Do you have a valid will?

Drafting a last will and testament is a crucial step in ensuring that your wishes are carried out after you pass away. Having a valid will in place can provide peace of mind and clarity for your loved ones during a challenging time.

Why drafting a will is important

Ensuring your wishes are honoured

In a will you can stipulate how you want your assets to be distributed after your death. Without a will, the distribution of your estate will be governed by intestate succession laws, which may not align with your wishes.

Providing for your loved ones

A will enables you to provide for your loved ones, including your spouse, children, and other dependents. You can stipulate who should inherit specific assets or receive financial support, ensuring that they are taken care of after you’re gone.

Minimising family disputes

Clear instructions in a will can help prevent disputes among family members over the distribution of assets. By outlining your wishes in writing, you can minimise the potential for conflict and ensure that your estate is settled smoothly.

Appointing guardians

If you have minor children, a will allows you to designate guardians who will be responsible for their care in the event of your death. This ensures that your children are placed in the care of individuals you trust and who share your values.

Key elements of a valid will

Identification of the testator

The will should begin with your full legal name and address, clearly identifying you as the testator (the person making the will). A testator must be older than 16 years.

Appointment of an executor

You should appoint an executor to administer your estate and carry out the instructions in your will. Choose someone who is trustworthy and capable of handling the responsibilities associated with executorship.

Distribution of assets

Clearly outline how you want your assets to be distributed after your death. Specify who should inherit specific items or properties and include alternate beneficiaries in case your primary beneficiaries predecease you.

Residuary clause

Include a residuary clause to address any assets or property that are not specifically mentioned in the will. This way all your assets are accounted for and distributed according to your wishes.

Funeral and burial wishes

You may include instructions regarding your funeral arrangements and any specific wishes you have regarding your burial or cremation.

Revocation clause

Include a clause explicitly revoking any previous wills or testamentary documents that you have made, ensuring that your current will takes precedence.

Witnesses and signatures

In South Africa, a will must be signed by the testator in the presence of two competent witnesses who are older than 14 years. They must sign in the presence of the testator and each other. People named as heirs, guardians, executors, or trustees (and their spouses) may not sign as witnesses to the will. The will must also indicate the date and place where it was signed.

A will is not valid if these legal requirements aren’t met.

Safekeeping of your will

Your last will and testament must be stored in a safe place. Inform someone in your family or circle of friends where you keep your will. Professionals who draft wills, like lawyers or banks, can keep your will at their premises.

Updating your will

Don’t forget to update your will when there is a change in your personal circumstances, or you acquire or sell assets.

How we can help you

Drafting a will is an essential aspect of estate planning that allows you to protect your assets, provide for your loved ones, and ensure that your wishes are honoured after your death.

Contact us if you’re unsure how to draft a will or have complex estate planning needs. Our legal professionals will ensure that it’s drafted to reflect your wishes regarding the distribution of your assets. Furthermore, we’ll make sure that it’s drafted in a tax-efficient manner to provide financial benefits and maximise permitted deductions.

How to evict a non-paying tenant

Investing in rental properties is an excellent way of securing income for retirement. It is, till it isn’t. And that happens when tenants don’t pay, and it becomes necessary to evict them.

The eviction process in South Africa is governed by the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act (PIE), which provides certain protections for tenants.

The law is clear that a certain process must be followed. Landlords can’t just remove the tenant’s belongings and change the locks. These are the legal steps:

Step 1: Provide written notice to pay

The landlord provides a written notice to the tenant that they are in breach of their rental agreement and that they must pay their outstanding rent or vacate the premises. The notice should provide the tenant with a reasonable amount of time to rectify the breach. If there is no written lease agreement, the tenant must be given one calendar month’s notice to pay.

Step 2: Provide written notice to vacate

If no payment has been received, the landlord has the right to terminate the lease agreement and inform the tenant in writing by when they must vacate the premises.

Step 3: The Rental Housing Tribunal (optional)

If the tenant fails to pay their rent or vacate the premises, the landlord can file a complaint with the Rental Housing Tribunal. The complaint should include a copy of the written notice and any other relevant documentation.

