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5 Things All Property Sellers Need To Know - Before The Property Transfer Process Begins

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5 Things All Property Sellers Need To Know - Before The Property Transfer Process Begins

Buying and selling of Property is, while hugely exciting, a complex process involving many moving parts and players. This article by C & A Friedlander Attorneys, explores 5 points Sellers have regularly indicated they wish they knew upfront about the trickier and more intricate steps of the selling and transfer process.

1. ORIGINAL TITLE DEED NEEDS TO BE LODGED AT DEEDS OFFICE

A Title Deed is a document which proves ownership of immovable Property. It contains the name, identity number & marital status of the owner/s as well as the full legal property description. The Title Deed states all conditions that are applicable to the Property (such as Homeowner's Associations or building heights) and will also refer to any servitudes that may be registered over the Property.

An original Title Deed is signed by the Registrar of Deeds and has an embossing on the last page, which proves that it is the original. This is important to note as a Seller when selling your Property as it allows you to locate your original Title Deed amongst the copies, merely by running your hand along the last page to feel whether the page is raised by the embossing.

The original Title Deed needs to be lodged at the Deeds Office when your Conveyancer, or transfer attorney, are transferring the Property to the Purchaser. If the Property is bonded then the original Title Deed is retained by the relevant Bond Holder, being the bank that granted the bond over the Seller's Property. If the Property is unbonded then the Seller should be in possession of the original Title Deed - as the title deed is transferred directly to the new owner of a property.

Once a title deed comes into your possession it is vital that you keep it safe. Should you lose it, it does not mean you no longer have any rights of ownership.

If the original Title Deed is lost, the Conveyancer needs to apply to the Registrar of Deeds for a duplicate original. An advert must be placed in the Government Gazette, and an issue of a newspaper printed in the area where the property is situated, calling on any interested parties to object to a new Title Deed being issued. The intended copy must lie open for inspection at the Deeds Office for a period of two weeks. It is therefore important for the Seller to ascertain whether they are in possession of the original Title Deed at mandate stage to avoid any unnecessary delays. The cost of a Lost Copy is approximately R5 000.00 plus VAT per original Title Deed (as at April 2023).

2. PENALTY INTEREST FOR EARLY BOND CANCELLATION

If there is a bond registered over the Property the Seller should, at the stage of signing a mandate with an Estate Agent, notify the Bond Holder that the Property is on the market. Giving the Bond Holder the requisite 90 days' written notice prevents the Seller from having to pay penalty interest for cancelling the bond earlier than its original term.

If the Seller fails to notify the Bond Holder, then they will be liable to pay penalty interest which the National Credit Act allows the banks, which could be as much as 3 months' worth of interest on their bond. It is vital for Sellers to keep in mind that once they have given notice to cancel their bond, they are still liable to make payment of their monthly instalments until date of registration of transfer.

It is important to note that, when the Seller gives notice of their intention to cancel their bond, the Bond Holder will put a hold or freeze on their bond account so that they cannot withdraw any further funds from their access bond facility. In the case where a Seller wishes to make a payment, such as rates, from their access bond they would need to withdraw the required amount before notice is given to the Bond Holder of their intention to cancel the bond.

Penalty Interest - If Bond Is Less Than 2 Years "Old":

If your bond is relatively new, and you want to cancel it within the first two years of the loan agreement, you will also be liable for penalty interest of approximately 1% of the amount owing. This penalty will be applied once the house is sold and deducted from the proceeds of the sale.

3. THE BOND CANCELLATION PROCESS

When you sell a bonded Property there are different types of attorneys that assist you with the Selling process. There is the Conveyancer or transferring attorney who you, as the Seller, nominate in your Offer to Purchase and who assists you throughout the transfer process and there is a bond cancellation attorney who is appointed by your Bond Holder to cancel your existing bond.

It is recommended to use attorneys who are on the panel of all 4 major South African Financial Institutions - as the Seller can then request the bank to use the attorney to attend to both the transfer and simultaneous bond cancellation, simplifying and streamlining the process for the Seller.

