Guide to conveyancing

 

       

GUIDE TO CONVEYANCING

 

Guide to Mortage bonds Guide to conveyancing Guide to property vehicles and tax Guide to capital gains Guide to buying property as non-resident

 

GUIDE TO 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 for 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:

 

  • Power of Attorney by the Seller to Pass Transfer

  • Affidavits by the Seller and Purchaser in respect of their solvency, marital status, identity numbers, income tax numbers, and physical and postal addresses

  • Transfer Duty and/or Value Added Tax

  • Bond documents

  • 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 10 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 Law Society of South Africa, 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. (For the calculation of the above please see: Cost Calculator

 

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 is currently calculated as follows:

Applicable to transactions entere into after February 2011, are

R0 - R750 000 of Purchase Price

Exempt

R750 001 - R1 250 000 of Purchase price 

3%

R1 250 001 - R1 750 000

6%

R1 750 001 - R2 250 000

8%

R2 250 000 and above

11%

 

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 purchase 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 at 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 ten 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.

 

Unforseen 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 Purcahser or Seller consult one of our expert property and tax attorneys prior to making and Offer to Purchase or accepting such Offer.  This will enable us to help you, having due regard to your individual circumstances.

 

Should you require any further assistance, we invite you to contact any of our conveyancers, namely:

 

Eddie Albertyn

eddie@cwmalan.co.za

 

Marieke Ferreira

marieke@cwmalan.co.za


 



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