Property Sellers - Checklist On How To Speed Up The 3 Months Transfer Period Of Your Property
Property transfers can be a time-consuming process, especially in today's challenging economic times. Delays are common, but there are steps you can take to expedite the turnaround time of the property transfer process and register your property in a fraction of the usual time.
Sellers normally only focus on dealing with the conveyancer's requests for paperwork after the offer to purchase is signed. So, the usual process of assembling the paperwork, only after the property has been sold, can drag out the transfer considerably - already a 2- to 3-month-long process, calculated from the date of sale.
While some sellers are so desperate that they will do anything to expedite the process, other sellers are reluctant to spend money "on fixing up the property" in case the sale collapses.
By considering the following points, before selling your property, you can significantly reduce transfer timelines - sometimes up to a third of the usual time.
Understanding the delay factors: Two key factors contribute to prolonged property transfers:
- sellers taking time to gather necessary documents (paperwork) and certificates.
- delays in cash payments required for the transfer.
The Role of Sellers and Purchasers:
It is important to recognize that the speed of the transfer process normally depends not on the Deeds Office, but on the sellers and purchasers meeting their obligations timeously. Once the sale agreement is signed, both parties need to act promptly to gather the necessary paperwork.
The purchaser needs to pay immediately on request, and all the completed paperwork needs to be handed to the conveyancer as per the legal requirements and without omissions, the moment the sale agreement is signed. This is especially important if either party resides in another country or is otherwise difficult to contact for information and signatures.
Most of the certificates and documents below should be in place even if there is no sale, and one might regard this exercise as putting one's house in order anyway. For example, insurers and legislation require existing owners to be in possession of valid house plans, electrical, fence and gas certificates - whether or not there is to be a property sale.
Most potential sellers realise that they may as well get started, as all the certificates can still be used if the first sale collapses and the property is resold a second time.
Obviously, if the transfer is to be urgent, sellers would avoid an Offer to Purchase that contains conditions that will cause a delay - for example, having to wait for the purchaser to sell her own property with long guarantee time limits.
Considerations to Expedite Transfer:
To speed up your property transfer, consider the following points:
- A rates clearance certificate is valid for 60 days from the print date. If the transfer isn't registered within this period, a revised rates assessment and clearance certificate must be obtained. The purchaser will pay for the cost of applying for a rates assessment. Most conveyancers will use a rates and taxes runner to expedite the issue and calculation of the clearance certificate. The cost of obtaining a revised rates and taxes clearance certificate will be the same as mentioned above.
- Levy clearance certificates have a specific validity period. If the transfer isn't registered before the certificate expires, a revised assessment and clearance certificate will be required. Most managing agents of Body Corporates are private institutions, and they will charge an admin fee for the levy clearance certificate as well as for the revised rates and taxes clearance certificate (should it expire) - which is payable by the purchaser.
Sellers are responsible for paying municipal rates and taxes arrears and sectional title levies arrears, as well as a future provision for rates and taxes, water, lights, electricity, sewage, and other charges; in advance, calculated normally at 4 months multiplying the normal average charge. To avoid delays, sellers should ensure their accounts are up to date and have sufficient funds available for payment when requested.
The cost of a Rates and Taxes Clearance Certificate would not be incurred upfront because it is not possible to apply for an "Assessment Calculation" if one does not have all the purchaser's details. So, sellers would have to wait until an Offer to Purchase with a specific purchaser has been signed, before incurring the cost of a Clearance Certificate.
- Property Documents: Ensure you have essential property documents, such as valid house plans, electrical compliance certificates, fence compliance certificates, and gas compliance certificates. These documents are required regardless of a sale and having them readily available saves time.
- Seller Documents: Ensure you have the following documents ready for the estate agent and the conveyancer. Some of these documents is needed to also meet the FICA requirements.
4.1 Proof of address (not older than three months).
4.2 Certified copy of identity document.
4.3 Income tax number.
4.4 Details of marital and solvency status. For a transfer in terms of a divorce order, please follow this link for the additional documents and considerations needed.
4.5 Contact details of the attorney transferring the purchaser's property if the purchaser is utilising the proceeds to pay for his purchase.
4.6 Details of the bond granted on the property that have been sold.
- Avoid delaying conditions: If urgency is a priority, sellers should avoid including conditions in the offer to purchase that may cause delays, such as waiting for the purchaser to sell their property. One of the main reasons for delayed transfers happens when two or more deals are linked and money from one sale is needed to purchase the next property.
- Access bond withdrawals: If you need to withdraw cash from an access facility on your home loan account, do so before the transaction reaches the conveyancer to avoid delays caused by bank procedures. Once the conveyancer requests the existing mortgage bond cancellation figures, the home loan will be frozen, and it can take time for the bank to unfreeze the account and allow the seller to withdraw his funds.
- Building Plans: To meet purchaser and bank requirements, consider obtaining up-to-date building plans before the sale. This can save around 3 to 4 weeks in the process.
- Lost Title Deeds: If the original title deed is lost by the banks or by owners who no longer have any mortgage loan, involve a conveyancer upfront to assist with the application and advertisement in the press process required to obtain a duplicate original. A lost title deed can create a 5-week delay if not dealt with immediately.