Step 4: Obtain a court order

If the Rental Housing Tribunal can’t resolve the dispute, or if the landlord did not approach them, he can apply to the Magistrate’s Court or High Court (depending on jurisdiction) for an eviction order. The application should include a copy of the written notice, proof of non-payment of rent, and any other relevant documentation.

The court will provide the landlord with a date and time when the eviction application will be heard. Fourteen days before this date, the sheriff will serve the tenant and the municipality where the property is located with a written notice of the date of the eviction hearing.

Step 5: The eviction hearing

The court proceedings will give the tenant an opportunity to state the reason why they weren’t paying rent and shouldn’t be evicted. If the court determines that the tenant has a valid defence, then a trial date is set for the tenant to present their evidence. (see Step 6)

If there’s no valid defence, the court will issue a Warrant of Eviction that authorises the sheriff to remove the tenant and his possessions from the property. (see Step 7)

Step 6: The trial

If the court rules that the tenant didn’t have a valid defence it will issue a Warrant of Eviction.

Step 7: The Warrant of Eviction

Once the eviction order has been granted, the sheriff is authorised to remove the tenant and their possessions from the property.

What to look out for in a lease agreement

A lease agreement is a contract between a landlord and a tenant, giving the tenant the right to live in a property for a certain period. It’s not required to put a lease agreement in writing, but it’s highly advisable to do so.

What it should contain:

  • Names and addresses of the landlord and the tenant and their contact details.
  • Description of the property, including the physical address, and the type of property.
  • Rental amount and payment terms, such as the due date for payment and the consequences for late payment.
  • Duration of the lease: The start and end dates of the lease.
  • The termination and renewal procedures should specify how to end the lease and the options for renewing the lease.
  • Security deposit: The amount of the security deposit and the conditions for its refund. The security deposit should be held in an interest-bearing account for the benefit of the tenant.
  • Maintenance and repair responsibilities. Clarify which party is responsible for maintenance and repairs, and the procedures for reporting and addressing issues.
  • Restrictions and rules. Outline any restrictions on the use of the property and any rules or regulations the tenant must follow. For a sectional title property include the “house rules” of the complex.
  • Utilities. This should clarify which party is responsible for paying the utilities such as electricity, water, and gas, and how consumption will be measured.
  • Signatures of both parties. The lease agreement should be signed by both the landlord and the tenant to indicate their agreement and acceptance of the terms.

Handover inspections

It’s important for the landlord and the tenant to carry out joint inspections and note the state of the property on the date of the handover – when moving in and when moving out. The Rental Housing Act considers these inspections mandatory.

These inspections help identify any damage or other issues and determine who is responsible for repairing or addressing them. The ingoing inspection gives both parties a baseline of the state of the property. Photographs are very helpful to capture the exact condition of the property.

Should there be any disputes between the landlord and the tenant at the end of the tenancy, the ingoing inspection report serves as evidence of the condition of the property at the start of the tenancy. It also helps to identify which issues are the tenant’s responsibility and will be taken from his security deposit.

It’s advisable for landlords to use a lease agreement drafted by a legal professional. Tenants should also seek legal advice before signing a lease agreement.

Property repossessions

Repossession of a home can occur when a financial institution takes legal action to seize and sell the property of a debtor who has defaulted on their loan repayments.

Usually this happens once a debtor has repeatedly missed payments and not responded to the bank’s written requests to remedy the situation.

It’s advisable for a homeowner to immediately communicate with the mortgage holder if they find themselves in a financial predicament. Repossession would be a bank’s last resort, and they might be amenable to restructure the loan and give the debtor a “payment holiday” until his financial predicament has been resolved.

But if a sale in execution cannot be avoided, this is the process:

  • It typically begins with the bank sending the debtor a letter of demand, informing them of their default and requesting them to bring their payments up to date. If the debtor doesn’t respond or make the necessary payments, the bank may start legal proceedings to repossess the property.
  • To obtain an order for repossession, the bank must provide evidence to the court that the debtor is in default, that a mortgage bond is registered over the property as security for the debt, and that the repossession is necessary and fair. The court may also consider any defences or counterclaims raised by the debtor. But if the court grants the order for repossession, the creditor (the bank) has the right to take possession of the property and arrange for its sale.
  • The sale proceeds will be used to pay off the outstanding debt. Any surplus funds would be returned to the debtor. But if the sale proceeds are not sufficient to cover the amount owed, the debtor may be held liable for the shortfall.

