The Transfer Process

The Sale Agreement

Buying or Selling property is the biggest financial commitment most of us will ever undertake. It is thus very important that the Estate Agent and Attorneys are chosen carefully. The Estate Agent will explain the terms of the sale agreement to the parties - who must ensure that they ask questions and understand all the terms before signing the agreement. Once the agreement of sale is signed, it is a binding contract between the Seller and Purchaser.

What are Suspensive Conditions?

The Sale Agreement may contain "Suspensive Conditions". These are conditions which must be fulfilled before the transfer process can begin. The most common suspensive condition is the granting of a bond to the Purchaser. A bond is a loan of money to the Purchaser by a bank to enable him to pay the purchase price of the property, on security of the property purchased. It records that if the Purchaser fails to make the bond repayments, the bank will be entitled to sell the property to recover the money it has lent. Another common suspensive condition is that the agreement is subject to the sale of the Purchaser’s property. This happens where the Purchaser is selling his property and needs the funds from the purchase price of that property to pay for the new property. The Seller, in this case, must realise that the transfer of the Purchaser's property will have to be registered before or simultaneously with the transfer of the Seller's property. The conveyancers will then correspond closely with and usually obtain an undertaking the conveyancers who are attending to the transfer of the Purchaser's property to pay over the proceeds of that sale on registration.

Cancellation of the Existing Bond

If the Seller still owes money to his bank in respect of his bond, because he borrowed money to buy the property himself, then that bond will have to be cancelled at the same time the property is transferred to the Purchaser. The Conveyancer must obtain the original title deed to the property from the Seller's bank, who will be holding the title deed as security. The Seller's bank will also let the Conveyancer have the "cancellation figures", i.e. the exact amount still owing by the Seller under his bond.  When the property is registered in the name of the Purchaser and the Seller's bond is cancelled, the Seller's bank will be paid the outstanding amount and the balance of the purchase price will be paid to the Seller. The cost of cancelling the bond is payable by the Seller. The Transferring Conveyancer must correspond closely with the Bond Cancellation Conveyancer to ensure that the transfer documents and the cancellations documents are lodged in the Deeds Office together.

Registration of a New Mortgage Bond

If the Purchaser is obtaining a bond to pay the purchase price, this bond will also have to be registered simultaneously with the registration of the transfer and the cancellation of the Seller's bond. The bank which is granting the bond will appoint the Conveyancer who is to attend to the registration of the bond. The transfer Conveyancer must cooperate closely with the bond Conveyancer to ensure that the bond and transfer documents are drawn up and lodged at the Deeds Office together. The Conveyancer attending to the transfer will obtain guarantees from the Purchaser's bank to ensure that the money being lent to the Purchaser is available on the date of registration of the bond. The various banks have different conditions which must be met before the bond can be registered. These conditions include the signing of various documents by the Purchaser; obtaining insurance on the building that is erected on the property; obtaining and ceding a life assurance policy; the signing of suretyships; etc. The Bank will not allow the bond to be registered until all the conditions are met and it is thus in the interest of the Purchaser to take all steps necessary to comply with the Bank's requirements.

Transfer of the Property

To enable the Conveyancer to prepare the transfer documents, he will require the Purchaser's & Seller's details together with copies of their Identity documents, marriage certificates, ANC's, divorce orders, etc. After receiving these documents & the original Title Deed, the Conveyancer will prepare the transfer documents & his proforma account. The Parties will then be called upon to sign the documents and the Purchaser will be called upon to pay the Conveyancer's costs. These costs will include:

§  The Conveyancer's fees: these fees are charged in accordance with a tariff issued by the law society.

§  Transfer Duty: this is a tax payable to the state on all transfers of immovable property and is calculated as a percentage of the purchase price. No transfer can be registered until the Deeds Office has proof that the transfer duty has been paid. Certain Transfer Duty exemptions exist however.

§  Rates: the purchaser will be liable for rates from the date of registration of the property in his name. Approximately 3 months' payment in advance will be required by the Conveyancer to enable him to obtain a rates clearance certificate from the rates department. No transfer can be registered until the Deeds Office has proof that the rates have been paid. If the property is a sectional title unit, then a levy clearance certificate must also be obtained.

Registration

The transfer, bond & cancellation documents must be lodged in the Deeds Office at the same time to ensure simultaneous registration. If different conveyancers are attending to the registration of the Purchaser's bond, the cancellation of the Seller's bond and/or the transfer of the property, then all these conveyancers must collaborate. From date of lodgement, it usually takes 7 to 10 days until date of registration. The parties are notified on the day of registration and the Seller is paid out on the following day. The parties are furnished with final accounts reflecting the final adjustments between the parties in respect of rates, levies, occupational rent and other matters.

But what are the transferring steps?

1.  Once the seller has signed the Offer to Purchase, the purchaser needs to obtain a home loan.

2.  The seller has the choice to appoint a transfer attorney (conveyancer).

3.  There are usually 3 different attorneys working together on one transaction:

     3.1 The Transfer Attorney – doing the change of ownership.

     3.2 The Bond Cancellation Attorney – cancelling the seller’s existing bond.

     3.3 The Bond Attorney – registering the new bond for the purchaser.

4.  The transfer attorney needs to obtain FICA (ID and proof of residence) of both parties and then applies for the seller’s bond cancellation figures. The bank will then send a copy of the original Title Deed to the bond cancellation attorneys.

5.  Once the transfer documents have been prepared by the transfer attorney, the purchaser and seller are required to sign the documents.

6.  The transfer attorney requests figures from the municipality to ensure that all the seller’s rates and taxes are paid up to date and then needs to lodge a clearance certificate issued by the municipality.

7.  The purchaser must pay the South African Revenue Services (SARS) transfer duty. This is a tax levied on property transfers. The transfer attorney will request a transfer duty receipt on SARS e-filing and also make the payment of the transfer duty on behalf of the purchaser.

8.  Once the transfer attorney has all the required documents, they are lodged in the Deeds Office, together with the new bond and old bond cancellation.

9.  From the date of lodgement in the Deeds Office, it takes about 8 - 10 working days for the documents to be examined.

10.  Should there be no changes required by the Deeds Office and all the requirements have been met, the transaction is registered. This means that the purchaser is now the new rightful owner of the property.

11.  The new Title Deed is delivered a few months after registration and handed to the bank which has registered the new home loan, or alternatively the Purchaser if no bond was registered.

Selling or buying a property is probably going to be one of the most significant financial transactions of your life. Hinrichsen Attorneys strive to maintain a personal working relationship with every purchaser and seller, from the negotiation stage to the successful registration of the property.

We take pride in providing our clients with regular updates. We are there to smooth out any bumps in the transfer process to ensure that all parties have a stress-free experience.