With every property transaction, there are certain steps which need to be followed. One of these steps pertains to the deed of sale.
Most deeds of sale include a clause which stipulates that a deposit be paid by a certain date into the trust account of the estate agency or lawyers handling the sale. The deposit is seen as a binding gesture and indicates that the buyer is taking the sale seriously. If the deposit is not paid by the specified date, this automatically results in the buyer being in breach of contract and the seller has the right to cancel the sale or take legal action.
According to Saneli Ngcobo of Gunstons Attorneys, the deposit stipulation may be waived if a buyer is granted a 100% bond. However, if a bond is not awarded to the buyer this can be grounds for cancelling the sale too. On registration of the sale, the deposit will be paid to the seller and the interest accrued should be paid back to the buyer.
Although this is generally held to be the normal course of action with such matters, there are buyers who will go to great lengths to avoid paying a deposit, says Saneli. She says the reason for this is potentially rooted in the fear that estate agents and lawyers misuse trusts.
While there have been widely-publicised instances of this in the past, they are few and far between and the system is generally regarded as secure. The fact that the law dictates that money relating to a property transaction can only be released once the transfer has taken place should also reassure those involved.
But what happens if a lawyer or agent absconds with some or all of the money? Is the buyer protected? Responding in the affirmative, Saneli explains that the Estate Agents Affairs Board and legal fraternity have established funds for such matters.
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Although it may take time to be reimbursed, Saneli says that where such cases arise, those who have lost money will be refunded. As such, it’s important to deal with reputable, registered lawyers when dealing with matters of this nature.
Still not convinced? If as a buyer you still feel wary of paying a deposit, you can ask your bank to issue a bank guaranteed cheque (which can be fairly expensive) in favour of the conveyancer’s account. Once the transfer has gone through and the conveyancer presents proof to this effect, the bank will be advised to effect the payment. Keep in mind though that if this is not done within 30 days the deed of sale becomes invalid and the guarantee will be withdrawn.