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| The Conveyancing and Transfer process of Property |
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Once an Offer to Purchase is duly signed by all parties it is handed to
conveyancing attorneys traditionally appointed by the seller who then
proceed with the formal process of conveying ownership of the property
from the seller to the buyer and who at the end of the process deliver
the buyer's title deed to him. The process involves a number of
simultaneous steps all of which are managed by the conveyancing
attorneys:
• Receipt of copy of sale agreement and instructions to process transfer of ownership: The Conveyancer will be guided by the contents of the Sale Agreement concluded between the buyer and the seller as recorded in the agreement. The Conveyancer therefore, is compelled to "bake the cake" in accordance with the "recipe" prepared for him in advance! After noting the details of the deal between the parties the Conveyancer will open a file and only proceed further when all suspensive conditions recorded in the agreement have been fulfilled [i.e. bond granted]. • Search of Deeds Office records: The Conveyancer will conduct a search of the records of the relevant Deeds Office to determine the property details, records of ownership and any mortgage bonds which might be registered against the property. • Existing bond on the property: If the seller caused a bond to be registered over the property in the past the bond will serve as a block to any efforts to transfer ownership of the property. The Conveyancer is therefore obliged to contact the bondholder [normally a bank] for co-operation in the process and will address a letter to the bondholder advising it of the fact that the property has been sold and calling upon it to forward the seller’s title deed to the Conveyancer [the bank holds the title deed as part of its security]. He will simultaneously ask the bondholder to advise him of the amount required to pay off the existing bond on registration of transfer and request of the bondholder to instruct its own attorneys to prepare the appropriate documentation required by the Deeds Office to have the bond cancelled at time of registration of transfer of the property to the buyer. As most banks are unable to trace the file in which the title deed and bond are retained without an account number, it is important that the particulars of the bond account number be reflected in the information section of the Sale Agreement. Most banks require a certain minimum period of notice [+ 3 months] for the cancellation of any bonds held by them failing which they charge a penalty. Sufficient time should therefore be allowed for this notice period. • Permission from Municipality (Rates Clearance Certificate): It is not permitted in law for any property to be transferred without the written permission of the municipality. This permission will only be given by the municipality if all money owing to it has been paid. The Conveyancer will therefore write to the municipality and will request from it a statement of all money due to it. This statement [besides taking longer and longer to obtain] seldom bears any resemblance to the monthly statement which the seller has been receiving and is invariably a potential source of debate. The statement will include particulars of all arrears in respect of rates and services, the balance of rates for the rest of the current financial year [the privilege of paying the rates off on a monthly basis goes out the window] and furthermore an estimate for approximately 3 months in advance of the average services bill. Although it is often a bitter pill to swallow it is invariably in the best interests of the transaction for the seller to pay the bill and argue later. This will at least enable the transfer process to proceed to finality without unnecessary delays. Part of the amount paid [the rates for the period from transfer to the end of the financial year of the municipality – normally 1 July to 30 June] will be for the account of the buyer who will be required to pay his share to the Conveyancer on request. • Preparation of preliminary documents: On receipt of the Deeds Office particulars and subject to all suspensive conditions having being fulfilled, the Conveyancer will proceed to prepare documentation which is required for Deeds Office and South African Revenue Service purposes to be signed by the seller and the buyer. It is therefore self explanatory that if either of the parties is going to be away during the relevant period the transfer will be delayed unless adequate arrangements are made for signature before their departure. • Signature and costs: On signature of the preliminary documents, the Conveyancer will ask the buyer to settle the transfer costs account. The account which the Conveyancer will present will include the Conveyancer's own fee plus Vat thereon, the transfer duty [if applicable – transfer duty is the sales tax applicable to property sales] and the fee charged by the Deeds Office for processing the transaction. It is important that the buyer settle these costs at least one month before the scheduled date of transfer as the Conveyancer is required to pay the transfer duty due on the transaction to the South African Revenue Service before the Deeds Office can be approached for the registration of the transfer. Transfer duty is payable [at varying rates] on all sales where the property is not part of a VAT registered enterprise and where the purchase price is more than R500 000.00. • Buyer’s bond: If the buyer is relying on a bond to pay for the property then the bank granting the bond will appoint attorneys of their choosing to prepare the standard bond documentation required by the bank. These attorneys will liaise with the Conveyancer to obtain information which they require to enable them to prepare their bond documents. The bond attorneys will make independent arrangements with the buyer for signature of their documents and will present their own bill for their services to the buyer. It is very important that the buyer understand clearly the conditions set by the bank as part and parcel of the bond as failure to comply with the conditions could cause the bond to become useless and thereby expose the buyer to last minute financial embarrassment. • Final phase: When everybody is ready (i.e. the bond attorneys documents are signed, the bond cancellations attorneys consent to cancellation is in their possession and duly signed by the bondholder, the transfer duty receipt and rates clearance have been received), the Conveyancer will contact all the other attorneys involved and arrange simultaneous "lodgement" at the Deeds Office. On the pre-arranged date all the attorneys simultaneously hand their folders of papers into the Deeds Office. These papers are then collated by the Deeds Office and allocated to a specific Deeds Office Examiner. The Examiner inspects all the documents, and if found to be in order, approves the documents for registration. This procedure in the Deeds Office takes approximately ten days [it can vary]. If any difficulties are discovered in any of the papers, the documents are "rejected". If the documents are approved for registration the Conveyancer, after ensuring that all the finances for the transaction have either been paid or alternatively secured, will arrange with all the attorneys concerned for actual registration to take place. At the moment of registration ownership passes from the seller to the buyer. On that day the seller receives his purchase price and the transaction is complete. • How long does it take? It is very difficult to estimate precisely how long a transfer takes from the time that the Conveyancer receives his instructions. If one is forced to make an estimate, then one can assume that if all the parties involved in the transaction, perform their function timeously, that the entire transaction could be completed within a period of two months from the time of receipt of the initial Sale Agreement. • Consequences of registration of transfer: Once transfer of ownership of the property is recorded in the Deeds Registry, the buyer has full rights of ownership and can deal with the property as he sees fit subject only to such restrictions as might appear within the title deed to the property or the restrictions of the municipal zoning scheme. Zoning schemes constitute a set of rules and regulations which regulate the use of any property within a particular area for the mutual benefit of all. |
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