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No Transfer Duty from Company, CC or Trust

Transfers can take place from a Company, Close Corporation and Trust to its Shareholder / Member or Beneficiary free of Transfer Duties from 11 September2009 until 31 December 2011 subject to terms and conditions.

A Transfer Duty Exemptions is provided by the Receiver of Revenue and for this purpose, the following documents have to be lodged with the Receiver in addition to the standard affidavits (TD1/TD2):

- The Deed of Sale between the Company/Close Corporation/Trust and the Shareholder/Member/Beneficiary in his individual capacity;
- The affidavits and Conveyancer certificate attached hereto; - Copies of the Share register/CK1/CK2/Trust Deed indicating the beneficial interest from 11 September 2009.

For Further information contact :

Louwrens Koen Attorneys & Conveyancers
Tel: 012-343 0267
koen@louwrenskoen.co.za

Property transfer, Bond Registration, Property Law and Conveyancing explained.

OFFER TO PURCHASE PROPERTY

OFFER TO PURCHASE

By:.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

(“the Purchaser�)

To:..............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

(“the Seller�)

The Purchaser hereby offers, through the agency of Swan Properties (“the Agency�), to purchase the Property mentioned below, from the Seller on the terms and conditions contained in this agreement:

FULL TITLE

Stand Number:.......................Street Address...........................................................................................................

Suburb: ........................................................ Township:………….…........................................................................

or

SECTIONAL TITLE

Unit Number........... Flat / Townhouse number …...... Stand number................ in the Scheme…....... ……………………..in the Township of ....................................... together with an undivided share in the common Property in the scheme and the exclusive use and enjoyment of the following areas of the common Property and / or buildings namely:……………………………………......................................................................................

and carport/garage number. ................

(“the Property�)

1.            SALE AND PURCHASE

The Seller hereby sells to the Purchaser the Property together with all permanent improvements, fixtures and fittings which will include the following:

1.1          Including:

Built in stove (stovetop and oven); built-in units and cupboards electrical installations and light fittings; curtain fittings and rails; wall –to- wall carpeting; blinds and awnings; swimming pool pumps and engines; swimming pool equipment and automatic swimming pool cleaners in working order on date of occupation, installed alarm system, electronic consoles and existing keys; built-in braai and accessories, all fencing and trees; shrubs and plants; television aerials and satellite dish (including M-net and DSTV connections); built-in heaters, built-in air conditioning systems; tennis court nets, bar stools.

(Delete whichever is not applicable)

1.2          Also including: ………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………………….………which include accessories the Seller warrants to be paid for in full and to be the sole beneficial owner of

1.3 Excluding:…………………………………………………............................................................................................

............................................................................................................................................ ………………………….

2.            PURCHASE PRICE

The purchase price of the Property is the sum of R ..................................... (…………………………………. ........................................................ rand) (value added tax included if applicable), payable as follows: (read together with clause 19)

2.1          A DEPOSIT for the amount of R.............................. (……………………………..…................................................. …………………………………………………….………………………………………………………………..……rand);

The Purchaser shall pay the deposit or the full purchase price to the conveyancer within .................... (................................................) days to be kept in trust until registration of the transfer by the conveyancer, in an interest bearing account at a financial institution of his choice. The interest accrued on the amount shall be for the benefit of the Purchaser.

3.            SUSPENSIVE CONDITIONS

3.1          The Purchaser shall apply for a LOAN in the amount of R….............................................................................

(.......................................................................................................................................................................rand);

This agreement is subject to the suspensive condition that the Purchaser receives approval of the loan within.................. (......................................) days after signature of this agreement, from a financial institution, against registration of a first mortgage bond over the Property.

3.1.1      The Purchaser shall apply for such a loan on the first business day after acceptance of this offer by the Seller. In this regard the Agency is irrevocably authorised to apply for such loan through Bond Choice Home Loans on behalf of the Purchaser, at Banks and/or other Financial Institutions which may be appropriate under the circumstances.

3.1.2      The Purchaser undertakes to provide all documentation and information that may be necessary to fulfil the above mentioned conditions on request from the Agency/Seller/Bank Consultant. The loan obtained by the Purchaser shall be subject to the normal terms and conditions of banks and/or other financial institutions, where the application for the Bond was made.

3.1.3      If the Purchaser’s loan is not approved within the provided time period, the period will automatically be extended with 14 (fourteen) days.

3.2          The SALE of Purchaser’s Property for the amount of R.....................................................................................

(....................................................................................................................................................................... rand)

or for such a lesser amount as the Purchaser may accept. This agreement is subject to the suspensive condition that the Purchaser sells his Property, with Property description...............................................................

………………………………………………………………………………………………………………………………….within …………………..(……………………………………….) days after signature hereof.

3.2.1      The Purchaser must sell his Property described in clause 3.2 (“the Purchaser’s Property�). The Seller is aware that the Purchaser will apply the net proceeds of such sale to meet his obligations in terms of this agreement. The Purchaser’s Property shall be considered sold if:

3.2.1.1   a purchase and sale agreement of the Purchaser’s Property is entered into within the period stipulated in clause 3.2. and

3.2.1.2   all the suspensive conditions in the sale agreement of the Purchaser’s Property are fulfilled.

3.2.2      It is consequently agreed that:

3.2.2.1   The Purchaser shall receive a guarantee for the payment of the purchase price, or a part thereof, of his

Property within …………(………………………………………..) days after the conditions in 3.2.1 have been fulfilled, which guarantees shall be delivered to the Seller or his conveyancer;

3.2.2.2   Registrations of the transfer of the Purchaser’s Property shall take place within a reasonable time;

3.2.2.3   If the Purchaser’s Property has already been sold at the time of signature of this agreement, the time periods as set out above will be applicable to such transaction;

3.2.2.4   if the Seller receives an unconditional offer to purchase the Property before the conditions contained in 3.2.1.1 and 3.2.1.2 are fulfilled, the Seller shall deliver to the Purchaser a copy of such offer, whereupon the Purchaser shall be obliged to fulfil such conditions within 5 (five) days, or to waive the conditions contained in clause 3.2. The Purchaser shall give written notice to the Seller regarding his decision failing which this offer shall expire immediately and any amount already paid by the Purchaser shall be reimbursed together within any interest accrued thereon.

3.3          ANOTHER SOURCE for the amount of R……………………………………………………………………………..

(....................................................................................................................................................................... rand)

Other source/Other: ...........................................................................................................

Written proof of the existence of the other source shall be provided to the conveyancer within ..................... (..................................................) days after the signature date of this agreement..

4.            GUARANTEES

The full purchase price/balance of the purchase price shall be payable to the Seller against registration of transfer of the Property into in the name of the Purchaseer and shall be secured by a bank or other acceptable guarantee furnished by the Purchaser within .................... (...........................................) days after signature of this agreement, and if this offer is subject to any suspensive conditions within 14 (fourteen) days after fulfilment of the suspensive condition(s).

5.            OCCUPATION

5.1          Undisturbed occupation of the Property shall be given to the Purchaser on REGISTRATION or as otherwise agreed between the parties in writing, as soon as all suspensive conditions in terms of this agreement have been fulfilled

5.2          In the event of the Property being let to a tenant, the Purchaser’s right to occupation will be subject to the tenant’s rights in terms of the lease agreement. The rental income will still be due to the Seller until date of registration of transfer into the name of the Purchaser.

