Key Takeaways from this article:
Conveyancing Process: The conveyancing process starts with the property being put on the market and concludes with the transfer registration at the deeds office.
Role of Conveyancer: A Conveyancer, a specialized attorney, oversees the legal procedures of property transfer, ensuring compliance and representing the seller at the deeds office.
Seller’s Privilege, Buyer’s Cost: The seller appoints the Conveyancer, but the buyer is responsible for paying the transfer costs.
Title Deed and Transfer Duties: The title deed proves ownership, and transfer duties are taxes paid to SARS, with properties under R1.1 million exempt.
Documents and Compliance: Essential documents include the sale agreement and title deed, with compliance ensured through certificates from local authorities and financial institutions.
Conveyancing
Conveyancing mainly deals with the transfer of immovable property and the encumbrance of immovable property with mortgages. Conveyancing also includes various other acts that have to do with immovable property such as for example, the subdivision of land and the opening of sectional title schemes on land. South Africa has a very stable land registration system and the various deeds offices nationwide attend to the registration of all transactions relating to immovable property and keep records of all transactions entered into. All property transactions and transactions related to immovable property are registered in the relevant deeds office.
Who is the Conveyancer?
A Conveyancer is an admitted attorney who has passed a specialized conveyancing examination and has been admitted as a conveyancer by the High Court of South Africa. Each deeds office keeps a database of Conveyancers who may practice in those specific deeds office or area.
Who appoints the Conveyancer?
It is usually the seller of immovable property’s right and choice to appoint the Conveyancer. However, the buyer pays the transfer costs. It is normally only the seller, in terms of the Deeds Registries Act as well as the Common Law, who can affect the transfer of the property, therefore the seller appoints his representative (Conveyancer) to transfer the property. It is also generally accepted that the greater risk in the transfer of immovable property is on the seller’s side, the seller holds the asset and if the transaction is delayed the seller may suffer, therefore it is important that the seller has a conveyancer appointed of his choice.
How does the conveyancing process go where immovable property is sold?
The process always starts initially with a seller putting his property on the market to sell. A potential buyer will then look at the property and approach the agent or the seller to make an offer to buy the property. After the offer has been accepted by the seller, a formal sale agreement is prepared for signature by both parties, after which the sale agreement is sent to the chosen Conveyancer to start the process.
A very important condition that must be agreed upon is the purchase price and how the purchase price is payable, if the purchase price is payable in cash, the cash must be paid within a certain period or secured by way of a guarantee. If the buyer is going to apply for financing, the condition must also be clearly set out with a period linked to it. Once the purchase price is secured, the Conveyancer can continue with the process.
The Conveyancer then proceeds to approach the bank if the property is encumbered with a mortgage to obtain the release figure or cancellation figure as well as the original title deed. If the property is not encumbered with a mortgage, the original title deed will usually be in the possession of the seller.
If the buyer has obtained finance to buy the property, the bank will appoint an attorney to register the mortgage bond on behalf of the bank. The Conveyancer must make sure that the necessary clearance certificate is obtained from the local authority and the levy certificate from the management agents of the legal entity and/or home owners’ association to ensure that the seller’s payments to the institutions are up to date. The buyer pays transfer duties to the South African Revenue Service (SARS), if applicable and the Conveyancer must submit proof of this to the deeds office.
All the necessary transfer documents will be drawn up by the Conveyancer for signature by the buyer and seller. The seller will then give the Conveyancer power of attorney to appear on behalf of the seller in the deeds office before the registrar of deeds and transfer the property to the buyer, on the day of registration.
What is the title deed?
The title deed serves as proof of ownership of immovable property. Ownership is transferred from one person to another by means of a title deed. When a buyer buys a property and obtains finance from a bank or financial institution, the bank or financial institution will request that the original title deed be sent to the bank or financial institution on the date of registration. The title deed then serves as security for the bank or financial institution that granted the finance to the buyer. Once the buyer has repaid the financed amount, the bank will cancel the mortgage bond and send the title deed to the buyer/owner.
What are the transfer costs?
The transfer costs usually consist of the fee payable to the Conveyancer, the transfer duties payable to the South African Revenue Service (SARS), and if the buyer registers a mortgage over the property the bond registration attorneys will also provide an invoice for registration of the mortgage bond. Transfer duty is payable on the purchase of immovable property by the purchaser to the South African Revenue Service (SARS). The Transfer Duty Act aims to generate revenue for the state treasury from transactions involving immovable property.
Currently, Transfer Duty is exempt for the purchase of a property with a value of R1.1 million or less. Transfer duties are then calculated on a sliding scale and are payable by the buyer.
FAQs
What is conveyancing, and what does it involve?
Conveyancing involves the transfer and mortgaging of immovable property. It also includes other processes like land subdivision and opening sectional title schemes.
Who is responsible for appointing a conveyancer during a property sale?
The seller typically appoints the conveyancer to handle the property transfer, while the buyer covers the transfer costs.
What documents are needed for the conveyancing process?
Key documents include the sale agreement, title deed, mortgage bond (if applicable), clearance certificate, levy certificate, and proof of transfer duty payment to SARS.
In Conclusion:
Conveyancing is a crucial legal process that ensures the proper transfer of immovable property in South Africa. It involves various steps, including the appointment of a conveyancer, securing the purchase price, obtaining necessary certificates, and registering the transfer at the deeds office. The process protects both buyers and sellers, ensuring clear property ownership and compliance with legal requirements.
Feel free to contact our offices if you need any help or assistance with the transfer of a property or related matters.
Our team of specialists are ready to assist you.
Article written by:
Henry Durrheim (Director of OAK LAW: Conveyancer)