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WHAT IS
CONVEYANCING?
Conveyancing
describes the legal process whereby a
purchaser becomes the lawfully
registered owner of immovable property.
It furthermore encompasses the
cancellation and registration of
mortgage bonds.
Only an
attorney who is also a conveyancer may
attend to the conveyancing of property
and the registration of mortgage bonds.
The conveyancer is usually appointed by
the Seller to transfer the immovable
property although this can be negotiated
between the parties.
STEPS IN THE
CONVEYANCING PROCESS
The first
requirement of the process to start is a
valid deed of sale. Such deed of sale
will guide the conveyancer in the
performance of his duty. A deed of sale
is an agreement between a Seller and a
Purchaser, reduced to writing and
containing the conditions for the
purchase and sale of an immovable
property. It normally takes the form of
a document entitled “Offer to Purchase”,
which, once signed by a Purchaser and
Seller, becomes a Deed of Sale.
As soon as the
Conveyancer receives the Deed of Sale,
he will prepare the necessary documents
to give effect to transfer and will then
contact both the Purchaser and Seller
for signing. The documents to be signed
will include the following:
(i) Power of Attorney by the Seller to Pass
Transfer
(ii) Affidavits by the Seller and Purchaser
in respect of their solvency, marital
status, identity numbers, income tax
numbers, and physical and postal addresses
(iii) Transfer Duty and/or Value Added Tax
(iv) Bond documents
(v) FICA documents
When the above
documents are ready, the Conveyancer
will arrange an appointment
for the signature of the documents.
During the appointment, the Conveyancer
will present his account to the
Purchaser for settlement.
As soon as the
above costs have been paid, the
Conveyancer will pay the necessary
transfer duty to SARS and apply
electronically for a transfer duty
receipt. The Conveyancer will
furthermore pay all rates and
taxes on the property to the end of the
current rates year and apply for a Rates
Clearance Certificate.
On receipt of the
Transfer Duty receipt and Rates
Clearance Certificate, the Conveyancer
will draft the new Deed of Transfer and
then lodge all documents via a
correspondent in the Deeds Office for
examination, which examination takes
approximately 12 – 15 working days
Simultaneously
with lodgement of the transfer documents
in the Deeds Office, all present
mortgage bonds to be cancelled and new
bonds to be registered, will also be
lodged.
EXISTING BONDS
On receipt of
a new Deed of Sale, the Conveyancer will
immediately conduct a Deeds Office
search to inter alia obtain full details
of the mortgage bonds held over the
property. They will then ask the present
bondholder (normally a bank) to advise
them of the amount required to pay off
the existing bond, and request them to
instruct their attorneys to prepare
documents for the cancellation of the
existing bond.
The bondholder
will in due course advise the
Conveyancer of the exact amount required
for the cancellation of the bond. The
Conveyancer will then either provide the
attorneys of the bondholder with a
guarantee or an undertaking for the
amount required to cancel the bond.
NEW BOND
After the Deed
of Sale has been signed by both parties,
the purchaser, if he requires a mortgage
bond to finance the Purchase Price, will
apply directly to a bank or through a
mortgage originator for a bond. After
approval of such bond the bank will
appoint attorneys who will prepare their
own documentation and arrange for the
Purchaser to sign same and pay their
costs.
LODGEMENT AND
REGISTRATION
Cancellation of
the existing bond, transfer of the
property and registration of a new bond,
happens simultaneously in the deeds
office. The Deeds
Office is a government registry of
immovable property and all right in such
property. The personnel in the deeds
office will scrutinize all documents to
ensure that they comply with all
relevant legislation and regulations.
When they are satisfied, the Conveyancer
will be informed and transfer of the
property can be registered in the name
of the purchaser. The existing bond and
new bond (if applicable) are registered
simultaneously.
WHAT ARE THE
COSTS INVOLVED?
The cost
relating to the transfer of immovable
property falls into two main categories.
A distinction must be drawn between
professional fees and disbursements made
by the Conveyancer on behalf of the
parties.
The
professional fees charged by the
Conveyancer are in accordance with
guidelines prescribed by the Legal
Practice Council, which makes provision
for a sliding scale based on the price
of the property. The Purchaser usually
pays the professional fees.
Disbursements
will normally be transfer duty or value
added tax, and pro-rata rates and/or
levies payable to the relevant local
authority and/or body corporate.