The downside of a property being sold by public auction is that it may not realise more than what’s owed to the bank. It is highly likely that a private sale would achieve a higher price. That alone is a good reason to avoid a repossession sale.

It’s important to note that the repossession process must comply with certain legal requirements and procedures to protect the rights of the debtor. For example, the creditor must give the debtor notice of their intention to repossess the property and may not use force or intimidation to gain access to the property. The debtor may also have the right to defend against the repossession through legal means.

Both the creditor and the debtor should seek legal advice to ensure that their rights and interests are protected throughout the repossession process.

Transferring a house after a divorce

The legalities of transferring a property after a divorce depend on the terms of the divorce settlement and the nature of the property ownership. Once a court has granted a decree of divorce, properties must be transferred as stipulated in the agreement.

If a property was jointly owned by the spouses, the parties may agree to sell the property and divide the proceeds. Or one party may agree to transfer their share of the property to the other party.

The transfer itself may take a few months, but the interests of the party who acquired the property in terms of the divorce settlement are protected. That means, the other party cannot use the property as security for debts or encumber it with a mortgage.

If one spouse owned the property prior to the marriage, the transfer of ownership may be more complex. In general, if the property was acquired before the marriage and was not used for the common benefit of both spouses during the marriage, it may be excluded from the joint estate and remain the property of the original owner.

But if the property was acquired during the marriage, for example, with funds from the joint estate, it may be considered part of the joint estate and subject to division in the divorce settlement.

Once the terms of the divorce settlement have been agreed upon, the transfer of ownership can take place through a conveyancing process. This typically involves the registration of the transfer of ownership with the Deeds Office, which requires the submission of various documents and the payment of fees and taxes.

It’s important to note that the transfer of ownership must comply with all relevant legal requirements and procedures, including those related to transfer duties, capital gains tax, and municipal bylaws.

The parties should seek legal advice to protect their rights and interests, and to ensure that the transfer is conducted in accordance with the law.

Cancelling a property sale agreement

When a buyer signs an offer to purchase a property and the seller countersigns the offer, it becomes a binding agreement of sale.

What if one of the parties changes their mind? The buyer no longer wants to buy, or the seller no longer wants to sell. Is it possible to cancel the agreement of sale?

It all depends on the terms of the agreement and may have substantial financial implications. Basically, it’s important to study the agreement.

For example, a sales agreement automatically becomes void if the buyer is not able to raise finance. This usually happens early on, and the agreement automatically lapses. Once finance has been approved and a bank has issued the guarantee, there may be other suspensive conditions that, if not fulfilled, will cancel the agreement.

If one of the parties is in breach, for example, by not fulfilling a suspensive condition either in the time allocated or not being able to do so at all, this could be grounds to cancel the agreement. But it also depends on whether the agreement stipulates any remedies for such a situation.

On the other hand, new facts about the property may have come to the attention of the buyer that he feels the seller should have disclosed, which could put a spanner in the works. The seller may have knowingly concealed substantial defects, thinking he could rely on the voetstoots clause. But that isn’t always the case.

Of course, cancelling an agreement by mutual consent is always possible, depending on the situation. If the transfer process is already underway, it’s likely that the party who initiates the cancellation may be liable for legal and other fees.

Any one of these scenarios is possible, depending on the terms of the agreement:

Cooling-off period

There could be an agreed-upon cooling-off period stipulated in the agreement within which the buyer or seller could withdraw from the contract.

Breach

If either party breaches a specific clause of the agreement, the other party may be entitled to cancel the agreement.

Suspensive conditions

The agreement may have conditions that must be fulfilled by a certain date. If these conditions are not met, the buyer or seller may be entitled to cancel the agreement.

