 At what stage does the Purchaser become the legal owner of the property?
How does the registration process work?
Who is liable for legal fees?
How long does the registration process take?
Who gets the title deed (and bond) that is registered at the Deeds Office?
Glossary
AT WHAT STAGE DOES THE PURCHASER BECOME THE LEGAL OWNER OF THE PROPERTY?
A Contract comes into existence once the Deed of Sale is signed by both the Seller and Purchaser. At this stage both parties are bound by the agreement and should one party fail to perform, it will mean that he is breaching the contract and can be put to terms by the other party. The other party will therefore be entitled to claim specific performance, or alternatively claim damages. However, the Purchaser is not the owner of the property yet, but will only be the legal owner once the property has been registered in his name in the Deeds Office..
HOW DOES THE REGISTRATION PROCESS WORK?
After signing the Deed of Sale, an Attorney (Conveyancer) will be appointed to tend to the transaction. It is the Seller’s prerogative to appoint the Conveyancer, unless the parties agree otherwise.
Should the Purchaser wish to register a bond, he can apply at a bank, or contact a Mortgage Originator to negotiate the best interest rate at the bank on his behalf. (The Deed of Sale usually places a time limit on how long the Purchaser has to obtain a bond, in order to protect the interests of the Seller).
After the bond has been approved, the relevant bank will instruct a Conveyancer to tend to the registration thereof. Although the registration of the transfer and bond takes place simultaneously, it might be two different Conveyancers (i.e. law firms) tending to the transactions.
After all relevant transfer- and bond documents have been prepared, the Seller and Purchaser will be contacted to sign at the attorneys tending to the transaction. Once all documents have been signed and all documents required by the Deeds Office have been obtained, the Deeds will be lodged in the Deeds Office closest to where the property is situated. (There are currently 9 Deeds Offices in the country, namely: Cape Town, Johannesburg, Pretoria, Pietermaritzburg, Vryburg, Bloemfontein, Kimberley, King Williams Town and Umtata).
WHO IS LIABLE FOR LEGAL FEES?
Unless otherwise agreed, the Purchaser is liable for the transfer- and bond costs. It is also vital for purchasers to keep in mind that besides the Purchase Price, they are also liable for Transfer Duty. The amount of Transfer Duty payable depends on the Purchase Price and is currently calculated as follows:
(i) Below R500 000.00: NIL
(ii) R500 000 – R1000 000: 5% on the amount above R500 000
(iii) Above R1 000 000: R25 000 plus 8% on the amount above R1000 000..
HOW LONG DOES THE REGISTRATION PROCESS TAKE?
It will be safe for the parties to allow approximately 3 months for registration to take place. It can obviously be shorter, but the exact time span depends on various factors which may cause delays out of the Conveyancer’s control, such as the following:
(i) If the Purchaser is buying a freestanding house, the Conveyancer has to obtain a Rates Clearance Certificate from the relevant Municipality. Unfortunately, it happens from time to time that transferring attorneys are faced with backlogs at the Municipalities. As it is not possible to lodge the deeds in the Deeds Office without this Certificate, the transaction will be delayed until such as the Municipality issues the Rates Clearance Certificate.
(ii) The deeds can also only be lodged in the Deeds Office after the Conveyancer received a Transfer Duty Receipt from the Receiver of Revenue as proof that transfer duty has been paid. Should the Receiver have any queries regarding a tax issue, it can also cause a delay as they will not issue the Transfer Duty Receipt unless the matter has been resolved.
(iii) From time to time there are backlogs in the Deeds Office. Under normal circumstances transactions should be registered within 7-10 working days after lodgement, but should the Deeds Office fall behind schedule, all transactions are delayed.
WHO GETS THE TITLE DEED (AND BOND) THAT WAS REGISTERED AT THE DEEDS OFFICE?
Approximately 3-4 months after registration the Title Deed (and Bond) will be delivered to the Attorneys who tended to the transaction. If a bond was registered, the Attorneys will send the Title Deed, together with the Bond, to the relevant bank to keep as security. If no bond was registered, the Attorneys will deliver the Title Deed to the new owner of the property.
GLOSSARY
Deed of Sale (Offer to Purchase):
An agreement signed by a Seller and Purchaser in terms whereof the Purchaser purchases the Seller’s property.
Deed of Transfer:
A document that transfers the ownership in property from one person (seller) to another (purchaser).This document gets registered in the Deeds Office.
Mortgage bond:
The deed in terms whereof the Mortgagee (bank) holds security over the property of the Mortgagor (person taking out the loan)
Title Deed:
The document that serves as proof of a person’s right in property. It can be the right of ownership or any other real right.
Voetstoots:
A clause usually contained in a Deed of Sale setting out that the purchaser will take transfer of the property “as is” and will not be entitled to hold the seller liable for defects in the property.
Domicilia citandi et executandi:
The physical address elected by the seller and purchaser as the address where documents and correspondence should be served.
Occupational interest:
Should the purchaser move into property before it is actually registered in his/her name, the purchaser may be liable for occupational interest if it was set out as such in the Deed of Sale.
Conveyancer:
An attorney who passed a specialized examination and was admitted as a Conveyancer in the High Court of South Africa. (Only an attorney admitted as a Conveyancer is allowed to prepare documents for and register transactions dealing with property in the Deeds Office).
Notary Public:
An attorney who passed a specialized examination and was admitted as a Notary Public in the High Court of South Africa. (Only a Notary Public may execute certain documents, for example: servitudes, cessions of exclusive use areas, ante-nuptial contracts etc.).
Servitude:
Personal servitudes: A right entitling the holder thereof in his personal capacity to exercise some right in the property of another. The most common example is:Usufruct: a personal right to the use of a thing, for example the life long right to live on a certain property.
Praedial servitudes: A real right entitling one piece of land from receiving the benefit of the right over another piece of land.
For example: A Right of Way: the owner of one piece of land has the right to use a road over another piece of land
Right to Encroachment: buildings on one piece of land may encroach on another piece of land (These servitudes has to be drafted and executed by a notary public)
Transfer Duty:
Tax payable to the Receiver of Revenue where property is sold, calculated on the purchase price or market value of the property. (usually the Purchaser is liable for this amount).
The above Legal Tips and Advice was brought to you by
<< Back to Tips and Advice Main Page
|