The Conveyancer
collects the following funds before
registration from the Purchaser and
Seller:
•
The Seller
-
Outstanding
amounts due to the local authority
and/or Body Corporate
-
Bond cancellation
cost
•
The Purchaser
-
Pro-rata
provision for rates and taxes and/or
levies due to the local authority and/or
Body Corporate
-
Registration fees
of the Deeds Office
-
Professional fees
-
Transfer duty
and/or VAT
Transfer duty,
calculated as follows, based on the
purchase price and which is also
available on our website:
|
VALUE OF PROPERTY (R) |
RATE |
|
R0 – R1 000 000 |
0% |
|
R1 000 001 - R1 375 000 |
3 % on the value above R1
000 000 but not exceeding R1 375
000 |
|
R1 375 001 - R1 925 000 |
R11 250 plus 6 % on the
value above R1 375 000 but not
exceeding R1 925 000 |
|
R1 925 001 – R2 475 000 |
R44 250 plus 8% on the
value above R1 925 000 but not
exceeding R2 475 000 |
|
R2 475 001 – R11 000 000 |
R88 250 plus 11% on the
value above R2 475 000 but not
exceeding R11 000 000 |
|
R11 000 001 and above |
R1 026 000 + 13% of the
value exceeding R11 000 000 |
HOW LONG DOES
THE PROCESS TAKE:
Conveyancing is
a complex field requiring knowledge,
skill and attention to detail on the
part of the Conveyancer.
A number of
parties are involved, such as:
•
The seller (and
spouse)
•
The purchaser
(and spouse)
•
The institution
which previously gave the bond to the
seller (and the conveyancer acting on
its behalf)
•
The Receiver of
Revenue
•
The municipality
or local authority
•
The institution
which gives the new bond to the
purchaser (and the conveyancer acting on
its behalf)
•
Estate agent
•
Conveyancer(s)
•
Registrar of
Deeds
•
The buyer of the
purchaser’s previous property (which the
purchaser had to sell to obtain the cash
portion of the purchaser price)
•
The conveyancer
acting for the purchaser in that
transaction
•
The institutions
which gave and are giving the loans in
that transaction (and their
conveyancers) and so forth.
Very often
there are a whole chain of transactions
linked up in this fashion.
The Conveyancer
has to complete the arrangements with
all these parties. Because human beings
and various institutions are involved in
each instance, delays are possible ate
any stage of the transaction. The
Conveyancer knows exactly when and how
to use legal methods to compel delaying
parties to act more expeditiously.
It is
important, therefore, that the purchaser
should sign the documents and pay the
required amounts as soon as the
conveyancer calls on him to do so; this
helps to ensure that there are no
unnecessary delays.
The length of
time it takes to get the transaction
into the Deeds Office is dependent on
the reaction time taken by each and
every one of the mentioned parties. The
usual time taken by the Deeds Office to
inspect all the documents lodged by the
different conveyancers for a specific
transaction is twelve to fifteen working
days
On average, the
time taken to register the transfer of
property, where a bond is involved, will
be two to three months from the date
that the conveyancer is instructed.
Unforeseen
difficulties such as the death of one of
the parties, attachment of the property
by a creditor of the seller and so forth
may cause the period to be extended.
WHY IS A
CONVEYANCER NECESSARY?
Most people are
accustomed to doing much of their
personal business without the need of a
legal or other adviser: However, a great
deal is at stake in the transfer of
fixed property. It is generally the
largest single asset that a person owns
and the transaction for the purchase or
sale of a fixed property is probably the
most important contract undertaken by
individuals.
The law
therefore, provides that only qualified
conveyancers may attend to the transfer
of fixed property and related
transactions. This is not only to give
proper protection to the rights and
interest of the public, but also to
safeguard the integrity of the South
African land registration system, which
is universally regarded as one of the
best in the world.
When all the
checks have been made, all the
procedures followed by the conveyancer
and the property has been registered in
the name of the purchaser, the purchaser
can be assured that he or she has the
best title to the property.
The information
contained in this Guide provides a brief
summary. It is highly recommended that
any Purchaser or Seller consult one of
our expert property and tax attorneys
prior to making an Offer to Purchase or
accepting such Offer. This will enable
us to help you, having due regard to
your individual circumstances.
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