6.            RISK AND BENEFIT

On date of registration the transfer, all risks of damage in connection with the Property and ownership shall be transferred to the Purchaser, together with all the benefits and responsiblities for payment of any rates, Property taxes and/or expenses in connection with the Property. The Purchaser shall also be responsible to insure the Property against any contingency

7.            LEVIES

                SECTIONAL TITLES

The Purchaser confirms that he/she is aware that:

7.1          The Property is subject to the conditions of the Sectional Title Act, nr 95 of 1986;

7.2          The Property is situated within a Sectional Title Scheme which inter alia means that the Purchasers shall receive ownership of the Property and that he / she shall also have a right to sell or lease the Property;

7.3          The Purchaser of a unit automatically becomes a member of the Body Corporate, a non-profit organisation in terms of the Sectional Title Act. The Purchaser agrees to conform to the rules of the Body Corperate;

7.4          The developer has registered a real right of extension in terms of the section 25(9) of Act 95 of 1986 and that until such right does no longer exist, the Purchaser’s right shall be subject to the real right of extension of the developer.

HOMEOWNERS ASSOCIATIONS

7.5          The Purchaser is aware that a homeowners association exist to which he/she becomes a member with transfer of the Property and will therefore be bound by the constitution of the Homeowners Association.

7.6          A monthly Homeowners Association / Body Corporate levy in the amount of R……….............(…………...............

...................................................rand) per month, is payable to ................................................................... at Telephone Number. .........................................................................

8.            TRANSFER AND COSTS

The conveyancer shall ensure the registration of the transfer immediately after all the suspensive and all other relevant conditions as set out in this agreement have been fulfilled. Transfer and bond costs must be paid on request, immediately by the Purchaser to the transfer- and bond attorneys. The Purchaser and Seller must immediately and on request, provide all information and sign all documents in order to ensure registration of the Property and/or bond(s) over the Property.

9.            VOETSTOOTS

The property is sold VOETSTOOTS, subject to all conditions of title and servitudes contained in the current and/or previous Title Deeds of the Property, which are available for public inspection at the relevant deeds office, as well as any new conditions of title and servitudes that may exist regarding the current condition and size of the Property. The Agent shall not be liable for any patent or latent defect in the Property, nor for any damages suffered by the Purchaser as a result of such defect. All parties declare that they are acquainted with the VOETSTOOTS clause and the legal effect thereof. The Property is sold in its current condition, excluding any normal wear and tear from the date of signature of this agreement to date of registration.

10.          GUARANTEES AND WARRANTIES BY THE SELLER

10.1        The Seller warrants that he has provided all relevant information relating to the Property and the condition thereof to the Agency in writing. The Seller hereby indemnifies the Agency against any liability in the event of the Purchaser instituting a claim against the Agency due to any defects in the Property not disclosed by the Seller.

10.2        The Seller is not responsible to point out the surveyor’s beacons demarcating the boundaries of the Stand to the Purchaser, and is also not liable to pay the cost to determine such boundaries.

10.3        The Purchaser confirms that neither the Seller, nor anyone on his behalf have provided any warranties or given any guarantees in respect of any aspect relating to the quality of the Property which are not contained in this agreement.

10.4        The Seller confirms that:

10.4.1    The purchase price is sufficient to settle all outstanding obligations relevant to the sale of the Property, including but not limited to the existing bonds, agent’s commission, outstanding statutory fees and/or levies, or any other costs normally associated with the transfer of Property.

10.4.2    In the event of any shortfall as referred to in 10.4.1 above, such shortfall shall be paid by the Seller to the conveyancer on demand.

 10.5       In lieu of the fact that the South African Revenue Service (SARS) conducts a risk analyses on both the Purchaser and Seller with the issue of transfer duty receipts in Property transactions, both the Purchaser and Seller warrant to each other and the agent that all taxation issues (personal and/or other), including, but not limited to tax returns and payments, have been submitted and paid timeously.

11.          DELAYS

The Property shall within a reasonable period after signing of the agreement be registered in the name of the Purchaser. Should any party cause an unreasonable delay in the transfer process, the party who is responsible for the delay shall be liable to the other party for interest to be paid at the prime rate plus 2% (two percent) on the purchase price calculated for the period of the delay.The aggrieved party shall in terms of this clause, be entitled to claim penalty interest from the party responsible for the delay. This remedy is in addition to any other remedy the aggrieved party may have in law or in terms of this agreement.

12.          JURISTIC PERSON AND AUTHORITY        

12.1        Juristic person: If the person signing this agreement, signs as Trustee, on behalf of a legal entity (Company or Close Corporation) to be registered, then it is specifically recorded that unless the legal entity is registered and ratifies this agreement within 30 (thirty) calendar days after signature of this agreement, such person by his signature hereto shall be deemed to have signed the agreement in his personal capacity. If the legal entity is however registered timeously, the signatory binds himself as surety for and co-principal debtor in solidium with the said legal entity for the due performance of its obligations in terms of this agreement.

12.2        Representation: Any natural person signing on behalf of a juristic person, whether registered or still in the process of registration, personally warrants that the entering into of this agreement by the juristic person concerned is within the scope of its powers, objects and authority and does not contravene any provisions of the Companies Act 61 of 1973, the Close Corporations Act 69 of 1984 or the Trust Property Control Act 57 of 1988, and that all the necessary steps have been taken to give the signatory the power to execute this agreement on behalf of the juristic person and in particular, but without limitation, the directors, members or trustees have approved this agreement in specific terms

12.3        Surety: If the Purchaser signs this agreement in his capacity as representative of a Trust, Company or other legal entity, the signatory binds himself as surety for and co-principal debtor in solidium with the said legal entity for the due performance of its obligations in terms of this agreement. Such a representative hereby waives all legal exceptions, including but not limited to the following: no cause of indebtedness, revision of accounts, the benefit of excussion, and the benefit of division – the nature and content of which he is aware of and undertstands.

13.          BREACH

13.1        Should either the Seller / Purchaser breach any of the terms of this agreement and fail to remedy such breach within 14 (fourteen) days after receipt of either a hand delivered notice, or a notice dispatched by prepaid registered post to the defaulting party’s domicilium calling upon the defaulting party to remedy the breach, then the aggrieved party shall, without prejudice to any other rights that he may have, be entitled to:

13.1.1    cancel this agreement and institute action for damages sustained; alternatively;

13.1.2    claim specific performance in terms of this agreement, together with damages.

13.2        In the event of the agreement being cancelled as a result of a breach by the Purchaser, the Purchaser is obliged to vacate the Property immediately (in the event of the Purchaser already occupying the Property) and the Seller is entitled to retain all amounts paid by the Purchaser together with any interest thereon as a pre-estimate of damages, alternatively, to retain such amounts until such time as the Seller’s claim have been determined and such amounts are off-set against each other.

14.          ELECTRICAL COMPLIANCE CERTIFICATE

14.1 The Seller is obliged to deliver to the Conveyancer, at his own expense, a certificate of compliance issued by a qualified electrician in terms of the Electrical Installations Regulations of 1992, promulgated under Act 6 of  1983 and amended under Act 85 of 1993 (an “accredited person�), with regard to the wiring of the Property, wherein the electrician states that he has examined the wiring from the point of entry of the Property to the utitlity point and found it reasonably safe, and guarantees that the wiring meets the requirements set in the Code for wiring the premises SABS 0142 M or the substitute thereof.

14.2 Should the Seller fail to deliver the certificate before the date of registration, the Purchaser shall be entitled to appoint a  qualified electrician to issue the abovementioned certificate for the account fo the Seller, and he will be entitled to deduct such costs form the purchase price.

