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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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