THE TRANSFER PROCESS EXPLAINED
Transferring the ownership of a home from the seller to the buyer can be a complicated and misunderstood process as it involves a number of parties, many of who have conflicting interests. However, regardless of each party's interest, all have to work together and coordinate their efforts to ensure that the documentation arrives at the Deeds Office simultaneously.
Understanding the sequence of events will assist everyone involved to monitor the process more closely. On average the process can take around three months, starting from the date of sale and ending with the property registered in the new owner's name. That said, there are a few external factors that could postpone the process, such as obtaining clearance certificates or the fulfilment of a stipulated condition in the contract.
Here the typical steps required to transfer a residential property:
The buyer signs an offer to purchase (OTP). The sale agreement or deed of sale is a binding contract between the buyer and the seller that forms the basis of the transaction.
The buyer or bond originator applies for finance. A bond application will normally form part of the suspensive conditions, which are events that need to happen before the sale is finalised. Another common suspensive condition is the sale of the buyer’s existing home.
The estate agent will send the sale agreement to the transferring attorney – one of three attorneys who will be appointed. If there is an existing bond over the property, the transferring attorney will then contact the seller's bank and request the original title deed and cancellation figures, also referred to as discharge costs.
The buyer's bank will then instruct a bond attorney to register a mortgage bond, which is a special loan which uses fixed property as security and is registered in the Deeds Office.
The cancellation attorney is instructed to cancel the seller's bond. They then send the title deed and guarantee requirements to the bond attorney and the transferring attorney.
The transferring attorney requests a Rates Clearance Certificate from the local authority.
The law stipulates that transfer can only take place once all municipal charges and associated costs are paid in full. Once done, a rates clearance certificate is issued by the local council. The seller may be required to pay a few months in advance to obtain the certificate. However, any credit on the account at the date of transfer will be refunded. The transferring attorney will also do a Deeds Office search to check all the details of the property. They will then assemble and prepare the required documentation, which can take up to three weeks to prepare.
The buyer is contacted by the transferring attorney to come in and sign the documents. The buyer will be required to sign a Power of Attorney to Transfer, as well as some affidavits to verify their marital status, financial status and identity.
Buyers will require the following documentation:
A proof of address (not older than three months)
A certified copy of their identity document
Their income tax number.
Declaration in respect of marital and solvency status
Particulars concerning the identity of the attorney transferring the purchaser’s property if the buyer is utilising the proceeds to pay for his purchase
Particulars of the bond granted
The documents are needed to meet the Financial Intelligence Centre Act (FICA) requirements. Apart from FICA, the transfer process is required to satisfy the necessary criteria of several regulatory institutions such as the Transfer Duty Act and the Value Added Tax Act for the South African Revenue Service (SARS) and the Municipal Property Rates Act.
The buyer pays the transfer costs and their share of the rates and taxes. A proforma account is given to the buyer with estimated costs. The buyer will receive a final account after the property is registered and the actual costs are known. The costs vary because the date of registration is unknown at this stage of the process and a portion of the costs are determined by this date.
The transferring attorney instructs the lodging attorney to lodge the documents with the Deeds Office. The lodging attorney is located near to the Deeds Office and acts on behalf of the transferring attorney, who may not be in the vicinity. The lodging attorney will contact both the cancelling attorney and bond attorney to ensure that all the documents are lodged on the same day. The documents must be registered at the same time because the seller's bank has guarantees to ensure it will be paid when the bond is cancelled, and they are not prepared to cancel the bond until the new bond is registered.
A Deeds Office examiner will check the documentation, which can take between seven and ten days working days. The examiner will then contact all the attorneys to inform them that they are in order and will be registered the following day.
The documents are registered – the buyer becomes the owner of the property and the seller is paid the net proceeds. The agent is also paid their commission. The transferring attorney will send the original title deed to the buyer's bank. In the instance where the buyer does not have a bond, the title deed will be sent directly to the buyer.
While it can be a complex process, a professional real estate agent will be able to guide both buyers and sellers. Understanding the transfer sequence and having all the necessary documentation at hand before the start of the process will ensure that everything progresses without incident.