14.3 Any defect in the wiring discovered during the abovementioned examination must be rectified by the Seller before transfer of the Property, failing which the Purchaser shall be entitled to rectify it for the account of the Seller, and he will be entitiled to deduct such costs from the purchase price.

14.4 The Seller undertakes not to make any changes in respect of the electrical installations in the Property after delivery of such certificate.

15.          BEETLE CERTIFICATE (Kwazulu Natal / Cape Province)

The Seller shall at his own expense arrange for the accessible portions of the building/s on the Property to be inspected by a government accredited entomologist and/or qualified, accredited firm for insfestation by visible wood borer beetle (“Oxypleuris Nodierie, Hylotrupes Bajulus and Anobium Punctatum�) and prior to registration of transfer furnish the Purchaser with a certificate by the aforesaid entomologist and / or firm recording that the accessible timbers of the buildings were inspected and found to be free from such infestation or that such infested timbers had been treated / removed and replaced with pre-treated timbers by a qualified reputable contractor. (*Delete whichever is not applicable)

16.          AGENTS COMMISSION 

16.1        The parties confirm that............................................. of _______________________________ was the effective cause of this agreement.

16.2        Agent’s commission shall be paid by the Seller in the amount of

is deemed to be earned on fulfilment of the suspensive condition/s, which is due and payable on the registration of  the transfer of the Property into the name of the Purchaser.

16.3        The Agency shall be entitled to and the Seller shall remain responsible for payment of the agent commission and/or damages should the agreement not continue or be cancelled as a result of any failure by the Seller to fulfil his obligations in terms of this agreement.

 16.4       The Agency shall be entitiled to and the Purchaser responsible for the payment of the agent commission and/or damages, should a binding agreement not be signed or if the agreement cannot continue, or if the agreement is cancelled as a result of the Purchaser’s failure to comply with his obligations in terms of this agreement.

16.5        The Agency shall be entitled to payment of the agents commission should the Seller and Purchaser agree not to proceed with this agreement. The Seller and Purchaser will in such event jointly and/or severally be liable for payment of the agent’s commission, regardless whether the suspensive condition(s) have been fulfilled or not.

16.6        Should any dispute arise between the party(ies) and the Agency in respect of the agents commission, the party(ies) and the Agency hereby agree to refer the dispute for arbitration to the Arbitration Tribunal of the Estate Agency Affairs Board. The constitution and procedural rules of the Tribunal are herewith fully incorporated into this agreement and as such it forms an integral part thereof. The referral to arbitration shall be solely at the Agency’s discretion and the Agency shall be entitled to proceed with litigation instead.

17.          COOLING-OFF PERIOD

The parties confirm that they are fully aware of their rights in terms of Section 29(A)(1)of the Alienation of Land Act 68 of 1981 (as amended), in terms of which the Purchaser is entitled to recall his offer by written notice to the Seller, should the purchase price be less or equal to R250 000.00 (two hundred and fifty thousand rand) within 5 (five) business days after signature of this offer by the Purchaser.

18.          SOLD BOARDS

The Seller and Purchaser herewith give their consent to the display of a for sale/sold board in front of the Property for a period of 3 (three)months after all suspensive conditions have been fulfilled.

19.          VALUE-ADDED TAX (VAT)

If the Seller is registered as a value added tax vendor and the transaction is subject to payment of value added tax, the value added tax will be included in the purchase price and it is the responsibility of the Seller to pay such value added tax to the South African Revenue Service on registration. In the event that value added tax in payable, no transfer duty shall be payable by the Purchaser. If the Seller confirms that he is not registered for value added tax, transfer duty shall be payable by the Purchaser on the purchase price.

20.          GENERAL

20.1        No failure, omission of waiver or relaxation of any of the provisions of this agreement, nor any failure by a party to enforce the provisions of this agreement due to any breach, shall operate as an estoppel against any party in respect of its rights, under this agreement, nor shall it preclude such party thereafter from exercising its rights strictly in accordance with this agreement.

20.2        No rights in terms of this agreement may be ceded, delegated and/or transferred without the written consent of the other party.

20.3        Signature of this agreement refer to the date on which the Seller accepts the offer.

20.4        Days in this agreement refers to calendar days, Saturdays, Sundays and public holidays included, the first day excluded and the last day included. If the agreement is forwarded by registered post, the day on which the Post Office’s slip is issued shall be included.

20.5        The Purchaser and Seller herewith choose as domicilium citandi et executandi, the addresses as stated in the information sheet, for the service and/or delivery of all notices and documents in terms of this agreement.

21.          SPECIAL CONDITIONS

............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

22.          ACCEPTANCE

This offer is irrevocable until ......................:00 (…………..............hours) on the …………………………….. (………………………………) day of ……………………………………..20……….. and is binding on the parties by acceptance hereof without the Purchaser having to be informed of the Seller’s acceptance.

23.          WHOLE AGREEMENT

This agreement constitutes the entire agreement between the parties and no conditions, stipulations, warranties or representations of whatsoever nature shall be of any force or effect unless reduced to writing and signed by both parties.

OFFER MADE BY ME/US

At __________________________________                  on this        day of                             .20

.......................................................                       ………………………………………………......

     WITNESS                                                                                                                                         PURCHASER

.........................................................                    …………………………………………….…….

WITNESS                                                          CO - PURCHASER

OFFER ACCEPTED BY ME / US

at ...................................... on this ................ day of………......................................20…………. and we/I hereby give instruction to attorneys ................................................................................... to register the transfer of the Property.

.............................................................                                                               ………..…………………………………………

WITNESS                                                                                                                              SELLER

..............................................................                                                                             ………………………..…………………………

WITNESS                                                                                                                              CO - SELLER

The Agency herewith accepts the benefits, which they will receive from the agreement.

.............................. ..............................                                                               …………..………………………………………

AGENT                                                                                                                  PRINCIPAL

INFORMATION FOR TRANSFERRING ATTORNEY

PURCHASER(S): PURCHASER A/ PURCHASER B ___________________________________________

Full name & surname (if married woman, give maiden name) ________________________________

Name & number of Company / CC / Trust. _______________________________________________

(Full names & surnames of Directors / Members)___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

ID Number / Passport Number / Registration Number    ______________________________________          

Current Physical address ____________________________________________________________________________________________________________________________________________________________________

Postal address ____________________________________________________________________________________________________________________________________________________________________

Date of birth and place of birth                  ____________________________________

Marriage Regime ( in community / out of community of Property) _________________________

Antenuptial no and where registered / country of contract marriage, if no South Africa __________________________________________________

Contact numbers : Home                             ____________________________

                              Work                                      ___________________________

                              Fax                                           ___________________________

                              Cell                                           _________________________

                              E-mail                                      ___________________________

Income Tax Number                                       __________________________

Value added tax Registration Number    __________________________          

I/we certify the above information to be correct.

………………………                     ……………………………..               ………..……………….

          DATE                                         PURCHASER A                             PURCHASER B

 INFORMATION FOR TRANFERRING ATTORNEY

SELLER(S) :          SELLER A

____________________________________________________________________________________________________________________________________________________________________Full name & surname (if married woman, give maiden name)Name & number of Company / CC / Trust.

