Why property transfers take so long

Private Property South Africa
Cathy Nolan

Tip-Concluding-a-written-deed-of-saleSometimes, the offer-acceptance-conveyancing-transfer process can take a while. Here’s why:

The deed of sale (offer to purchase) is completed and signed by both the seller and the purchaser. This must be a written agreement. A written offer to purchase signed by a purchaser and accepted by a seller also constitutes a deed of sale. A verbal contract for the sale of fixed property is not valid.

The deed of sale is an important document that must be carefully examined. The parties must check that the price is what has been agreed on, that the terms of payment are acceptable to both parties and that the arrangements in respect of financing agree with the terms of payment.

Ownership does not pass on the date of the agreement, but only much later on date of registration. Prior to registration the purchaser merely has a personal right to claim transfer of the property.

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Documents to the conveyancer

The seller presents the conveyancer with the deed of sale. The conveyancer then gathers the necessary information and documentation to proceed with the registration process.

According to the Common Law, it is the seller’s prerogative to appoint a conveyancer of his choice to attend to the registration of the transfer of his immovable property. Keep in mind however that several attorneys may be involved as one such transaction usually entails the following simultaneous actions:

  • Transfer of property from seller to purchaser.

  • Cancellation of seller’s existing bond.

  • Registration of purchaser’s new bond.

Different attorneys therefore attend to the various transactions in this process. They are referred to as the transferring or conveyancing attorney (who handles the transfer), the cancellation attorney (who represents the financial institution of the seller’s existing bond) and the bond attorney (who effects the registration of the new bond in the name of the purchaser). For each of these different transactions there are different fees and expenses payable, respectively linked to the purchase price and to the amount of the bond to be registered.

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Deposit

If the purchaser is paying a deposit then the time period in which it should be paid must be stipulated in the offer to purchase. This time period is usually two weeks from signature.

If the purchaser is applying for a bond, then all the bank approval steps will start. The bank will want to inspect the property to ensure that the value in the property justifies the purchase price. The bank will also require other conditions to be met before they will provide guarantees. For example, a life insurance policy may be required to cover the amount of the bond.

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Documents assembled

As soon as the conveyancing lawyer receives the deed of sale, all the necessary documents required to register the transfer of the property will be gathered. These include:

  • The existing title deed of the property.

  • Any cancellation fees on the seller’s bond.

  • Outstanding rates and taxes.

  • How the buyer will pay for the property.

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Signatures from purchaser and seller

After the loan has been granted to the purchaser and all the required documents have been collected, the conveyancing lawyer can prepare the documents for signature by all parties. The papers that have to be signed are:

Property transfer documentation:

  • Power of attorney – the seller needs to authorise the conveyancing lawyer to appear before the Registrar of Deeds on his/her behalf to register the transfer.

  • Insolvency and marital declarations.

  • Transfer duty declaration to be sent to the Receiver of Revenue together with payment of transfer duties

Bond documentation:

  • Power of attorney – the purchaser needs to authorise the conveyancing lawyer to register the bond in favour of the financial institution who granted the loan.

  • Insolvency and marital declarations.

  • Standard documentation from the financial institution.

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Purchaser pays conveyancing costs

The conveyancing lawyer will prepare a statement of account detailing all transfer costs and bond registration costs that have to be paid

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Documents lodged at the Deeds Office

The different conveyancing lawyers involved with the property must liaise with each other to ensure that all documents are lodged simultaneously at the Deeds Office:

  • Transfer document.

  • Bond registration documents.

  • Bond cancellation documents.

The costs relating to the transfer of fixed property fall into three main categories:

  • Transfer duty, which is payable to the State (roughly 5.8 percent of purchase price where the purchaser is an individual, and 10 percent where the purchaser is a corporate entity).

  • A portion of the rates payable on the property, as determined by the relevant local authority.

  • The conveyancer’s fee, which is calculated on a sliding scale based on the purchase price; for example where the price is R100 000 the fee will be approximately 1.5 percent.

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Property is registered

The conveyancer will lodge the documents that he has prepared for registration in the Deeds Office. The Deeds Office is a government registry of all fixed property and rights in fixed property. If there is a bond to be registered the bond attorney will lodge the bond documents in the Deeds Office for registration simultaneously with the transfer documents.

The examiners in the deeds office scrutinise the documents to ensure that they comply with all relevant legislation and regulations. When they are satisfied, they inform the conveyancer that the transaction is ready for registration and thereupon, in the presence of the conveyancer and the Registrar of Deeds, the property is registered in the name of the purchaser. The bond is registered simultaneously.

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Purchase price paid to seller

The parties will be given final accounts reflecting the final adjustments on, for example, rates, levies and occupational rent.

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Title deed released

Registration renders the purchaser the registered owner of the property and his real rights are thus protected against third parties. All financial arrangements are usually finalised within 24 hours of registration. This entails the payment of guarantees by the purchaser’s financial institution, payment of the amount of the cancellation figure to the existing bondholder, payment of the balance purchase price to the seller and the settling of accounts with all parties.

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