Property Transfer Process and Steps South-Africa


1

Before Signing the Contract

2

Offer To Purchase

The buyer signs an offer to purchase (OTP). The sale agreement or deed of sale is a binding contract between the buyer and the seller that forms the basis of the transaction.

3

Appoint Transferring Attorney

The transferring attorney receives the instruction from the client or the estate agent to attend the transfer. Generally, unless the parties agree otherwise, the seller normally nominates the transferring attorney. Upon receiving the instruction, the transferring attorney will conduct a deeds search on the property to verify that all the property and related information is correct. It may also be necessary to do a company search to verify the directors of the company who is a party in the contract. In order to comply with FICA requirements, the transferring attorney will require the purchaser’s and seller’s details. Accordingly, the following documents will generally be required from all the parties: Copies of identity documents Proof of residence Income tax number or VAT registration number Marriage certificates (in case of a property in community of property, also FICA documents for the spouse) Antenuptial agreement Divorce orders In 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 conveyancer will also request the original title deed from the seller or in case where a bond is registered, the bond account number and details of the bond holder to request cancellation figures.

4

Apply for Finance

The buyer or bond originator applies to the bank for finance. A bond application will normally form part of the suspensive conditions, which are events that need to happen before the sale is finalised. Another common suspensive condition is the sale of the buyer’s existing home.

5

Requesting Cancellation Figures

The seller’s bank instructs its attorney, i.e. the cancellation attorney, to cancel the seller’s bond. The cancelation attorney then sends the title deed and guarantee requirements to the bond attorney and the transferring attorney.

6

Requesting Rates Clearance Figures Municipality

The transferring attorney requests a rates clearance certificate from the local authority. According to South African law, a property can only be transferred once all municipal charges and associated costs have been paid in full to the relevant parties. Once this is done, a rates clearance certificate will be issued by the local council. The seller may be required to pay a few months in advance to obtain the certificate; however, any credit on the account on the date of transfer will be refunded. At this stage the transferring attorney will also do a Deeds Office search to check all the details of the property. After this has been done, the transferring attorney will assemble and prepare the required documentation, which can take up to three weeks.

7

Getting Compliance Certificates

Electrical compliance certificate The requirements for an electrical compliance certificate are set out in the regulations to the Occupational Health and Safety Act (OHSA). Regulations lay down many general requirements, for example, only registered electrical contractors may perform electrical work and issue the certificates. A new certificate is not required for transferring ownership of a property if there is a valid certificate in place that is not more than two years old, provided that no alterations have been made to the installation since the certificate was issued. Electrical fence certificate This certificate is governed by the Electrical Machinery Regulations, in terms of the OHSA, and the purpose is to ensure that the installation is safe. The certificate is required if: There is a change in ownership of a property with an electric fence. If an electric fence has been modified. Unlike electrical compliance certificates the legislation does not mention the certificate being valid for a fixed period. Once obtained it can be transferred from one owner to the next provided there were no alterations to the installation after the certificate was issued. Gas compliance certificate Pressure equipment regulations were promulgated under the OHSA, bringing gas appliances installed in properties more or less in line with electrical installations from 2009. In terms of the regulations, any person installing a liquid gas appliance at a property must have a certificate of compliance issued for the appliance. The certificate may only be issued by an authorised person registered with the Liquefied Petroleum Gas Safety Association of Southern Africa (LPGAS). Installations for which CoCs are required would include built-in gas fires or braais, stoves and hot water systems. Unlike electrical certificates, there is no mention in the legislation of how long the certificate is valid for once issued. However, new certificates are required to be issued after any new installation, alteration, modification or in the event of a change of ownership of property. Beetle-free certificate Beetle-free certificates are no longer required by law, but are still standard in sale agreements in the Western Cape and KwaZulu-Natal.

8

Drafting Transfer Documentation

At this stage the buyer will be contacted by the transferring attorney to come in and sign the documents. The buyer will be required to sign a power of attorney to transfer, as well as a number of affidavits to verify his or her marital status, financial status and identity. Buyers can prepare for this by getting the following documentation in order: proof of address (not older than three months) a certified copy of their identity documents their income tax numbers declaration in respect of marital and solvency status particulars concerning the identity of the attorney transferring the purchaser’s property if the buyer is utilising the proceeds to pay for his or her purchase particulars of the bond granted These documents will be needed to meet the Financial Intelligence Centre Act (FICA) requirements. Apart from FICA, the transfer process is required to satisfy the necessary criteria of several regulatory instruments, such as the Transfer Duty Act and the Value Added Tax Act for the South African Revenue Service (SARS), and the Municipal Property Rates Act.

9

Requesting Guarantees

10

Signature of Documentation Buyer and Seller

11

Payment of Transfer Costs

The buyer pays the transfer costs and his or her share of the rates and taxes. A pro forma account will be presented to the buyer with estimated costs. The buyer will receive a final account after the property has been registered and the actual costs are known. The costs vary because the date of registration is unknown at this stage of the process and a portion of the costs are determined by this date.

12

Forwarding Guarantees to Cancelation Attorney. Aquiring original Title Deed.

13

Collecting Outstanding Documentation.

14

Prep and Lodgement

15

Deeds Office Examination

Various Deeds Office examiners will carefully check all the documentation. This will take between seven and fifteen working days, depending on how busy the Deeds Office is. Once the documents have been examined, the examiner will contact all the attorneys to inform them that the documents are in order and will be registered the following day.

16

Deeds office Prep

17

Registration (Simultaneous)

he documents are registered – the buyer becomes the owner of the property and the seller is paid out the net proceeds. At this stage the estate agent will also be paid his commission. The transferring attorney will at this stage send the original title deed to the buyer’s bank. In the instance where the buyer does not have a bond, the title deed will be sent directly to the buyer.

18

Finalisation of Accounts.

19

Delivery of Original Title Deed.