(Full names & surnames of Directors / Members) _________________________________   

ID Number / Passport Number / Registration Number _____________________________

Current Physical address ____________________________________________________________________________________________________________________________________________________________________

Postal address

____________________________________________________________________________________________________________________________________________________________________

Date of birth and place of birth ________________________________________________               

Marriage Regime ( in community / out of community of Property)_____________________   

Antenuptial contract no and where registered / country of marriage, if no South Africa                 

Contact numbers : Home                             ____________________________________

                              Work                                       ____________________________________

                              Fax                                           ____________________________________

                              Cell                                           ____________________________________

                              E-mail                                      ____________________________________

Income Tax Number                       __________________________________________________

Value added tax Registration Number                    ____________________________________

1st  Bond holder :Bank   Branch: Acc No:                 ____________________________________

2nd Bond holder : Bank                 Branch: Acc No:                 ______________________________________

3rd  Bond holder : Bank                 Branch: Acc No:                 _______________________________________

I/we certify the above information to be correct.

………………………                     ……………………………..               ………..……………….

          DATE                                               SELLER A              …                   SELLER B

TRANFERING ATTORNEYS           

Firm :     Firm : ___________________________________________________________

Contact Person : ___________________________________________________________

E-mail :                 E-mail _____________________________________________________________

BOND ATTORNEYS _________________________________________________________

 Contact Person : __________________________________________________________

E-mail :                 E-mail _____________________________________________________________

AGENT:                Contact number:  _____________________________________________________

To this end, we have put together a selection of questions frequently asked by non-residents that we trust will assist in clarifying these issues. In order to obtain a comprehensive idea of the processes involved in buying and selling property in South Africa, this brochure should be read in conjunction with our brochures Buying Property in South Africa and The Complete Guide to Buying and Selling Property in South Africa.

? Are there any restrictions on non-residents buying property in South Africa?

The answer to this is a resounding NO, save for a prohibition on illegal aliens owning immovable prop¬erty in South Africa. Non-residents will of course be subject to the same laws and regulations as South Africans and it is compliance with these that ensure the efficiency of the S.A. land registration system and security of tenure.

Should the non-resident not wish to purchase the property in his or her own name but rather in the name of an entity, such an entity must be locally registered and meet the requirements inherent in

registration of the chosen entity, such as those con-tained in the Companies Act. For example, the non-resident may decide to own the property through share ownership in a company, membership in a close corporation (unique to South Africa) or as a beneficiary in a trust. In the event of a non-resident acquiring property in the name of an entity, funds brought into the country will represent a loan to the local entity and will require Exchange Control approval.

For the most part however, property is registered in the name of the purchaser as an individual. There may be specific reasons for taking transfer in the name of an entity and for a brief overview of these, kindly consult our Purchaser’s Guide to Alternate Entities for Acquiring Ownership Of Immovable Property.

Note that purchasers, will have to finalise their choice of vehicle for purchasing the property prior to signing any Offer to Purchase or Agreement of Sale, as no changes can be made at a later date without the possibility of penalties being imposed and result¬ant delays in the transaction.

Finally, a non-resident can purchase South African property over the internet without entering the coun-try. However, should the prospective purchaser intend residing in the property for any length of time, he or she will need to comply with the requirements of the Immigration Act and either have a valid permit to temporarily remain in the country or be in posses-sion of a permanent residency permit.

? How can foreign funds be brought into SA for a property acquisition?

Foreign funds can be paid into any nominated bank account in South Africa. This account will usually be the trust account of the estate agent or transferring attorneys into which the deposit for the property and the balance of the purchase price is paid. These funds will be invested for the non-resident’s benefit and the non-resident can rest assured that such a transfer is secure and guaranteed, as the operation of these trust accounts is regulated by the profes-sional boards overseeing the operations of both attorneys and estate agents.

When a non-resident transfers funds from a foreign source into a South African bank account, a record known as a “deal receipt� is kept of the foreign funds received by the South African bank. This is an impor¬tant document which must be retained for purposes of repatriation of the funds.

? Can money be borrowed in SA to purchase property?

? Can a non-resident open a bank account at a South African banking institution?

In order for a non-resident to service repayments on a mortgage bond, he or she will need to open a non-resident banking account which can either be done from abroad or from within the country. Again, certain documentation relating to the applicant’s identity will be required, ie. application form detailing name, passport number and address, certified copies of the relevant pages of the passport, and proof of source of income, such as a salary slip or pension state¬ment. All copies will have to be originally certified. Once the bank account has been opened, foreign funds will have to be deposited immediately.

In certain circumstances, local currency can be deposited into the account, for example, rental

income acquired from property belonging to the non¬resident. This is dependent on the bank being in pos¬session of a certified copy of the rental agreement. Obviously the rand value received on the sale of immovable property in South Africa can also be receipted into the non-resident account provided the necessary documentation is lodged prior to the deposit being made.

? Who chooses which attorneys will attend to the transfer and whose interests are the attorneys protecting?

It is customary in South Africa for the seller of immov¬able property to nominate the attorneys who will attend to the transfer. Such attorneys then act for the seller and on his or her instructions. Consequently, in the event of a dispute between the seller and pur¬chaser, the purchaser would have to seek independ¬ent legal advice. Note that whilst the seller selects the attorneys, the purchaser pays the transfer costs.

? Can transfer and bond documents be signed overseas and if so, what is the procedure?

Yes. However, there are certain formalities that must be complied with. Documents can either be signed before a Notary Public or at the South African Embassy in that country, but this can be costly and time consuming. If a seller or purchaser is in South Africa at the time of the transaction but returning overseas shortly thereafter, it is advisable if at all possible to sign a special or general power of attor-ney in favour of a local friend or family member who will then be able to act on their behalf.

? Other than the purchase price, are there any other costs for which the purchaser will be liable?

Yes. The purchaser is usually liable for the following costs:

? transfer duty, which is a tax levied on property and based on the purchase price, (this is not payable if the seller is VAT registered);

? transfer fees;

? Deeds Office levies, pro-rata rates and taxes/ sectional title levies;

? the cost of obtaining a rates/levy clearance certificate.

Most of these costs are determined according to the purchase price of the property.

Further costs, including the attorney’s fees and bank charges such as the initiation and valuation fee, will be incurred if the purchaser registers a mortgage bond.

Once the purchaser takes transfer of the property or assumes the risk therein, he or she will be liable for all costs and associated risks. If the property is not bonded, it is in the purchaser’s best interests to obtain insurance. This is compulsory if the property is bonded and is normally arranged by the bank concerned.

? On sale of the property, can the money be taken out the country?

Understandably, this is without doubt the number one concern of non-residents considering investing in South Africa. The answer to this question is simply, yes. Money from a foreign source together with any profit, proportionate to that non-residents share holding in the property, may be repatriated in due course in terms of S.A. Exchange Control Regulations. If the non-resident owns property together with a S.A. resident, only his portion may be repatriated.

On transfer of the property to the non-resident purchaser, the title deed will be endorsed “non-resident� and /or a deal receipt retained by the banking institution when the foreign funds were originally introduced into the country. This facilitates the repatriation of the funds and profit on sale of the property, provided the bankers are satisfied that such profit is reasonable and market related. Obviously if the purchase was partially financed by funds borrowed in South Africa, that portion of the purchase price cannot be repatriated unless the bond has been settled in full.

Furthermore, if a foreigner takes up permanent residency in South Africa and signs a Declaration and Undertaking at a South African bank (namely declaring whether they are in possession of foreign funds and undertaking not to place same at the disposal of anyone resident in the Republic), they will be considered a resident for Exchange Control purposes and accordingly will only able to repatriate funds within five years of their immigration. Thereafter they will be considered to be a South African citizen and subject to the same regulations and limitations.

Finally, the repatriation of funds will be subject to capital gains tax and this will be discussed more fully in due course.