Rescission

Rescission of the sales agreement may be possible if there was fraud or misrepresentation by one of the parties, or if there was a mistake in the agreement.

Mutual agreement

The parties may agree to cancel the agreement by mutual consent. In this case, the terms of cancellation should be clearly agreed upon in writing and signed by both parties.

A party who wishes to cancel a sales agreement should consult a qualified legal professional who can explain their rights or obligations and advise on the best way forward.

What is a usufruct?

A usufruct is a legal right given by the owner of a property to a person, usually for a specified period, to use and enjoy the property as if it were their own. This means that the usufructuary has the right to occupy the property and collect any income or profits from it. Subject to certain limitations, the usufructuary may also make necessary changes or improvements to the property.

An example of a usufruct would be if a father leaves a farm to his son in his will but stipulates that his wife should have continued use of the house on the farm until her death (or any other specified period). Upon the father’s death, the property would be transferred to the son, and the wife’s usufruct would be registered simultaneously against the title deed.

The wife, in this instance, has a limited right. She can live in the house but cannot sell the property, mortgage it, or leave it to someone else in her will. She also has certain obligations. Those include maintaining the property and paying rates and taxes. Only upon her death would the usufruct lapse, and the full property rights would automatically vest in her son.

During her lifetime, the son can use the house as security to obtain a mortgage, as he is the legal owner. But he is bound by the terms of the usufruct and may not infringe on the usufructuary’s rights. That means he cannot sell the property without the consent of the usufructuary.

For example, if the son decided to quit farming and wanted to sell the farm, which would include the house, his mother would have to agree to the sale, and both would also have to agree on how to divide the proceeds.

A usufruct is an excellent way for a husband to make provision for his wife and still bequeath a property to his children. The tax benefit in a situation like this is that the usufruct reduces the amount of estate duty payable by the testator’s estate. The value of the entire inherited property is reduced by the value of the usufruct.

In a different scenario that doesn’t involve a will, a usufruct can be granted by the seller of a property in a cession or notarial deed to reduce the amount of transfer duty. There are different tax implications in this scenario.

Suspensive conditions in property sales agreements

A suspensive condition is a clause in the sales agreement that stipulates particular criteria that must be met in order for the contract to come into force. If the suspensive conditions are not met, the agreement will be void.

Suspensive conditions can protect both the buyer and the seller. They are typically used to allow time for certain events to occur before the sale can be finalised. The most well-known suspensive condition in property sales is probably the clause requiring the buyer to obtain finance within a certain period. If the buyer cannot get a mortgage, there is no sale.

But there can be other conditions that have to be met. The seller is required to obtain certain compliance certificates. The buyer may have signed the agreement subject to the sale of his current property. Or the seller was in the process of renovations and the sales agreement stipulates that these need to be completed before the buyer takes occupation at a certain date. Whatever it may be, it’s important to include all suspensive conditions in the sales agreement for the protection of both buyer and seller.

What if a suspensive condition isn’t met? Often the timeline is quite tight. If any condition isn’t fulfilled within the appointed timeframe, then the transfer process could be delayed.

It’s therefore important to stipulate exactly what the remedy is if something doesn’t happen by an appointed deadline. If the buyer doesn’t sell his existing property within three months, will the sale be void, or is there leeway to renegotiate the terms.

Often buyers sign a standard estate agency offer to purchase and add a few handwritten notes. The seller may add a few more notes before signing the offer to purchase, which then becomes the sales agreement. This could result in ambiguity, leaving the suspensive conditions open to interpretation.

It is advisable to consult a conveyancing attorney, if there are complex suspensive conditions to ensure the agreement is worded in such a way to protect both parties.

Voetstoots – what does it mean?

Property sales agreements usually include a “voetstoots” clause. In South African law, the term voetstoots means “as is” or “with all faults”. When a property is sold voetstoots, the buyer agrees to accept the property in its present condition, including any defects or issues that may be present at the time of the sale.

This means that the seller is not responsible for any defects or problems that the buyer discovers after the sale is completed unless the seller deliberately concealed them. The buyer is expected to have inspected the property thoroughly before agreeing to purchase it and is responsible for any repairs or improvements needed after the sale.

