A surprisingly large number of people buying and selling property are unaware of all or some of the many steps involved in transferring property from one owner to the next.
Property deals are involved and complicated. According to Gunston Strandvik Mlambo Attorneys, those who enter into property transactions without professional advice all too often end up being badly hurt.
They offer some advice for negotiating the steps in transferring property.
Stumbling blocks
The first issue concerns a failure to appreciate all the costs involved. Frequently, buyers won’t realise they have to pay transfer duty on the date specified. This can cause serious holdups because as long as the SA Revenue Service is unable to issue a receipt for the transfer duty, the deal cannot be finalised.
Quite often, buyers will be waiting for the sale of their current home to go through before paying transfer duty. If this is delayed for any reason, they may feel entitled to - or unable to avoid - delay when taking transfer or ownership of their newly purchased home. However, this is not condoned in law.
Similarly, buyers may either not appreciate or resent that they have to pay the new bond registration costs and the attorney’s fees. However, failure to do this at the agreed time will, again, hold up the transaction and may even result in cancellation.
A good estate agent will make sure these obligatory costs are understood at the outset. Regrettably, because conveyancers only become involved after the sale has been agreed to, they are not usually in a position to forestall difficulties here.
A second big mistake many make is neglecting to get the electrical, plumbing, gas and borer beetle certificates as soon as the sale is signed. Without these, the sale cannot go through.
The sellers are responsible for obtaining these, and the electrical certificate most often causes problems. All too often, the sellers will have an electrical certificate, but these are valid for only two years - provided no further electrical work is done - so it may need to be updated. Many sellers don’t understand this.
When a new electrical inspection is finally agreed to, the sellers may point out that many of the repairs the electrician deems essential for issuing a certificate have been dealt with previously.
Electricians do sometimes maximise the necessary work, often forgetting that their task is not to put the whole home’s electrical network in prime order but merely to make it compliant with the regulations.
In these circumstances, home sellers can appeal to the Electrical Contractors Association or get new quotes. Again, however, much time may be lost. The situation may be further complicated by the fact that certain banks will only pay bond finance once they have received a certified copy of the electrical certificate.
A third major case of holdups is that buyers and sellers may be ignorant of the rates legislation.
On registering a bond, the deeds office will give the municipality the new owner's details. The registration can only occur if the seller has paid the rates owed to date and four months' rates in advance. This matter has to be handled by the sellers directly with the municipality. The conveyancers are not involved, and if the rates payments are not made, no rates clearance certificate will be issued, and the sale cannot proceed.
A fourth issue which frequently causes delays and distress is the confusion over the date of transfer and the date of occupation.
The problem is that the date of transfer cannot be diarised in advance. There are no hard and fast rules governing when this occurs, and often the transfer date will not coincide with the occupation date.
For this or other reasons, the seller will often agree to the buyer taking occupation before transfer and paying a bond-related occupational rental until transfer takes place.
This can be a very satisfactory arrangement, but there is a possible drawback: on moving into the home, the buyers may find several faults that previously escaped their notice. They may then try to force the sellers to put this right and delay the transfer illegally.
In most sales, the voetstoots clause applies, and this can only be overruled if it can be proved that the sellers deliberately hid a problem - something most courts will not accept.
In most cases, the wise option is to ensure that the occupation and transfer dates are the same. If this means the buyer needs to find temporary accommodation that cannot be helped.
Advice
Gunston Strandvik Mlambo Attorneys advise that, wherever possible, sellers and buyers should be aware of the steps in transferring property.
“We also advise sellers, buyers and estate agents to do a final inspection together and then draw up a list of defects as observed by all.
“Our main message to clients, however, is before you sign any agreement, ensure that you are aware of all the contractual obligations. Although there are cases where clients deliberately try to manipulate contracts, most of the problems are caused simply by ignorance.”
Writer: Sarah-Jane Meyer