? Is a non-resident, liable for payment of any South African income tax?

While South Africans are taxed on their worldwide income, non-residents are liable for income tax only on income accruing from a South African source. For example, if the property is rented, the rental income will be subject to South African income tax.

On disposal of the property, the non-resident will be liable for payment of capital gains tax. For property registered in the name of an individual, 25% of the profit will be taxed at the individual’s marginal income tax rate. The maximum marginal rate is currently 40%, which translates to a maximum flat rate payable of 10% of the capital gain.

Until recently, non-resident sellers were obliged to register as taxpayers in the year of disposal of their immovable property in South Africa. However, this was not being done and the SARS were not able to collect tax that was due and payable. Accordingly, measures have been introduced which will tighten the tax collection net considerably. In terms of new proposals to the capital gains tax legislation, an obligation will be imposed on any purchaser of property from a non-resident for a price exceeding R2 million

to retain a percentage of the purchase price and to pay it over to SARS within 10 days of the date of transfer of the property. The amounts that will have to be retained are:

? 5% if the seller is a non-resident individual

? 7.5% if the seller is a non-resident company

? 10% if the seller is a non-resident trust.

This payment will form an advance collection against the non-resident’s income tax liability for the year of assessment in which the property is sold.

Finally, it is important to note that a non-resident who has not permanently immigrated to South Africa will be considered a resident for income tax purposes if he or she spends more than a certain length of time within the country. This is known as the “physical presence test� and is calculated in terms of days spent in the country over a three year period.

No tax is levied on foreign pensions.

What about estate duty in the

?

event of death?

Estate duty is presently calculated at 20% of the dutiable amount of an estate. However any inheri-tance bequeathed to a surviving spouse is not sub-ject to estate duty. Non-residents, like South Africans, are entitled to a rebate of R2.5 million on their dutiable assets; however, unlike South Africans, this rebate is limited to assets situated in South Africa.

We trust that the aforegoing has addressed at least some of the questions and concerns that non-resi-dents interested in purchasing property in South Africa might have. However, should you wish to dis¬cuss any of these or other issues further, we urge you to contact one of our conveyancing attorneys on our 24 hour hotline service.

Disclaimer: The material contained in this article is provided for general information purposes only and does not constitute legal or other professional advice.

A Mandate is an instruction or authority from a client to an estate agent, to render a particular estate agency service. It is a legally binding contract between the estate agent and his client, that need not be in writing unless in the case of a sole and exclusive mandate, or a power of attorney to conclude certain transactions on behalf of the client. It is always a good idea to record all mandates in writing anyway. There
are different kinds of mandates: 

  Open Mandate
Many different estate agents can have a mandate to market your property, meaning that one estate agent cannot claim to have the sole right to market it.
 
 Sole Mandate
Giving an estate agent a sole mandate to market your property, means that you cannot confer a similar mandate on another estate agent before the expiry of a determined period. If another estate agent sells or lets your property during this period, the estate agent with the sole mandate can claim damages from you, which may be equal to the commission that he could have earned if he sold the property.
You however, can sell or let the property yourself without any implications during this period as long as you make sure the wording in the mandate does not state that the estate agent has 'sole and exclusive selling rights' or 'sole right to sell' or 'sole authority to sell'.
 
 Sole and Exclusive Mandate
Nobody (including you), except for the estate agent holding the sole and exclusive mandate, is allowed to market your property before the expiry of the determined period of the mandate. This means that should anyone other than the mandated estate agent sell your property, you will still have to pay commission to that estate agent.

The estate agent, to whom the sole- or sole and exclusive mandate was given, is still entitled to his commission if he introduced a buyer to your property during the mandated period, depending upon the wording of the mandate document, and this buyer only purchases your property after the expiry of the mandate, perhaps through you as the owner or through another estate agent.

 

 

Section 78(2a) of the Attorneys Act specifically makes provision that an attorney, at the instruction of any person, may open a trust savings or other interest bearing account and the interest is paid out according to instruction. These funds are protected by the Attorneys Fidelity Fund. The attorney may charge a fee for this service.

WHAT IS CONVEYANCING?

The term "CONVEYANCING" describes the legal process whereby a person, company, close corporation or trust becomes the registered and lawful owner of fixed property and ensures that such ownership cannot be challenged. It also encompasses the process of the registration of mortgage bonds. (See our brochure on "Mortgage Bonds").

WHAT IS A CONVEYANCER?
A Conveyancer is an attorney who also passed the national conveyancing examination and by law is the only person who can register fixed property transfers. This is necessary to ensure the protection of the various interests the parties have in the transaction and to maintain the high standard of land registration.

WHO APPOINTS A CONVEYANCER?
The seller usually appoints a Conveyancer to attend to the transfer of fixed property, although this, like other aspects of a sale agreement, can be varied by negotiation between the parties.

WHAT IS THE FIRST STEP IN THE SALE OF FIXED PROPERTY?
The first requirement is a valid agreement of sale. This is a written agreement which is signed by both the purchaser and seller (and by the sellers’ spouse in cases where the parties are married in community of property, or account to the laws of a foreign country). A written "Offer to Purchase" signed by a purchaser and accepted by a seller also constitutes a binding agreement. An oral contract for the sale of fixed property is invalid.

WHAT ARE THE TERMS OF SALE TO BE CONSIDERED BY THE SELLER (AND PURCHASER)?

• The name, address, identity numbers and marital status of both buyer and seller, (e.g. married in or out of community of property, or by way of foreign marriage); if a company is buying, the capacity of its signatory;

• A clear description of the property;

• The selling price and manner of payment. If a deposit is payable, that it be held in trust by the named Conveyancer or estate agent;

• That the buyer is to pay all transfer costs and all taxes and other municipal charges on the property from the date of possession;

• The date on which the buyer is to take possession and occupation; the date on which transfer is to take place;

• That the property is sold "voetstoots" or "as is" (in other words without any guarantee by the seller regarding visible or hidden faults);

• The name of the Conveyancer who will attend to the transfer;

• That commission is due to a named estate agent, and the amount thereof; that the specific agent introduced the buyer to the property; or was the cause of sale;

• That if occupation is taken before the date of transfer, the buyer will pay occupational interest or rental from that date. The amount and manner of payment must be stated;

• If a borer-free certificate has to be obtained, who must pay for the inspection and any work required;

• Who will pay for an "electrical certificate" and any work required;

• That no amendment to the agreement of sale will be valid unless it is in writing and signed by both parties;

• Where the sale is subject to the purchaser obtaining a loan, the amount of such loan, the institution to whom he/she may apply and the date by which the loan must be approved;

• Where the sale is subject to the sale of the purchaser's property, a description of the property, the amount for which it is to be sold and the date by which it must be sold.

Any special condition which has been inserted either at the instance of the buyer or the seller must be carefully checked. The seller may wish to ensure that certain items are not regarded as immovable, forming part of the property sold. He must check to see that these have been properly listed. It is usually wise to obtain legal advice on special conditions.

WHAT HAPPENS NEXT?
The Deed of Sale is handed to the appointed Conveyancer, who will draft the necessary documents. Both the seller and the purchaser will be required to call at the offices of the Conveyancer to sign the necessary documents. The documents to be signed include the following:

A Power of Attorney to Pass Transfer
This document must be signed by the seller as it empowers the Conveyancer to transfer the property on his/her behalf.

Declaration in respect of Marital Status, Identity Number and Insolvency
Both purchaser and seller must depose to an affidavit wherein they state their marital status, identity number and confirm their solvency.