But the voetstoots clause does not exempt the seller from his legal obligations to disclose any known defects or issues with the property. If the seller knowingly conceals defects or misrepresents the condition of the property, he cannot rely on the voetstoots clause. He may still be held liable for any damages that the buyer incurs as a result. The buyer may elect to cancel the contract or negotiate a reduction in the sale price, or even take legal action to resolve the issue.

A voetstoots clause is important for both parties. If the seller discloses all latent defects, he can avoid claims down the road. The buyer, after a thorough inspection, can make his offer based on the condition of the property, knowing what expenses may come his way in terms of repairs and renovations.

Can the seller remove fixtures?

You’ve bought a property, waited for bond approval, signed all the documents, and now the date of occupation has arrived. The estate agent hands over the keys and you’re ready to move in.

Of course, the property will look quite different to what you saw on show day. Once the furniture is gone, it usually does look rather appalling. You’re mentally prepared for that. But not for the missing water fountain in the garden, the empty space where the built-in shelves should be, and the glaringly absent awning over the carport.

These are fixtures you say, and they shouldn’t have been removed. And you’re probably right. But whether a seller can remove fixtures after the sales agreement has been signed depends on the terms of the agreement and the legal definition of what constitutes a fixture.

So what is a fixture? A fixture is a physical object that is permanently attached to the property and is considered part of the real estate. That means everything that’s built-in, bolted-on or otherwise attached, belongs to the property. Usually, these items are regarded as fixtures:

  • Alarm systems
  • Bathroom mirrors
  • Blinds
  • Built-in furniture
  • Ceiling fans
  • Curtain rails
  • Fitted carpets
  • Irrigation systems
  • Keys and remotes
  • Light fittings
  • Security cameras
  • Water fountains

Of course, the seller may have a garden shed or built-in bar that he wants to use at his next property. To avoid any misunderstanding and the unnecessary aggravation of having to resolve disputes down the road, rather list in the sales agreement the items that you agree will remain and those that the seller wants to remove.

Bottom line, a seller can only remove fixtures listed in the sales agreement.

Electronic signatures for property transactions

What if a seller lives in a house in Cape Town that he wishes to sell. A potential buyer in France, looking for an investment property, sees the house advertised online. How do they go about signing the agreement of sale and all the transfer documents? Let’s explore whether electronic signatures can be used for property transactions in South Africa.

Electronic signatures are becoming increasingly common because they’re convenient and speed up the process of getting documents signed. Applications such as DocuSign enable secure e-signature transactions with multiple levels of authentication. But contrary to other sales transactions, the sale of immovable property still requires a written document signed by all parties personally to be valid and binding in terms of the Alienation of Land Act.

Another piece of legislation, the Electronic Communications and Transactions Act, deals with electronic signatures of documents and specifically excludes agreements of sale of immovable property. Therefore, the sales agreement must still be signed “in wet ink” by the buyer and seller or their agents. The buyer or his agent can sign the sales agreement in France, but the physical paper contract will have to be couriered back and forth.

Now to the next step, the transfer documents. The transfer of property is governed by the Deeds Registries Act, which requires that any transfer of land must be in writing and signed by all parties. Traditionally this has been interpreted as requiring a physical signature. But in recent years there has been a move to recognise electronic signatures as valid alternatives to wet ink signatures.

The Deeds Office still requires documents to be printed, signed, and physically submitted for registration. But once the Electronic Deeds Registration Systems Act is fully in effect, this process will be much easier. Presently, only one section is in force. The one that authorises the Chief Registrar of Deeds to develop, establish and maintain an electronic deeds registration system. Eventually, this system will replace the current manual preparation and lodgement process. And then the entire process will speed up dramatically.

Can foreigners buy property in South Africa?

The short answer is yes. Foreign buyers, whether they are natural persons or legal entities registered outside the country, can buy property in South Africa. Of course, they must comply with local legislation. For example, a foreign company or trust will be required to register locally according to the requirements set out in the Companies Act.

