| CONVEYANCING |
| What is Conveyancing? |
| Conveyancing is the legal process of obtaining
registered and lawful ownership of fixed property, including improved and unimproved land,
houses, farms, flats (sectional titles), as well as registration of bonds and other rights
to fixed properties including servitudes, usufructs and the like. It entails the transfer
process from the date the deed of sale is signed to the date of payment of finances and
delivery of the deeds. |
| Who is a conveyancer? |
| A conveyancer is an attorney specially qualified to
deal with such property transactions. Requirements for qualification include admission as
an attorney, attending training courses, passing an extensive practical examination and
admission as conveyancer by the High Court. |
| Who appoints a conveyancer? |
| In South Africa the seller, in the case of
property transfers, and the mortgagee, (bank) in the case of bonds, customarily
appoint the conveyancer for a transaction. The parties can however agree to the contrary
and many banks allow the mortgagor a conveyancer of his choice. The transferring attorney
can be the same conveyancer, in which event it may have significant time and cost
advantages for both seller and purchaser. |
| Why do you need a conveyancer? |
| Purchasing property is of the larger transaction types
a person enters into. A suitably qualified professional person (or even persons) should
advise on the nature of the transaction. South African law requires conveyancers to attend
to property transfers to safeguard the integrity of the South African land ownership
system, which is regarded by some as one of the best in the world. |
| The process of conveying ownership in fixed
property |
| The sale |
| Property can only be sold by way of a written deed of
sale signed by both the purchaser and seller, as well as their spouses if married in
community of property. An oral contract for the sale or mortgage of fixed property is
invalid. If the property is owned in a corporate such as a Company or Close Corporation,
the transaction could be structured as a sale of shares. If it is in a Trust a resignation
of trustees and appointment of new trustees might be possible (depending on the purpose of
the trust and the content of the Trust Deed.) It is a good idea to get advice and input on
the structure of the transaction. |
| The deed of sale must be carefully drafted and read to
ensure that it accurately reflects the parties' full agreement especially with regard to
the amount payable, the method of payment, all verbal promises made by the seller or his
estate agent, the incorporation of all special conditions to suit the parties' particular
needs and the time of the purchaser's physical occupation of the property, which may
coincide with registration of transfer. |
| The seller must usually provide an Electrical
Installation Compliance Certificate in terms of the applicable occupation and health
safety laws. The parties may agree that the purchaser has this duty. These laws do not
necessarily cover the situation where the sale involves a company, close corporation or
trust and the shares are sold or the trustees are changed. It would be a good idea for the
buyer of such shares or members interest or the prospective new trustees to insist that
the deed of sale or other agreement used, includes a clause dealing with the Electrical
Installation Compliance Certificate responsibility. Speak to your conveyancer for proper
advice. |
| If physical occupation and transfer do not coincide,
the deed of sale must provide for occupational rental payable between the dates of
occupation and transfer. Risk in the property also only passes from the purchaser to the
seller on registration unless otherwise agreed in the deed of sale. This must be borne in
mind when arranging insurance on the property. |
| If the sale is subject to the purchaser obtaining a
bond, this must be specified in the deed of sale. The minimum amount of the loan the
purchaser must obtain to be able to afford the property, must be specified. The same
applies to the period within which bond approval must be obtained to avoid the deal being
delayed indefinitely. The deed of sale should also specify that if the purchaser is unable
to obtain the required bond in time the sale lapses. Any amounts payable by the purchaser
in this event should also be specified. |
| Estate agents have their own deeds of sale, although an
attorney can draft one specifically suited to the needs of the parties concerned. |
| The Conveyance or transfer of ownership |
| After completion of the deed of sale, a conveyancer
must effect registration in the deeds office. This is a time consuming and complex
process. Upon receipt of the deed of sale, the conveyancer must obtain from deeds office
records the particulars of the property and any bonds thereover as well as any possible
legal objections to passing transfer. The conveyancer must also obtain the title deed of
the property (which is mostly in possession of the seller's bondholder). Then the
documents are drawn. |
| The parties will be required to sign the following
documents: |
| Power of Attorney signed by the seller to authorise the
conveyancer to attend to the transfer on his behalf; |
| Transfer Duty and Valued Added Tax Declarations signed
by both seller and purchaser for the purposes of the Receiver of Revenue; |
| Affidavits regarding marital status and solvency;