Transfer Duty and Value Added Tax (VAT) Declaration
Transfer duty is a form of tax payable, normally by the purchaser, to the Government and is calculated on the value of the property. Both the purchaser and seller have to sign transfer duty declarations to be furnished to the Receiver of Revenue in which they affirm the purchase price to be paid. VAT is not usually payable on transactions between private purchasers and sellers but will be if the seller is a registered vendor under the VAT Act. Where the seller is registered as a vendor, he will sign a VAT declaration. If VAT is payable on the purchase price no transfer duty will be payable.

Bond Documents
If the purchaser obtains a loan from a financial institution, the lender will require the purchaser to register a bond over the fixed property to secure the loan. To enable the Conveyancer appointed by the financial institution to prepare the necessary documentation, the purchaser must submit his/her identity document, marriage certificate and, if applicable, Antenuptial Contract to the Conveyancer concerned.

WHAT ARE THE COSTS INVOLVED?
The costs relating to the transfer of the fixed property fall into three categories.

Transfer Duty or VAT
Where transfer duty is payable, a formula is applicable based on the value of the property. Transfer duty normally constitutes the majority of the costs; sometimes 90% or more of the costs of transfer, and is payable by the purchaser.

Rates and Levies
Whilst not a cost of transfer, rates and levies must be paid in full on date of transfer. A pro rata (normally to date of possession) portion of the charges payable on the fixed property to the relevant local authority or the levies payable to the Body Corporate in the case of a sectional title unit.

Fees
The Conveyancer's fees are prescribed by a tariff and are calculated on a sliding scale based on the purchase price. The purchaser is normally liable for payment thereof together with VAT thereon.

Bond Registration Costs
Where a bond is to be registered, stamp duty is payable to the Receiver of Revenue, the amount whereof depends on the amount of the bond. The Conveyancer's fee is calculated on a sliding scale based on the amount of the bond and is payable by the purchaser to the Conveyancer who registers the bond together with VAT thereon.

Bond Cancellation Costs
If the seller has a bond registered over his/her property, this must be cancelled on transfer and the seller is responsible for payment of the Conveyancer's fee for cancellation together with VAT thereon. Once the documents have been signed by the purchaser and the seller, and the transfer costs, transfer duty and rates and levies have been paid, the Conveyancer may proceed with the registration of transfer of the property in the Deeds Office

Glossary of Conveyancing terms:

Act
An Act is a form of legislation passed by the courts for the government.

Addendum
An Addendum is a supplementary agreement to an original sale contract covering points agreed to afterwards. It is a separate agreement in its own right and, if it contradicts the original in any way, it is presumed to overrule it.

Administration Fee
The bank charges a monthly Administration Fee to handle your home loan.

Agent's Commission
This is a fee charged by an estate agent for the services rendered to a seller, for selling his property. Estate agents always have to pay VAT on their commissions. Unless otherwise agreed the VAT will be added to the agreed commission. The seller pays the commission on registration and, if he is a vendor he may, in appropriate circumstances, recover the VAT paid.

Agreement of Loan
The Agreement of Loan is the contract that is drawn up by your bank and which is signed by you when a bond is approved and granted. This contract contains all relevant details pertaining to your bond, such as interest rate application, bank charges, insurance premiums and monthly instalments.

Agreement of Sale
The Agreement of Sale, also referred to as the Offer to Purchase or Deed of Sale, is a legal document signed by the buyer and seller, whereby the buyer agrees to buy a property from the seller, who agrees to sell the property to the buyer. This agreement sets out the proposed purchase price and conditions on which the sale will take place. Once signed by all parties, it is a legal and binding agreement. No matter what the parties have agreed to verbally, no contract exists until an agreement of sale is completed and signed by both parties.

 Ante Nuptial Contract
This is an agreement entered into by parties prior to getting married. The agreement will regulate the affairs of the parties both during and after the marriage. The parties will then be married out of community of property.

Articles of Association
This document forms part of the constitution of a company and contains valuable information about the company.

Assessment
An Assessment is the bank's assessed valuation of the property.

Assessment Fees
This is the amount that the bank will charge you to assess the property prior to granting you the finance that you have applied for. They are also known as inspection fees or valuation fees.

Assessor
An Assessor is the Bank's valuator of the property.

Association Agreement
An Association Agreement is an agreement concluded between the members of a close corporation, which states for example the contractual capacities of the members.

Attorney Allocation
Attorney Allocation means that the banks have specific attorneys they deal with, who are allocated to do registrations on behalf of that specific bank.

Authority Forms
Every borrower has to authorise the payment of the proceeds of a loan. When a property transfer is taking place simultaneously, different guarantees will be issued and authority forms have to be signed by the borrower before they can be furnished.

Authority to Pay
This is a mandate authorising the bank to make payment of the proceeds of a new loan once it is registered. The borrower signs at the bank's attorneys and they then issue guarantees in favour of the seller, developer or builder, payment is made in accordance with certain completion dates being met.

Cancellation
A bond is officially cancelled when the debt owing is paid in full and the bank's attorneys register the cancellation at the Deeds Office. A fee is payable to the bank's duly appointed attorneys for this service.
Cancellation Attorney
The Cancellation Attorney is appointed by the bank, which holds the current mortgage bond (home loan) over the property. This attorney attends to the cancellation of the seller's bond.

Cancellation Figures
Cancellation Figures consist of the outstanding amount on a home loan being cancelled, as well as the interest and any other costs required to settle the home loan.

Capital Gains Tax
Capital Gains Tax is basically a government charge, levied on the resale of assets. All taxpayers, including individuals, trusts, companies and corporations, are taxed on the profit they make from the sale of (or otherwise dispose of) asset of a capital nature or property.

Capital Redemption
Capital Redemption means repaying the capital amount as well as opposed to just the interest amount on the monthly bond repayments.

Cession of Insurance Policy
When banks require their borrowers to take out life assurance to cover their bonds and the borrowers choose to use existing policies to cover this requirement, they will have to sign a form ceding the policy to the bank as surety for the home loan.

Clause
A Clause in a contract is a condition which renders the operation and consequences of the contract as a whole dependent on an uncertain future event.

Clearance Certificate
This certificate is issued by your local authority or municipality (and in some cases by your Body Corporate or Home Owner's Association) to confirm that all rates, taxes and/or levies are paid up to date. Property transfer cannot take place without this certificate.

Close Corporation
A Close Corporation is a form of business entity similar to a company. Only natural people can be members of a Close Corporation and the number of members of a Close Corporation is limited to ten.

Cluster Home
A Cluster Home is a freehold property in a development of similar houses, usually with good security and limited access. Each subdivided stand in the development is exclusively bought and individually owned.

Collateral
Collateral is the amount of security provided to secure a home loan.

Common Law
Common Law is the law which applies if the parties to a contract have not reached agreement on a specific legal issue in their contract, or if legislation does not specifically deal with a matter.

Company
A Company is a trading entity that is commonly used for commercial activity.

Compliance Certificate
An Electrical Compliance Certificate is required by law for the property to be transferred to the buyer's name. This, and any electrical repairs that need to be made, is for the seller's account. The certificate is issued by a qualified electrician. You may also be required by the buyer's bank to provide a Beetle/Infestation Clearance Certificate.
  Condition
A Condition in a contract is a clause which renders the operation and consequences of the contract as a whole dependent on an uncertain future event.
A Suspensive Condition is whereby the validity of the contract is made subject to the occurrence (or non-occurrence) of a future event, e.g. the granting of a bond of a certain amount or the sale of another property before a certain date. Only if and when the condition has been fulfilled will an enforceable contract exist.
In the case where a Resolutive Condition is stipulated in a contract, the contract is immediately binding and will remain binding unless the condition is not fulfilled.

