Are you unhappy about how long it takes to transfer your new home into your name? Have you been inconvenienced by transfer delays which meant you had to carry on renting in your old home? Have you had to reschedule your move into your new home due to delays? These are all problems experienced by home buyers on a regular basis, made even more topical now here in Cape Town due to delays coming from the City of Cape Town’s \Rates Department.
Property transfers almost always take longer than expected. It is a complex process and it can be delayed by many factors. Understanding the process will go a long way in avoiding any surprises and will prepare you for a smooth transition into your new home. When purchasing a new home, the transfer processes revolve around satisfying the applicable regulatory environments surrounding property transactions. They are the Financial Intelligence Centre Act (FICA), the Transfer Duty Act (SARS), the Value Added Tax Act (also SARS) and the Municipal Property Rates Act. If you need a bond from a financial institution to finance the purchase, then you will of course have to follow that process of satisfying your bank’s demand for documentation as well.
The process starts with getting the finance in place after your offer to purchase has been accepted by the seller. Your estate agent can assist by approaching a bond originator or you can approach a bank of your choice.
You will need the following minimum documentation for bond approval; your proof of address, your ID and your income tax number. These documents will satisfy the FICA requirements. The banks have different methods of evaluating your ability to repay bonds, but you will asked for proof of earnings from your employer, a monthly budget and an asset and liability statement as a minimum.
While you are waiting for bond approval, the conveyance attorney will start the procedure to transfer the property. The seller normally has the right to choose the conveyance attorney. They attorney is required to first of all also do a FICA test. If they have not already received the documents from the estate agent, you might be asked to forward those documents to them as well. You will also be asked to go to their offices to sign their instructions to proceed with the process of applying for transfer duty and rates clearance certificates. At the same time they will contact the bond attorneys, whose task it is to issue a guarantee that the funds are available from your bank to purchase the property. If the purchase is financed in part by cash, you will also be asked for a guarantee that the cash will be available when due.
Many of these procedures can run concurrently but some must be completed before the next step can proceed. Although time frames are subject to change depending on the many variables, the average durations that you can expect the processes to take are as follows:
To obtain bond approval: 18 days from the offer being accepted by the seller.
To signing the documents at the conveyance attorney: 18 days from bond approval.
To lodge the transfer with the Deeds office: 39 days from signing at the attorneys.
To transfer the property: 14 days from lodgement at Deeds Office.
In total this averages out at approximately 103 days or 3 to 4 months from the date your offer is accepted to the date of transfer. This could vary between as little as two months and as much as six months as all transfers are unique.
Issues that might delay this process are many and varied. Incorrect income tax numbers, not being able to meet with attorneys timeously, outstanding municipal rates that are not paid up immediately, documents relating to the building are not available (electrical compliance certificate, NHBRC certificate, Occupancy certificate, Council Approved Building Plans and Completion Certificate), delays in the many government and municipal departments and inconsistencies between agreement of sale and bond documents such as erf numbers and suburb names.
Property rights and ownership are enshrined in our constitution and that is one of the most important contributors to investor confidence and peace of mind for the home owner. Be patient, support the process and the results will come. South Africa’s strict Title Deed system has resulted in everyone having complete confidence in the accuracy of its data, but that does come at a price. That price is time.