Mortgage bond documents. |
| Then the conveyancer collects the costs, pays the local
authority for a municipal valuation and rates clearance in the case of conventional erven
or outstanding levies to the body corporate of a sectional title scheme and obtains a
transfer duty receipt or exemption from the Receiver of Revenue. Upon receipt of all the
documentation the conveyancer lodges it, together with the documents of the attorneys
registering the cancellation of the sellers bond and the purchasers bond, in the Deeds
Office for examination. The Electrical Compliance Certificate should be obtained to be
handed to the buyer. |
| The Deeds Office |
| This is the public office where records of property
ownership and related transactions are kept. There are different deeds offices for
different regions. |
| Once the conveyancer is satisfied that all the legal
requirements have been met, the deed of transfer, bond and supporting documentation must
be lodged at the deeds office for the region in which the property is situate. This will
not be necessary if the transaction was coached in the form of a sale of shares or members
interest in a company or close corporation. Then only the mortgage bond (if any) goes
through the Deeds Office process. The transfer of the shares or members interest will go
through the offices of the Registrar of Companies and Close Corporations, now known as
CIPRO. |
| The deeds office staff then begin a process of
examination of the documents. They also examine the records of the purchaser, the seller
and the property to ensure that there are no legal impediments against the proposed
transfer. This process takes approximately two weeks, depending on the deeds office's work
load and the availability of staff. Any queries the examiners may have must be addressed
and should they rule that the documentation is not in order, the documentation will be
rejected. The documents must then be rectified and relodged whereupon the process starts
anew. |
| Once the examiners are satisfied that the documents are
in order for registration, the documents are made available for registration.
Simultaneously with registration the finances are exchanged between the conveyancers
representing the respective parties. Only at this stage is the purchase price, estate
agents commission, cancellation costs in respect of the sellers bond, etc. paid out. |
| Thereafter the documents are numbered, checked and
microfilmed and returned to the conveyancer. These processes take approximately four to
six weeks, depending on the workload of the deeds office and staff availability. |
| Costs involved |
| Most standard deeds of sale provide for the purchaser
to pay the costs of transfer. Similarly, most banks require the mortgagor (borrower) to
pay the costs attendant on bond registration and cancellation. These costs include the
following: |
| Transfer Duty or Value Added Tax. |
| If the seller is a registered vendor in respect of
Value Added Tax for the purpose of selling immovable property, Value Added Tax to the
value of 14% of the purchase price will be payable by the seller on registration. In other
cases transfer duty will be payable at a rate of 8% for companies, close corporations and
trusts. Presently residential exemption is up to R500 000 for natural persons or 5% on the
amount of the purchase price exceeding R500 000 up till R1million. For amounts above
R1million it is R25 000 plus 8% on amounts exceeding R1million in the case of
natural persons. Exemptions from transfer duty may be granted in the cases of low cost
housing, government, ecclesiastical, educational and charitable institutions and transfers
in terms of the laws of succession. The rate of tax payable often changes and it is
a good idea to check that no fiscal amendments have affected the rates since this page was
updated. Here again the structure of
the transaction could influence the tax payable. For
instance if an immovable property on which Value Added Tax (VAT)is payable and which is a
enterprize conducting business, is sold by a registered VAT Vendor to registered VAT
Vendor, that property or so much of it as is utilized for the going concern could be zero
rated by proper wording in an agreement. This means that no tax is payable on the
transaction (or to be technically correct, VAT is paid at 0%) |
| Rates and Local Authority Taxes |
| All rates and taxes, as well as arrear service charges,
payable to the local authority in the case of property falling inside municipal boundaries
must be paid up to the end of the current rates year (30 June) to obtain clearance for
transfer. All levies payable to bodies corporate in sectional title schemes must also be
paid or secured to the satisfaction of the body corporate. |
| Conveyancers Fee |
| The conveyancers fee is calculated on a sliding scale
based on the purchase price in the case of property transfers or the amount of a bond, or
a prescribed tariff in other cases. The tariff is a guideline and the client is entitled
to negotiate a fee with the conveyancer. |
| Various expenses |
| Depending on the nature of the transaction, the marital
status and solvency of the parties and conditions imposed against the property a number of
additional expenses may be incurred. These include valuation fees, clearance fees,
inspection fees, postages and petties. Stamp duties are no longer payable on mortgage
bonds. |
|
WE
WISH YOU ALL THE BEST WITH YOUR TRANSACTION
|
