Transferring housing, land

By PROFESSOR JONATHAN CAMPBELL and MR NDUMISO KHUMALO

1. How is ownership of housing/ land transferred from the seller to the buyer?

1. How is ownership of housing/ land transferred from the seller to the buyer?

First step: a sale of property MUST be in writing and signed by the seller and the buyer (required by the Alienation of Land Act).

This is normally done by way of a ‘Deed of Sale’ which is signed by both parties.

Second step: transfer of the property from the seller to the buyer must be registered in the Deeds Office, which is done by a conveyancer (an attorney who is also a qualified conveyancer).

The purchase price is paid to the seller on date of registration.

This can be a lengthy process, and it is common for transfer to take place six weeks or even much longer after the Deed of Sale is signed.

2. If you buy a property, when and to whom should you pay the purchase price?

Once the first step has been completed (the signed agreement of sale), it will take some time for transfer to be effected. You must not pay the purchase price directly to the seller, and you must not pay at the same time as you sign the Deed of Sale. If you pay, and the transfer of the property to your name does not go through for some reason, you may lose your money.

The purchase price must be paid to the conveyancing attorney only when s/he calls for it. It will then be invested in a trust account by the conveyancer and paid over to the seller only when transfer is actually registered in the Deeds Office. Any interest earned will be credited to the buyer.

3. What if there are outstanding rates or service charges on the property?

The seller is liable for rates and municipal service charges up to the date of registration of transfer. If there are outstanding rates and municipal service charges due to the municipality in respect of the property, it will not be possible to transfer the property into the name of the buyer.
Only once the rates and service charges are paid up and the municipality issues a ‘rates clearance certificate’ (confirming there are no outstanding rates and service charges) can the transfer be registered. The buyer will have to pay for this certificate.

So, if you are interested in buying a property you should always check on the municipal rates account for that property, as there are many properties which have large amounts of rates outstanding. If the seller is unable to afford to pay off those outstanding rates, it will not be possible to get this certificate and transfer the property (unless the Municipality accepts a written undertaking in exceptional circumstances). You should therefore not even consider buying this property.

4. What if the ‘seller’ is not the registered owner of the property?

The sale will be invalid, which means there is no sale. You cannot sell a property that you do not lawfully own (even if you think you might have some right to the property).

Therefore if you are wanting to buy a property, make very sure before agreeing to buy it that you see the Title Deed or a Deeds Office printout which proves that the person who wants to sell you the property is in fact the owner of the property.

5. What if you ‘buy’ a property and pay the full purchase price, but nothing is in writing (or it is not signed)?

The sale is invalid, and there is no sale. You will be left only with a claim for the return of the money paid, which you may or may not ever recover. An oral agreement and exchange of money does not comprise a valid sale.  Therefore make sure that there is a proper agreement which is properly signed.

Do not ‘pay’ for property without a proper signed agreement, managed by a conveyancing attorney.

6. What does it cost to transfer property?

Transfer costs comprise (i) transfer duty (tax) payable to SARS and (ii) transfer fees (payable to the conveyancing attorney). Both transfer duty and transfer fees are fixed sums set according to an established tariff which varies with the size of the purchase price.

7. Who pays the transfer costs?

The buyer pays all these costs. It is therefore extremely important to budget for these costs when deciding how much you can afford to pay for a property. It is also important for the seller to be aware that the buyer will have to pay these costs.

8. How can you buy a property if you don’t have the cash to do so?

You can borrow the money from a bank by way of a mortgage bond. The amount that the bank will be willing to loan you will depend on the size and stability of your income.

If you require a bond, it will be registered in the Deeds Office at the same time as the transfer. You (the buyer) will have to pay the bond registration costs. The bond registration attorney will pay over the purchase price to the transferring attorney on the date of registration. The transferring attorney in turn pays the money to the seller. In this way the risk to you, the buyer, is minimised.

9.How is the purchase price of a property decided?

The price is decided by agreement between the seller and the buyer, but it is important to be guided by advice from experts in the market (e.g. reputable estate agents). This will ensure that prices are not far too low or far too high.