- Power of Attorney for conveyancing documents: If you plan to go overseas, sign a Power of Attorney with a conveyancer in South Africa before departure. This eliminates the need for costly authentication procedures while abroad.
- Repair defects: To prevent disputes and delays, ensure that all defects in the property are repaired or disclosed in detail in the sale agreement to avoid repair obligations before transfer. The sales agreement needs to state that the seller will not be responsible for compensating for, and will not repair, the defects. A general rise in "Consumer Protection Awareness" have given purchasers a heightened sense of entitlement and they will try and seek out defects in the property - even those that have been "covered up" or "painted over". Demands and disputes that the defects be repaired before the transfer, obviously will cause a delay.
- Compliance Certificates: These certificates are always required before lodgement in the Deeds Office. Ensure you have valid electrical, electric fence, plumbing and gas compliance certificates issued by a certified inspector, as banks and purchasers may scrutinise them. Banks will not issue guarantees without valid COC's. Invalid certificates or repairs required to be undertaken before the certificates can be issued can lead to delays and additional costs.
- De-Registration of Companies or Close Corporations: If your company or close corporation has been de-registered, it must be re-instated before the transfer can be registered. This process can take up to 8 weeks, so your accountant should start this process well in advance.
- Approval Requirements for Companies and Close Corporations: There are still many Companies and Close Corporations that own, just a single asset; namely a residential property; as a hangover from the past. So if you want to sell the only asset, (namely the "whole or the greater part of its assets" in the entity), then the legislation requires 75% of voting rights in the Company, to approve the sale by a "Special Resolution." This applies to a Close Corporation as well. This means that in addition to the Directors, 75% of the Shareholders and Members' s Interest Owners, must approve a Resolution to sell the property.
- Approval Requirements for Trusts: For a property sale from a Trust to be valid, the Trust must be:
14.1 registered with The Master of the High Court and issued with an IT number;
14.2 signed by someone who has been authorised as a Trustee to the Trust by The "Letters of Authority" issued by the Master of the High Court;
14.3 and the Offer to Purchase and signature thereof, authorised by a Resolution signed by the appointed Trustees.
If someone signs an agreement when He is not authorised, the contract will be invalid, and he can be sued for damages in his personal capacity, So even a beneficiary, nominated in a will, cannot sign any contract unless his name appears in The Letters of Authority. Subsequent ratification of only one Trustee's signature, by the other Trustees, cannot cure an invalid sale.
It is common that Trustee resignations and appointments are frequently not updated, in the records of the High Court and this should be done well in advance before the property is sold. One of the conditions of a loan is that the Trustees in a Family Trust must be currently authorised and confirmed in the Letters of Authority issued by the Master of the High Court.
If one of the authorised Trustees passes away, the bank will require a new Trustee to be appointed and approved by the Master of the High Court, before the bond can be registered. In normal times it is estimated the Master will take up to six weeks to approve this appointment.
- NHBRC Certificates: For properties less than 5 years old, provide copies of the obligatory National Home Builders Registration Council (NHBRC) certificates to the purchaser's mortgage bond bank. Apply for duplicate copies if they are missing or lost as it is very difficult and time-consuming to try and extract it from the NHBRC offices.
- Unpaid Engineering Service Fees: If there are outstanding fees for engineering services or town planning applications to e.g. subdivide or rezone the property, settle them before the transfer. It happens often that an application to subdivide or rezone the property was made to the Council and then postponed or never completed. The moment an application is submitted, the Council will debit the property (and not the owner) with its Town Planning fees.
So even before the Council will calculate the amount to be paid for the issue of a Clearance Certificate for the Deeds Office, an upfront payment of these Subdivision and/Rezoning Council charges must be made to the Municipality. Take note - the Council is not concerned with which owner in the past incurred these fees. The responsibility always falls on the present owner.
- Deceased Estate Sales: Only the authorized executor named in the Letters of Executorship issued by the Master of The High Court can sign on behalf of a deceased estate. However, because the issue of the Letters of Executorship is frequently delayed, it is common for a family member to try and sell the deceased's property without waiting to be authorised - making such sale entirely invalid. Sellers (family) should always try to expedite the issue of the Letters of Authority as soon as possible, so that the property can be legally sold and then transferred.
- Incorrect rates and taxes accounts, especially where a previous subdivision of the property took place. In general, Municipal Rates and Taxes Accounts are never updated to reflect separate and distinct accounts for each newly created subdivided property. It can take at least 4 to 8 weeks to unravel these accounts before any rates and taxes Clearance Certificate can be issued for transfer.
While not all points will be relevant to every sale, this checklist provides a comprehensive overview of potential considerations. Additionally, conveyancers are available to assist with any queries and provide further guidance. Starting the paperwork well in advance of the sale is recommended to avoid unforeseen delays and ensure a smoother and faster transfer process.
Appointing a qualified and experienced conveyancing attorney is important. Appointing a friend or family member to handle the transfer could end up in a "conflict" you would want to avoid - especially if the transfer process time-frame is not well managed.
It is also recommended to always establish whether the transferring attorney and the estate agent has a good working relationship - as it is important for these two parties to work closely together behind the scenes to ensure a smooth and expeditious transfer.