Properties may be sold to permanent resident holders who are non-citizens and to refugees with a permanent residence permit after they’ve lived in South Africa for five continuous years. But selling or letting property to illegal foreigners is, well, illegal.

Visa requirements

It needs to be clear whether a property is purchased for investment or whether the foreign national wants to stay in the property for a longer period. Often foreigners buy holiday homes where they stay for a few months and rent the property out as holiday accommodation for the rest of the year. Then they might need a visa or residence permit. The requirements are set out in the Immigration Act 13 of 2002.

Buying online

You don’t have to be in South Africa to buy a house. Non-residents can view a property on the internet and complete the transaction without ever setting foot in the country. Depending on the country of signature, the purchaser will need to have documents signed before a notary public or at a South African embassy. In some instances, the documents may have to be apostilled.

Exchange control

Exchange control regulations state that foreigners may only borrow up to 50% of the purchase price of a property locally. The balance must be paid in cash and may well be sourced from an international bank. The amount and purpose of foreign funds brought into South Africa must be reported to the Financial Surveillance Department of the South African Reserve Bank, which regulates and monitors cross-border transactions.

Foreign nationals who bought a holiday home and receive rental income will be liable for tax as a non-resident, and they’ll have to pay capital gains tax when they sell the property. Upon the sale of a property, the proceeds up to the amount that was introduced from a foreign source, plus the capital growth and interest, can be repatriated.

Don’t buy before you’ve received legal advice

If you’re a foreign national, consult a local conveyancing law firm that understands the regulatory requirements and has experience in assisting foreign nationals in purchasing property in South Africa before you sign the sales agreement.

What if the seller of a property dies before transfer?

When you buy a house quite a few things must happen at the appointed time for the transaction to run smoothly.

As a buyer, you would have either given notice at a rental property or sold the home where you live now. The evacuation date at your current home is likely to coincide with your occupation date of the new property. You would have cancelled services and booked the movers. If everything is going according to plan, the transaction should take about three months from signing of the sales agreement to transfer.

But what if the owner and seller of the new property dies before signing the transfer documents?

This is the legal position

The sales agreement remains in force when a seller dies. But the process comes to a halt until an executor for the deceased estate has been appointed by the Master of the High Court.

Once appointed, the executor must make sure that the estate is solvent and that the sale agreement is valid and binding. The executor must sign a new Power of Attorney, endorsed by the Master of the High Court, for the transferring attorneys so they can continue with the conveyancing process.

If the matter has already been lodged at the Deeds Office, the attorneys will need to resubmit the documents with the new Power of Attorney.

Do the heirs have a say?

The heirs only need to consent to the sale of a property if there is no valid sales agreement in place.

If there is a valid sales agreement and the heirs object to the sale, then the buyer may have to enforce the sales agreement in court.

How long until the property is transferred

Although the sales agreement remains in force, the seller’s death will stop the proceedings. It usually takes about four to eight weeks after the estate has been reported to the Master’s Office before the Master issues his Letters of Executorship. Once the executor has been appointed and the transfer process is underway again, there should be no further delays.

What if the buyer dies?

If the buyer financed the property via a mortgage, the bank would likely withdraw its guarantee as the buyer would no longer be able to repay the loan. Then the sale would be cancelled. Only in a cash transaction would the buyer’s estate be obliged to pay the purchase price and proceed with the transfer.

Our conveyancing practice can assist you with any queries in connection with your property transfer.

Selling or buying property – The conveyancing process

Miniature white house being past from one person to another.

Conveyancing is the means of legally transferring ownership of immovable property. It’s a complex and lengthy procedure of obtaining and preparing documents for submission to the Deeds Office to transfer a property from a seller to a buyer.

Many parties are part of this process:

  • Estate agent
  • Seller
  • Buyer
  • Financial institution
  • Transfer attorney: Transfers the property from seller to buyer, appointed by the seller
  • Bond attorney: Prepares the buyer’s bond documents, appointed by the bank that provides the mortgage to the buyer
  • Cancellation attorney: Cancels the seller’s bond, appointed by the bank that holds the seller’s mortgage

Plus, secondary parties that supply compliance certificates and clearance figures, such as tradesmen (electrician, plumber), the municipality or body corporate.

