Process of Transferring Immovable Property

Process of Transferring Immovable Property

Strömbeck Pieterse Attorneys

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Process of Transferring Immovable Property

a) Signing an Agreement of Sale

An offer to purchase, when accepted by the seller, becomes a binding Agreement of Sale. The agreement must be in writing and must be signed by both the purchaser and seller (and spouses if married in community).

b) Obtaining a Mortgage Bond

Sometimes the sale is subject to the purchaser obtaining a loan from a bank. The sale will then only proceed when the loan is approved. The bank will then appoint a conveyancer to register a mortgage bond over the property as security for its loan.

c) Repayment of the Seller’s Bond

If the seller has an existing mortgage bond registered against the property, it must be repaid and cancelled before registration of transfer can take place. The seller’s conveyancer will give notice to the bank; thereafter the bank will appoint a conveyancer to cancel the bond (known as the Cancellation Attorney).

d) Signing of Documents

The seller and purchaser will be required to furnish the conveyancer with their original identity documents, marriage certificates (if applicable), ante-nuptial contracts (if applicable), proof of residential addresses and income tax numbers. The parties will then sign the transfer documents and bond documents (if applicable).

e) Purchase Price and Costs Involved

The seller’s conveyancer secures the purchase price and will account to the seller on registration of transfer.

The purchaser is usually responsible for payment of the following costs:

  • Transfer duty according to a formula based on the value of the property / VAT if the seller is a VAT vendor;

  • A pro rata portion of rates and taxes payable to the local municipality and levies payable to the body corporate (if sectional title);

  • Transfer fees payable to the conveyancers, calculated on a sliding scale based on the purchase price;

  • Bond fees payable to the bond attorneys, calculated on a sliding scale based on the value of the mortgage bond to be registered.

The seller is usually responsible for payment of the following costs:

  • Existing bond to be cancelled;

  • Bond cancellation costs +/- R2 779.00, depending on the amount of bonds registered over the property;

  • Estate agent’s commission;

  • A pro rata portion of rates and taxes payable to the local municipality and levies payable to the body corporate (if sectional title);

  • Electrical wiring certificate;

  • Borer beetle certificate;

  • Gas certificate;

  • Electrical fence certificate.

f) Rates Clearance and Transfer Duty

The conveyancer must submit proof to the Deeds Office that outstanding rates and taxes have been paid in respect of the property by lodging a Rates Clearance Certificate, issued by the relevant local municipality. The local municipality will only do this if their account is settled for their financial year. In Port Elizabeth, this financial year runs to the end of June, which means that all rates and taxes due within this period will need to be paid upfront by the purchaser. The conveyancer will therefore have to collect from the purchaser all the rates and taxes which would normally have been paid on a monthly basis by the owner. The purchaser will then enjoy a break from paying rates and taxes until July the following year.

Transfer duty is a tax levied on property transfers and is calculated on a sliding scale based on the purchase price.

It is important for a purchaser to factor these costs into their budget when buying property.

g) Registration in the Deeds Office

Registration of transfer for Port Elizabeth and surrounding areas take place at the Deeds Office in Cape Town. The conveyancers will forward the transfer documents, bond documents (if applicable) and cancellation documents (if applicable) to conveyancers in Cape Town, who will arrange simultaneous lodgement at the Deeds Office. The examiners will then check the documents to ensure compliance with all legal requirements. This process takes approximately 10 – 12 working days.

h) Time Period for Registration of Transfer

The conveyancing process is a complicated process involving a number of parties and different institutions. However, provided there are no unforeseen complications once all conditions have been met, the process should take approximately 6 weeks. Complications such as a delay in payment of the transfer costs, a lost title deed, the death of a party or the attachment of the property will cause delays.

i) Release of the Title Deed

The title deed, reflecting the purchaser as the new lawful owner, must first be microfilmed before it will be released by the Deeds Office. This process usually takes approximately three months. It will then be forwarded to the conveyancer where it can be collected by the new owner; unless a mortgage bond has been registered, in which case the title deed will be retained by the bondholder / bank.