Once the Property is sold and the suspensive conditions (such as the Purchaser securing a bond or the sale of the Purchaser's property) have been met, the Conveyancer will write to the Bond Holder advising them that the sale is now valid and binding. The

Bond Holder will instruct a bond cancellation attorney and issue the Conveyancer with cancellation figures so that they can ensure that there are sufficient funds from the sale of the Property to cover the outstanding balance on the bond and to cancel the bond. The Conveyancer also requires the cancellation figures to calculate an estimate of the amount from the proceeds of the sale of the Property that the Seller can expect to receive.

The Bond Holder then sends the original Title Deed to the bond cancellation attorneys. The Conveyancer will then provide an undertaking or bank guarantee to the bond cancellation attorneys for the bond cancellation amount as well as their bond cancellation costs. The Bond cancellation attorneys will then proceed to draft a "Consent to Cancellation" document which is signed on behalf of the Bond Holder. The bond cancellation is then lodged at the Deeds office simultaneously with the transfer and is cancelled on the same day as the property transfers to the Purchaser.

On registration of transfer the Seller's bond is settled and the Seller will often receive a refund from the Bond Holder approximately 2 to 3 working days after registration of transfer.

If the seller does not provide the required notice, the date the conveyancers request the final figures will be the one that marks the beginning of the notice period. The cancellation fee will then depend on the time taken to register transfer of the property.

The bond cancellation fees depend on how many bonds are registered over the Property being sold. If there is one bond to be cancelled it is approximately R5 500.00 plus VAT (as at April 2023). It is important for Seller's to note that the bond cancellation fee is still payable even if the bond has been paid up in full.

4. RATES CLEARANCE CERTIFICATE

For a Conveyancer to transfer a Property at the Deeds Office, they need to lodge a certificate from Council confirming that all rates and services are paid up to date so that the Purchaser does not inherit the Seller's debt. Sellers often are not aware that, to get a rates clearance certificate from Council, the Seller is liable to pay their current rates and services up to date AND 60 days' worth of estimate of their rates and services, known as "advanced collections".

Your Conveyancer will request figures from Council and once received, send the requested figures to the Seller who must then make payment of the rates and services, including advanced collections, to the Conveyancer who in turn pays Council. Many Conveyancers can assist the Seller by arranging for bridging finance should the Seller not be able to pay the advanced collections up front.

Council will then issue a rates clearance certificate reflecting the Seller and Purchaser's names and the Property description. The certificate also has an expiration date of 60 days from date of issue, which means that, should the transfer be delayed for any reason, the Conveyancer will need to apply for updated figures and the Seller will need to make further payment.

On registration the Conveyancer will notify Council that the Property has been registered, however Council usually waits for confirmation from the Deed's Office (which can take 4 to 6 weeks from date of registration) before finalising the Seller's account. Once the Seller's account is finalized any refund due to the Seller, in respect of the advanced collections not used, is paid to the Conveyancer who in turn makes payment to the Seller.

5. MUNICIPAL PLANS / BUILDING PLANS

If the building plans are found to be outdated and not "as built" plans, prior to registration of transfer, then the onus is on the Seller to have the plans redrafted and approved by the Local Authority at their cost.

Increasingly Purchaser/s wish to insert a suspensive condition in their Offer to Purchase which makes the offer subject to Building Plans being provided by the Seller. It is also sometimes a condition of the Purchaser's bond that the building plans be submitted to the Bond Holder before the Bond attorney can lodge their documents at the Deeds Office. We recommend that, when possible, the Seller provides a copy of the Building Plans to the Purchaser at mandate stage to prevent any delays.

It is important for Sellers to note that even if a Purchaser does not stipulate Building Plans as a condition of the sale but requests a copy of the plans during the transfer process, the Seller is obliged to provide "up to date, as built, approved plans" to the Purchaser.  If the plans are not updated and "as built" then the onus is on the Seller to have the plans redrafted and approved by the Local Authority at their cost.

If the Purchaser only requests a copy of the plans after transfer taking place and the plans do not match the property, this could be seen as a latent defect and the Seller may be found liable for the costs of rectifying the defect. If the Purchaser can prove that the Seller was aware the plans were outdated, regardless of whether they were in possession of a copy of the plans, and that they intentionally concealed this fact from the Purchaser, then the Seller will need to update the plans at their expense.

Author Andi Hoole, Conveyancer & Notary Public (C & A Friedlander Attorneys)
Published 21 Jun 2023 / Views -
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