Conditions of Loan
Some banks, in addition to their bond and loan agreement conditions, require their borrowers to sign a separate document setting out all their loan grant conditions. Borrowers cannot negotiate or change these conditions.

Conditions of Title
Conditions of Title are restrictive conditions limiting an owner's rights over his/her property, which are recorded on the property's title deed. They cover matters such as building limitations, mineral right reservations, servitudes, etc.

Consolidation of Debt
Consolidation of Debt is when a customer is paying off two products bought on credit and he chooses to combine both products and pay them off as one debt, possibly taking advantage of a lower rate.

Conveyancer
A Conveyancer is an attorney (lawyer) who is qualified to attend to the registration and transfer of immovable property, and/or the cancellation of bonds.

Conveyancing Costs
These are the costs payable to the attorney appointed to attend to the transfer of the property from the seller's name into the buyer's name.

Cooling-off Right
The Cooling-off Right is a statutory right, recorded in Section 29A of the Alienation of Land Act, giving a buyer of a residential property costing R 250 000.00 or less the right to withdraw from the sale within five days of signing an offer to purchase.

Costs (or Cover) Clause
A Cost (or Cover) Clause is an additional amount that is added to the capital amount loaned for a mortgage to cover any additional costs such as legal fees, penalties, interest, repossession costs, fire premiums, and so on. These provisions are made in the Mortgage Loan Document.

Cost Declaration
Estate agencies occasionally get their sellers and buyers to sign addendums providing for the transfer costs to come off the proceeds of the loan without the banks knowing. Banks often require their attorneys to sign declarations disclosing such addendums.

Credit Record
Your Credit Record is your previous payment history.

Creditor
A Creditor is someone to whom you owe money.
Damp Proofing Certificate
A Damp Proofing Certificate is a clearance report on the work carried out by a specialist damp proofing contractor, stating that the problem has been rectified and that it will not occur again within a specified time.
Debit Order
A Debit Order is the required method of home loan instalment repayments. The buyer gives the bank permission/instruction to debit your account to pay your monthly instalments. This also applies to any insurance premiums that may be due and which are normally debited once annually.

Debtor
A Debtor is someone who owes you money.

Deed
A Deed is a legal term for a formal legal document that is signed, witnessed and delivered to affect a conveyance or transfer of property or to create a legal obligation or contract.

Deed of Sale
The Deed of Sale, also referred to as the Offer to Purchase or Agreement of Sale, is a legal document signed by the buyer and seller, whereby the buyer agrees to buy a property from the seller, who agrees to sell the property to the buyer. This agreement sets out the proposed purchase price and conditions on which the sale will take place. Once signed by all parties, it is a legal and binding agreement.

Deeds Office
The Deeds Office is a government department responsible for the registratio

 

Glossary of Conveyancing terms:

Act
An Act is a form of legislation passed by the courts for the government.

Addendum
An Addendum is a supplementary agreement to an original sale contract covering points agreed to afterwards. It is a separate agreement in its own right and, if it contradicts the original in any way, it is presumed to overrule it.

Administration Fee
The bank charges a monthly Administration Fee to handle your home loan.

Agent's Commission
This is a fee charged by an estate agent for the services rendered to a seller, for selling his property. Estate agents always have to pay VAT on their commissions. Unless otherwise agreed the VAT will be added to the agreed commission. The seller pays the commission on registration and, if he is a vendor he may, in appropriate circumstances, recover the VAT paid.

Agreement of Loan
The Agreement of Loan is the contract that is drawn up by your bank and which is signed by you when a bond is approved and granted. This contract contains all relevant details pertaining to your bond, such as interest rate application, bank charges, insurance premiums and monthly instalments.

Agreement of Sale
The Agreement of Sale, also referred to as the Offer to Purchase or Deed of Sale, is a legal document signed by the buyer and seller, whereby the buyer agrees to buy a property from the seller, who agrees to sell the property to the buyer. This agreement sets out the proposed purchase price and conditions on which the sale will take place. Once signed by all parties, it is a legal and binding agreement. No matter what the parties have agreed to verbally, no contract exists until an agreement of sale is completed and signed by both parties.

 Ante Nuptial Contract
This is an agreement entered into by parties prior to getting married. The agreement will regulate the affairs of the parties both during and after the marriage. The parties will then be married out of community of property.

Articles of Association
This document forms part of the constitution of a company and contains valuable information about the company.

Assessment
An Assessment is the bank's assessed valuation of the property.

Assessment Fees
This is the amount that the bank will charge you to assess the property prior to granting you the finance that you have applied for. They are also known as inspection fees or valuation fees.

Assessor
An Assessor is the Bank's valuator of the property.

Association Agreement
An Association Agreement is an agreement concluded between the members of a close corporation, which states for example the contractual capacities of the members.

Attorney Allocation
Attorney Allocation means that the banks have specific attorneys they deal with, who are allocated to do registrations on behalf of that specific bank.

Authority Forms
Every borrower has to authorise the payment of the proceeds of a loan. When a property transfer is taking place simultaneously, different guarantees will be issued and authority forms have to be signed by the borrower before they can be furnished.

Authority to Pay
This is a mandate authorising the bank to make payment of the proceeds of a new loan once it is registered. The borrower signs at the bank's attorneys and they then issue guarantees in favour of the seller, developer or builder, payment is made in accordance with certain completion dates being met.

Cancellation
A bond is officially cancelled when the debt owing is paid in full and the bank's attorneys register the cancellation at the Deeds Office. A fee is payable to the bank's duly appointed attorneys for this service.
Cancellation Attorney
The Cancellation Attorney is appointed by the bank, which holds the current mortgage bond (home loan) over the property. This attorney attends to the cancellation of the seller's bond.

Cancellation Figures
Cancellation Figures consist of the outstanding amount on a home loan being cancelled, as well as the interest and any other costs required to settle the home loan.

Capital Gains Tax
Capital Gains Tax is basically a government charge, levied on the resale of assets. All taxpayers, including individuals, trusts, companies and corporations, are taxed on the profit they make from the sale of (or otherwise dispose of) asset of a capital nature or property.

Capital Redemption
Capital Redemption means repaying the capital amount as well as opposed to just the interest amount on the monthly bond repayments.

Cession of Insurance Policy
When banks require their borrowers to take out life assurance to cover their bonds and the borrowers choose to use existing policies to cover this requirement, they will have to sign a form ceding the policy to the bank as surety for the home loan.

Clause
A Clause in a contract is a condition which renders the operation and consequences of the contract as a whole dependent on an uncertain future event.

Clearance Certificate
This certificate is issued by your local authority or municipality (and in some cases by your Body Corporate or Home Owner's Association) to confirm that all rates, taxes and/or levies are paid up to date. Property transfer cannot take place without this certificate.

Close Corporation
A Close Corporation is a form of business entity similar to a company. Only natural people can be members of a Close Corporation and the number of members of a Close Corporation is limited to ten.

Cluster Home
A Cluster Home is a freehold property in a development of similar houses, usually with good security and limited access. Each subdivided stand in the development is exclusively bought and individually owned.

Collateral
Collateral is the amount of security provided to secure a home loan.

Common Law
Common Law is the law which applies if the parties to a contract have not reached agreement on a specific legal issue in their contract, or if legislation does not specifically deal with a matter.

