What is Conveyancing?
Conveyancing, or the transfer of property, refers to the legal process of transferring ownership of immovable property from the seller to the purchaser. This change of ownership is completed at the Deeds Office, where the deed of transfer is registered, officially making it the purchaser’s title deed to the property.
When Does Property Transfer Occur?
Property transfer can occur in various situations such as by:
- Sale Agreement: When a property is sold by agreement between the buyer and seller.
- Inheritance: When ownership is passed from a deceased individual to their heirs or family members.
- Forced Sale: When a property is sold in execution or insolvency.
- Divorce: When one spouse becomes entitled to 100% ownership through divorce proceedings.
What Is a Sale Agreement?
An agreement of sale is also known as a deed of sale or offer to purchase. It lays down the essential conditions necessary for the sale of a property. An agreement of sale will only be valid if it is in writing and signed by both the seller and the purchaser, and therefore an oral agreement of sale is not binding, and a Police affidavit is not an acceptable document for the transfer of property.
A valid sale agreement needs to contain certain material terms and conditions for a valid sale of the property, (negotiated between the purchaser and the seller) such as:
- The property description
- The personal information about the purchaser and seller, for example, their names and identity numbers and so on
- The purchase price and/or deposit, if payable
- Where a financial institution or bank is involved, the time frame for the approval of the mortgage bond
- The details of the conveyancing attorney instructed to attend to the transfer of the property (“conveyancer, namely Ngoetjana Attorneys Inc”)
- The estate agent commission payable, if any
- Any conditions or additional conditions the seller and purchaser agree on.
How Is the Purchase Price of the Property Done?
The purchase price is payable to the Conveyancing Attorneys’ trust account (remains the purchaser’s money till the date of property transfer, wherein the money needs to be paid to the seller on registration of the transfer).
The payment of the purchase price may be made in cash, EFT or by obtaining a mortgage bond. The agreement of sale needs to mention if the sale is through bond or cash, and whether a deposit is payable as well at the date of such payments.
Payment of a deposit is not a requirement in law unless in the event the purchaser’s mortgage bond requires such a deposit.
The purchase price or bank guarantee must be given to the conveyancer, pending the transfer of the property. At the request of the purchaser, this purchase price may be invested into an interest-bearing bank account.
Stakeholders Involved in a Transfer Process
1. Conveyancer or transferring attorneys
Only conveyancers are allowed to sign the preparation clause for registration of documents destined for registration at the deeds offices.
The Deeds Registries Act 47 of 1937 stipulates that, Except in so far as may be otherwise provided in any other law, no deed of transfer, mortgage bond or certificate of title or any certificate of registration of whatever nature, mentioned in this Act, shall be attested, executed or registered by a registrar unless it has been prepared by a conveyancer.
Conveyancing attorneys or transferring attorneys are responsible to:
- Always protect the interest of their client
- Update sellers and buyers about the status of transfer
- Ensure that the terms of agreement of sale are fulfilled
- Prepare and ensure that the sellers and buyers sign the transfer documents
- Ensures that the documents and other linked attorneys are ready for lodgement or submission of such documents to the Deeds Office
- Ensure that the sellers are paid upon registration of transfer.
The purchaser is responsible to pay the transferring attorneys.
2. Bond cancellation attorneys (attorneys for the cancellation of the seller’s existing mortgage bond on the property sold).
It is very normal for a person to sell their property while still under a mortgage bond. Transferring attorneys will then ask from the seller’s bank for cancellation figures, That is the amount outstanding on the bond (debt).
The seller’s bank will appoint cancellation attorneys for the cancellation of the existing seller’s bond and give them Cancellation figures (written bond cancellation requirement). Cancellation attorneys will then provide the transferring attorneys with the cancellation figures.
Transferring attorneys need to ensure that the seller’s bond cancellation requirements are fulfilled per the cancellation requirements. The seller needs to pay the bond cancellation costs for them to attend to cancel the existing bond (this happens even if the bond is fully paid).
3. Buyers bond registration attorneys
If the buyer is buying the property by Bond or through a bank, such bank will appoint the Bond attorneys, whom will partake in registration of the new bond on the property. The Bond attorneys are not involved if the buyer buys the property in cash.
The responsibility of the Bond attorneys is to ensure that the bond is registered and that the full bond or purchase amount is available. The bond attorneys ensure that, upon registration of the property from the seller to the purchaser, the original title deed is taken to the bank as security for the bond repayment.
The purchaser is responsible for paying the bond of attorneys.
4. The municipality
The municipality needs to issue the municipality compliance certificate which certifies that the seller has paid their full financial obligation and the purchaser will obtain the property free from the seller’s debts.
Sale of property cannot be finalised without the Municipality compliance certificate.
5. The electrical compliance certificate
It is usually the standard procedure that the seller needs to appoint a qualified electrician who certifies that the property is electrically compliant and provide the electrical compliance certificate.
The seller and the purchaser can specifically I agree that the buyer will provide the electrical compliance certificate.
6. Home owners association or managing agents, depending on whether it is applicable.
- Document review: Review and verify the buyer’s and seller’s documents.
- Compliance check: Ensure the property complies with HOA rules and regulations.
- Fee collection: Collect any outstanding fees or dues from the seller.
- Disclosure: Provide the buyer with necessary HOA documents and information
The seller is responsible to pay the HOA or managing agent.