All these people must provide their services in good time for the transfer to take place. It’s important for a seller to instruct an experienced conveyancing attorney, who controls this process, to attend to the property transfer.

Here’s a breakdown of the process.

The sales agreement and other documents.

  • Buyer and seller sign the sales agreement.
  • The seller instructs a conveyancing attorney to deal with the transfer.
  • The buyer usually has an agreed period in which to get a loan. Once the buyer’s bond has been approved by a bank, the bank will instruct an attorney to attend to the bond registration.
  • If the seller has an existing bond over the property, that bank will instruct another attorney to attend to the bond cancellation. If there’s more than one existing bond, each bank will instruct its own attorney.
  • The seller provides electrical, plumbing, beetle, gas, and electric fence certificates (not all of these are required for every property).
  • The transferring attorney will obtain the title deed and the cancellation figures for the existing bond/s, rates clearance figures, levy figures, and a guarantee from the buyer’s bank for the purchase price (or the balance if the buyer paid a deposit).
  • Any suspensive conditions, for example, the prior sale of the buyer’s existing property, must be fulfilled before the transaction can continue.
  • When all conditions have been met, the buyer and seller each sign the transfer documents. The buyer also signs bond documents.

Payments

  • The buyer pays the transfer costs.
  • The seller pays rates and levies, including any advance payments.
  • The transfer attorney obtains transfer duty receipts from SARS, rates clearance certificates, and a levy certificate (if any) and makes all payments.

Lodgement

Once all documents have been signed, all certificates are in place, and costs have been paid, the documents are prepared for lodgement at the Deeds Office. All attorneys must lodge their documents on the same day.

The Deeds Office has 10 working days to examine the document. If all goes well, the attorneys will be advised that the matter is “up for registration”. If anything is not in order, the attorneys will have to amend the documents and relodge, and the Deeds Office will have another 10 working days to examine the documents.

Registration

Once the Deeds Office has completed its examination and everything is in order, the attorneys have five days to appear at the Deeds Office to register the deeds. Once the Registrar of Deeds has signed the documents, ownership of the property passes from the seller to the buyer.

  • The buyer’s new bond has been registered and the seller’s existing bond has been cancelled.
  • All guarantees have been paid, the estate agent has been paid their commission, and the seller has received the net proceeds.

The buyer can now move into his new home unless an occupation date other than “on transfer” has been agreed upon in the sales agreement.

This is not the end of the story

About three months later, the Deeds Office sends the original title deed and bond documents to the attorneys. They will forward the title deed to the bank that provided the mortgage, or to the owner if there is no bond. Copies of these documents are usually sent to both buyer and seller by their attorneys.

If you’re selling your property and would like further information, contact us. We understand the legislation governing immovable property and the complexities of the conveyancing process. You can rest assured that your property transactions are in good hands with us.

Selling or buying property – Useful information

Miniature orange house with blue door and a For Sale tag next to it.

Useful information to have at hand before buying or selling a property.

The sales agreement

By law, this agreement must be in writing, signed by both the seller and the buyer. Usually, the buyer signs an offer to purchase provided by an estate agent. If the seller accepts the offer and countersigns, it becomes a binding agreement of sale.

The purpose of the sales agreement is to capture the relevant information of both parties, the property description, the purchase price, as well as all conditions relating to the sale.

Any changes to the agreement must be in writing, signed by both parties.

The property

Usually, properties are sold voetstoots. That means at the buyer’s risk without guarantee or warranty. But it’s advisable for the seller to disclose any hidden defects to avoid disputes down the road.

Occupation date

When there are no delays, the process from signing the sales agreement to transfer should take around three months. The buyer and the seller agree on the occupation date. The buyer can take occupation on a specific date or on registration of transfer.

If the agreed date is before transfer, then the buyer will pay the seller occupational rent – an amount stipulated in the sales agreement. Should transfer take place before the agreed date, then the seller will pay occupational rent to the buyer.

Fixtures

Anything that’s fitted, from the satellite dish to a built-in braai, forms part of the property. When in doubt, specify items that aren’t included, for example, a water feature in the garden.