Company
A Company is a trading entity that is commonly used for commercial activity.

Compliance Certificate
An Electrical Compliance Certificate is required by law for the property to be transferred to the buyer's name. This, and any electrical repairs that need to be made, is for the seller's account. The certificate is issued by a qualified electrician. You may also be required by the buyer's bank to provide a Beetle/Infestation Clearance Certificate.
  Condition
A Condition in a contract is a clause which renders the operation and consequences of the contract as a whole dependent on an uncertain future event.
A Suspensive Condition is whereby the validity of the contract is made subject to the occurrence (or non-occurrence) of a future event, e.g. the granting of a bond of a certain amount or the sale of another property before a certain date. Only if and when the condition has been fulfilled will an enforceable contract exist.
In the case where a Resolutive Condition is stipulated in a contract, the contract is immediately binding and will remain binding unless the condition is not fulfilled.

Conditions of Loan
Some banks, in addition to their bond and loan agreement conditions, require their borrowers to sign a separate document setting out all their loan grant conditions. Borrowers cannot negotiate or change these conditions.

Conditions of Title
Conditions of Title are restrictive conditions limiting an owner's rights over his/her property, which are recorded on the property's title deed. They cover matters such as building limitations, mineral right reservations, servitudes, etc.

Consolidation of Debt
Consolidation of Debt is when a customer is paying off two products bought on credit and he chooses to combine both products and pay them off as one debt, possibly taking advantage of a lower rate.

Conveyancer
A Conveyancer is an attorney (lawyer) who is qualified to attend to the registration and transfer of immovable property, and/or the cancellation of bonds.

Conveyancing Costs
These are the costs payable to the attorney appointed to attend to the transfer of the property from the seller's name into the buyer's name.

Cooling-off Right
The Cooling-off Right is a statutory right, recorded in Section 29A of the Alienation of Land Act, giving a buyer of a residential property costing R 250 000.00 or less the right to withdraw from the sale within five days of signing an offer to purchase.

Costs (or Cover) Clause
A Cost (or Cover) Clause is an additional amount that is added to the capital amount loaned for a mortgage to cover any additional costs such as legal fees, penalties, interest, repossession costs, fire premiums, and so on. These provisions are made in the Mortgage Loan Document.

Cost Declaration
Estate agencies occasionally get their sellers and buyers to sign addendums providing for the transfer costs to come off the proceeds of the loan without the banks knowing. Banks often require their attorneys to sign declarations disclosing such addendums.

Credit Record
Your Credit Record is your previous payment history.

Creditor
A Creditor is someone to whom you owe money.
Damp Proofing Certificate
A Damp Proofing Certificate is a clearance report on the work carried out by a specialist damp proofing contractor, stating that the problem has been rectified and that it will not occur again within a specified time.
Debit Order
A Debit Order is the required method of home loan instalment repayments. The buyer gives the bank permission/instruction to debit your account to pay your monthly instalments. This also applies to any insurance premiums that may be due and which are normally debited once annually.

Debtor
A Debtor is someone who owes you money.

Deed
A Deed is a legal term for a formal legal document that is signed, witnessed and delivered to affect a conveyance or transfer of property or to create a legal obligation or contract.

Deed of Sale
The Deed of Sale, also referred to as the Offer to Purchase or Agreement of Sale, is a legal document signed by the buyer and seller, whereby the buyer agrees to buy a property from the seller, who agrees to sell the property to the buyer. This agreement sets out the proposed purchase price and conditions on which the sale will take place. Once signed by all parties, it is a legal and binding agreement.

Deeds Office
The Deeds Office is a government department responsible for the registratio

 

The difference between possession and occupation

Occupation is the right to use and enjoy the property.   Possession is associated with the legal risk  of  loss  or  destruction of  the property and the right to enjoy the benefits associated with the property.

 Many Agreements of Sale state that in the event of the purchaser taking occupation of the property before transfer, the purchaser will take occupation and possession.

 Insurable Interest

It is a legal requirement for a valid indemnity insurance contract that the insured must at the time of loss, have an insurable interest in the property insured. An insurable interest exists when an insured has a financial interest in the property insured. According to authors Reinecke and van der Merwe in General Principles of Insurance Law published in 2002, a buyer of property (both moveable and immovable) has an insurable interest in such property despite not yet being the owner. The purchaser although not yet having real rights has the ius ad rem acquirendam (a personal right of delivery arising ex contractu) and  if  the  property  were  destroyed  this  right  of  delivery  would  become compromised. This principle also applies to a tenant, as he has rights of use in the property hired by him that are both insurable and would become diminished were the property to be damaged or destroyed.

What is involved if a seller or purchaser wants to have a title deed condition removed. What is the cost? How long does it take?

There are two options available. Firstly, one can make application to the High Court for a court order that the title condition be removed. In this instance the decision rests with a judge who will hear the application and require that the applicant advertise the intended removal in the Government Gazette and local press. In exceptional circumstances the court can dispense with notice if it deems appropriate. This option is more costly but the quicker option if there are no objections to the intended removal. However, if an interested party who appears to have vested rights objects, that can be fatal to the application as the court will not overrule the objection and it would then refer the applicant to the administrative channels (see below).

The other option is to make application to the local authority. Advertising in the local press and Government Gazette is a requirement. The whole process through council can take from 6 months up to a year. If there are objections, the local authority has the power to overrule them whereas as seen above, a court is reluctant to do so.

SARA permission

A Person may not alter or demolish any structure or part thereof which is 60 years or older without a permit from the relevant Provincial Heritage Resources Authority. Speak to one of our Conveyancers for Specialist advice in Property Law

Fractional Ownership can be defined as the collective ownership of an asset, usually one with a high monetary value.

Usage of the asset is shared amongst the owners by means of an ownership usage roster. The running costs are also shared amongst the owners.

Fractional ownership has become popular as more people are looking to purchase holiday homes. Prime properties are                

becoming more expensive and therefore people have started to use fractional ownership as a way of purchasing these properties. It is obviously more affordable to purchase such a property with a group of people rather than on one’s own .

What do you buy?

You buy shares in a private company that owns the property. You are then issued with a share certificate as proof of purchase. Usually there is a maximum of 13 shares that are issued and a maximum of 13 shareholders.

Fractional ownership allows you access to the property at certain times of the year. You are also entitled to rent your time allocation out to make money.

Legally fractional ownership is no different to other forms of shared ownership, such as time-share. With most time-share you pay to use the property over a specific time during the year but you do not own the property. Time-share is normally cheaper than fractional ownership. One of the possible drawbacks of fractional ownership is that your running costs that you have to bear as an owner may be significantly higher than if you owned time share. This is due to the fact that there will obviously be fewer owners in a fractional ownership scheme than in a time share scheme.

A point to note: is that should you sell your fractional ownership share, you will be liable for capital gains tax.

Fractional Ownership Companies normally manage the property on behalf of all shareholders. Management services include inspection of the inventory list after each shareholder’s visit, domestic services, maintenance, accounting and auditing, attendance of the Estate Annual General Meetings on behalf of the shareholders, and updating shareholders on general aspects of the property.

How can you finance your purchase of fractional ownership?

One way is to pay cash by taking out further finance on your primary residence or any other property that you may own. Certain commercial banks will allow you to finance 60% of the purchase price over ten years as a mortgage loan.

Fractional title is a very in-depth form of ownership and it is important to do your research before committing yourself. Go through the contract, house rules, and so on very carefully.

We advise that you seek advice from an attorney or a company who specialises in Fractional Ownership.