Owners Association if that is applicable. These amounts will also reflect on the statement of account received from the attorneys doing the transfer.
Transfer and bond fees are prescribed by the Law Society and are calculated on a sliding scale.
The Purchaser is also responsible for a proportionate payment of rates and taxes to the municipality, and levies to the Body Corporate or Home Owners Association if that is applicable. These amounts will also reflect on the statement of account received from the attorneys doing.
Unless you are buying from a developer, the Consumer Protection Act is not applicable to transactions where home owners sell homes to purchasers, even if an estate agent is involved.
The old “voetstoots clause “is still applicable to these transactions. It is therefore recommended that you as the purchaser do a proper inspection of the property when you want to out in an offer and ask questions such as:
- Has the house burn down at any stage?
- Were there additions and improvements that required building plans to be submitted and was that done?
- Are there any roof leaks that the owner is aware of and had the owner had leaks fixed within the last 12 months?
- Is all the swimming pool equipment in a working condition and included in the sale
Is the owner aware of any termites?
Once the property is sold, the owner will only be liable for any defects in the property if the defects were not noticeable by the purchaser had he done a proper inspection of the property and if the Seller on purpose, while aware of the problem did not inform the purchaser of the defect.
Once the property has been registered in your name at the Deeds office, you are responsible for the payment of all insurance of the property and will be responsible for all the repairs and maintenance of the property. Anything that goes wrong before the property is registered in your name, such as geysers that burst, flooding or fire, will be for the account of the Seller.