Clearance figures

The seller will need a rates clearance certificate from the municipality. This usually involves paying 4-5 months’ rates in advance to cater for the time from date of signature of the sales agreement until the property has been transferred into the buyer’s name.

For a sectional title property, the body corporate will have to provide a levy clearance figure.

Bank guarantee

The buyer’s bank provides a guarantee for the purchase price (or the balance if the buyer paid a deposit).

Compliance certificates

The seller must obtain compliance certificates from certified service providers that everything is in working order and compliant with industry standards, for some or all of these:

  • Electrical (house)
  • Electric fence
  • Water/plumbing
  • Gas
  • Beetle

In our next blog, we’ll outline the conveyancing process, that’s the transfer of the property from the seller to the buyer.

Buying a house – What you need to budget for

Miniature wooden house with coins on side and a calculator.

It’s exciting to buy a new home, but it’s also important to carefully consider all the financial implications.

There are once-off costs when you buy a property, but then there’ll be ongoing expenses other than the monthly mortgage repayments.

The purchase price

Several factors determine how much you can afford when you decide on buying a house that you need to finance through a bank.

Your credit rating. The higher your credit score, the better your chance of getting a mortgage with a favourable interest rate.

Your deposit. Banks usually require a 10% deposit, but a substantial down payment will increase your chance of getting a mortgage and it’ll also lower your monthly repayments. You will need to pay this deposit upfront to the estate agent or transferring attorney, who will keep it in a trust account.

Costs to transfer and register a property

Transfer duty is a tax levied on the value of the property, payable to SARS. There is no transfer duty payable on properties below ZAR1m.

Value added tax. The tax status of the seller determines whether VAT is payable instead of transfer duty. For example, the purchase price of a property bought from a property developer would include VAT and not transfer duty. In such a case, SARS issues a transfer duty exemption certificate.

Transfer fees are payable to the transferring attorney who handles the process of transferring the property from the seller to the buyer.

Bond registration fees. When the purchase price (minus the deposit) is financed by a bank, a mortgage bond will be registered over the property in the bank’s favour. The bank appoints an attorney who attends to the bond registration.

The transfer of the property and the bond registration take place simultaneously. All attorney fees are regulated by the Legal Practice Council of South Africa and are payable before registration.

Deeds Office fees are payable for the transfer of the property and the mortgage bond registration to the respective attorneys.

Bank initiation fee. The bank charges this fee for processing your application. It is either a flat rate or based on the size of the loan. Usually, this fee is included in the loan amount, but it can also be paid upfront.

Your monthly expenses as a homeowner

On the registration date of a property at the Deeds Office, all risks pass to the buyer and the buyer is also liable for all expenses relating to the property.

Bond repayments will depend on the size of your loan amount and the duration of the loan, usually 20 or 30 years. The bank will inform you of the minimum monthly payments required. Paying additional amounts into the loan account not only reduces the loan amount faster, but it can substantially reduce the total amount of interest you pay. Also, upon arrangement with the bank, you may be able to withdraw these funds later, for example for home improvements.

Property insurance. Banks require a financed property to be insured for the duration of the loan. The banks usually offer property insurance to clients. But a buyer is free to choose any insurance company and then provide proof of insurance to the bank. This insurance is for the building and is in addition to any home contents insurance you may have.

Municipal rates and taxes, electricity, water and sanitation charges. Your monthly invoice from your municipality will include these charges.

Sectional title levies. A levy for the upkeep of communal properties is usually charged by the body corporate of a townhouse complex.

Garden upkeep, security. If you’ve moved from a townhouse to a freestanding house, or from a rented property to your own home, gardening and security costs will now be for your account and not included in a levy or rental.

Home maintenance. It’s advisable to set aside a fixed amount every month to cover unexpected home maintenance emergencies and long-term maintenance. If you have rented before you bought, plumbing emergencies and other ad hoc repairs are now for your account. To retain the value of your property regular maintenance is advisable.

Now that you have an overview, feel free to contact our conveyancing practice, if you have any further questions.