Buying a Property? Signed on the dotted line? What happens next?
Purchasing property is usually a significant financial and emotional investment. Once you have made the commitment, signed the offer to purchase and finances are in place, the transfer process starts. This process should ideally take between 8 to 12 weeks, however as the process is very thorough and involves multiple parties it may take longer – every transfer differs. Many people are not aware of the fact that you must have cash available to make payment of the transfer fees, bond cost (if applicable) and transfer duty (if applicable) – ask your property consultant to provide you with an estimate.
Here is a basic outline of the transfer process:
- It is the seller’s right to choose the conveyancing attorney, unless otherwise agreed by both parties;
- Once appointed the conveyancing attorney collates all information and documents needed to lodge at the Deeds office in Nelspruit;
- The conveyancer will require several documents to comply with the FICA act and start the process:
- Certified copies of identity documents.
- Certified proof of residence
- Income tax number or VAT registration number
- Marriage certificates (in case of a marriage in community of property, also FICA documents for the spouse)
- Antenuptial agreement
- Divorce orders
- In the case of a close corporation or a company, the details of the directors, shareholders or members. Additionally, the incorporation documents of the legal entity or the trust deed and trust letters of authority will also be required
- The original title deed from the seller or in the case where a bond is registered, the bond account number and details of the bond holder to request cancellation figures.
- The conveyancer will inform you of the due dates for deposit payments, bond approval and bond guarantees. They will also provide their trust account details for payments of deposit as well as the purchase consideration (if you are paying cash)
Bond Application (if applicable)
- If a bond application is involved the purchaser is responsible for contacting his / her Bank/s directly and supplying them with the necessary requested documentation. Alternatively, the purchaser can apply for a bond through a bond originator. Bond originators submit applications on behalf of the purchaser to various banks and handle the follow through with will the bank. The cost of a bond originator is carried by the bank at no charge to the purchaser.
Once the bond is approved, a bond attorney will be appointed by the bank. The bond attorney with liaise with the purchaser and conveyancing attorney.
- Once the finances are in place i.e. deposit paid into conveyancer’s trust account and/ or bond approval / bank quotation are supplied, as specified in the offer to purchase, the actual transfer process will continue.
If there is an existing bond, the conveyancer will apply for the cancellation of the bond. Only once instruction is sent to the bond cancellation attorneys to cancel the bond, will the conveyancer receive a copy of the title deed/s. The conveyancer will require the title deed/s to prepare the necessary transfer documentation.
Once the conveyancer has received all the necessary documents including FICA and the title Deeds of the property, the conveyancer will draft and prepare for transfer. Both the purchaser and the seller will be required to sign these documents. Original documents will be required and must be signed in the presence of a commissioner of oaths:
Documents to be signed by the seller:
- Power of attorney
- Transfer duty declarations
- Affidavits (Solvency; FICA)
- Resolutions (if applicable)
Documents to be signed by purchaser:
- Transfer duty declarations
- Affidavits (Solvency; FICA)
- Power of attorney for bond documents
Rates Clearance Certificate
A rates clearance certificate is required from the local municipality before lodgment of the transfer at the Deeds office. The conveyancer will request the clearance figures and may appoint a correspondent to liaise directly with the local municipality. Should this happen, the cost is minimal but will be for the seller’s account. The figures include outstanding amounts on the account as well as 3 months in advance. This could be a lengthy process, depending on the municipality. The seller is liable for payment of outstanding rates up until the date of application of the clearance figure, and the purchaser will pay a prorate amount in anticipation of the future registration into his name, unless stated otherwise in the offer to purchase. The conveyancer will allocate the share of rates due by each party, depending on actual date of registration.
Spluma (Spatial Planning and Land Use Management) certificate
As of May 2016, the Deeds office requires a Spluma certificate of compliance, which is issued by the municipality. The purpose of the certificate is to determine that the land usage is correct and that municipal bylaws have been adhered to. The application can only be done once the rates clearance certificate has been issued, from application to issue is usually 2 weeks, this is however dependent on municipal staff’s availability.
Levy Clearance Certificates (if applicable)
This is required where the property is part of a sectional title scheme or an estate which has a homeowners association (HOA), to verify that all outstanding levies have been paid up to date.
Should there be any electric or gas installations on the property compliance certificates will be required. An inspection will be done on the property by the respective registered service providers i.e. an electrician or gas installer. Any installations that are not compliant will be repaired / corrected before a certificate will be issued. The seller is responsible for these costs unless otherwise agreed upon in the offer to purchase.
Transfer duty or VAT receipts from SARS
Transfer duty receipts are required for all transactions, or alternatively an exemption certificate where transfer duty is not payable. As transfer duty applications are done via eFiling, all involved parties (including the property consultant / agency) need to be up to date with their taxes. Transfer duty (if applicable) will be payable by the purchaser. Should the seller be registered as a VAT vendor, VAT will be payable. The offer to purchase will stipulate which party will be liable for the VAT payment.
The final steps
- Once the conveyancer receives the Transfer duty receipt, the rates clearance certificate, electrical compliance certificate and all other documentation is in place, lodgment in the Deeds office can be arranged with the simultaneous attorneys (e.g. attorneys attending to the bond cancellation and the new bond to be registered). ALL parties must be ready before lodgment can take place.
- The time period between the date of lodgment to the date of registration is dependent on the Deeds office. The standard time frame is approximately 10 working days, but this does vary.
- Only once the property has registered at the Deeds office, will the funds held be paid over from the conveyancers’ trust account to the seller. All interest earned on the funds in the trust account are for the account of the purchaser. Funds are usually paid within 24 hours to the relevant parties if they are held in the conveyancers’ trust account. If a bond is involved the Bank will only pay out their portion to the conveyancer in approximately 3 days from date of registration.
Once the transaction is complete, the purchaser will need to ensure that the municipal and Eskom accounts are transferred into their name. The conveyancer will provide a letter of registration to the municipality.
Good luck & feel free to call us if you need any advice.
Zest Property Group Dullstroom 013 254 0219