It can be difficult to understand the real estate market, particularly when it comes to the legal ramifications of changing property ownership. In South Africa, the conveyancing process ensures that property transactions are conducted legally, protecting both purchasers and sellers.
Whether you are a first-time homebuyer or a seasoned property investor, understanding this process is crucial for a smooth and successful property transaction. This article outlines the key stages and responsibilities for all parties involved, making the conveyancing journey easier to follow and comprehend.
The Process
1. Offer to Purchase (OTP)
- Initiation: The process begins when the purchaser and seller sign the Offer to Purchase, a legally binding agreement outlining the sale terms, including the purchase price and any special conditions.
2. Due Diligence
- Title Deed and Property Searches: The seller’s conveyancer checks the property title for any issues and obtains necessary documents like the title deed and municipal clearance certificates from the seller.
- Approval of Mortgage Loan: The purchaser must apply for a bond in an amount equal to the purchase price.
3. Drafting and Signing Transfer Documents
- Preparation: The seller’s conveyancer drafts essential documents, such as the Power of Attorney to Pass Transfer, the Datasheet for SARS, affidavits, etc. Both parties are requested to sign these documents.
- Compliance Checks: Verify compliance with the Financial Intelligence Centre Act (FICA).
3.1 Bond Approval (If Applicable)
- Application: The purchaser applies for a mortgage bond. The bank conducts a credit assessment and property valuation.
- Approval: Upon approval, the bank appoints a bond attorney to manage the bond registration process.
4. Payment of Transfer Costs
- Costs: The purchaser pays transfer costs, including transfer duty, conveyancing fees, and other applicable expenses, to the transferring attorney. The seller settles outstanding rates and taxes, levies and any bond cancellation fees. The purchaser pays the bond registration costs to the registering attorneys.
5. Obtaining Compliance Certificates
- Certificates: The seller provides all necessary compliance certificates (electrical, plumbing, gas, beetle, etc.) as required by the Occupational Health and Safety Act.
6. Lodgement of Documents at the Deeds Office
- Submission: The Conveyancer lodges the Deed of Transfer and related documents at the Deeds Office.
- Examination: The Deeds Office examines the documents for legal compliance, which typically takes 7–10 working days.
7. Registration
- Completion: Once the Deeds Office approves, the property is officially registered in the purchaser’s name. The purchaser’s bond (if applicable) is registered, and the seller’s existing bond is cancelled.
- Notification: Both parties are notified of the successful registration.
8. Finalisation
- Payments: The Conveyancer pays the seller’s proceeds and settles any outstanding amounts, including estate agent commission.
- Delivery of Deeds: The original Title Deed is sent to the purchaser’s bank (if bonded) or directly to the buyer (if unbonded) after registration, 7–14 working days.
Key Players in the Process:
- Conveyancer: Manages the legal aspects of the transfer.
- Deeds Office: A government body responsible for registering property transactions.
- Financial Institutions: Provide mortgage bonds and assess the buyer’s creditworthiness.
- Municipalities: Issue clearance certificates for rates and taxes.
Common Costs Involved:
- Seller: Estate agent commission, bond cancellation fees, compliance certificates, advanced rates and taxes, special levies, and any other amounts stipulated in the Deed of Sale.
- Purchaser: Transfer duty, conveyancing fees, bond registration fees, clearance certificates, and any other costs arising from the Deed of Sale.
