Buying or selling a residential property in South Africa is an exciting yet complex process that involves several legal steps to ensure a smooth transaction. At Wikus Strydom Attorneys, we guide our clients through every stage of the process, from the pre-sale phase to the final registration in the Deeds Office. Below, we outline the key steps involved in buying and selling residential property in South Africa.
1. Pre-Sale Process
Before a property is sold, both the buyer and seller should consider the following:
- Valuation of the Property: The seller should obtain a professional valuation to determine a fair market price.
- Financial Readiness: Buyers should assess their financial position, ensuring they have pre-approved home loans or sufficient funds for the purchase.
- Choosing a Conveyancer: While it is customary for the seller to appoint a conveyancing attorney, both parties may benefit from legal guidance throughout the process.
2. Offer to Purchase (OTP)
Once a buyer has found a property, an Offer to Purchase (OTP) is drafted. This document serves as a binding agreement between the buyer and the seller. Key components of an OTP include:
- Purchase price and payment terms
- Conditions of sale (e.g., obtaining a bond, property inspection, compliance certificates)
- Transfer and occupation dates
- Fixtures and fittings included in the sale
Once both parties sign the OTP, it becomes a legally binding contract, subject to any suspensive conditions.
3. Bond Approval and Compliance Certificates
- Bond Application: If the purchase is financed, the buyer must apply for a home loan. The bank will conduct a property valuation before granting approval.
- Compliance Certificates: The seller must obtain various compliance certificates, including:
- Electrical compliance certificate
- Plumbing certificate (in some regions)
- Gas compliance certificate (if applicable)
- Beetle certificate (in coastal areas)
4. Conveyancing and Transfer Process
Once the suspensive conditions are met, the conveyancing attorney takes over the process. The steps include:
- Drafting Transfer Documents: The conveyancer prepares the necessary transfer documents and obtains signatures from both parties.
- Payment of Transfer Costs: The buyer is responsible for transfer duties (if applicable) and conveyancing fees, while the seller covers the agent’s commission and bond cancellation fees.
- Lodgement at the Deeds Office: Once all documents are in order, the conveyancer lodges the transaction at the Deeds Office.
5. Registration at the Deeds Office
- The Deeds Office examines the lodged documents, ensuring compliance with legal requirements.
- Upon approval, the property is registered in the buyer’s name, and ownership officially transfers.
- The bank (if applicable) registers a mortgage bond over the property.
6. Final Steps and Handover
Once registration is complete:
- The seller receives the proceeds of the sale.
- The buyer takes ownership and can move into the property.
- The new title deed is issued and sent to the buyer or the bank (if bonded).
7. Costs Involved for Buyers and Sellers
Costs for Buyers:
- Purchase Price: As per the Offer to Purchase.
- Transfer Duty: Payable to SARS if the property price exceeds R1,100,000.
- Conveyancing Fees: Paid to the transferring attorney, based on the property value.
- Bond Registration Fees: If financing the purchase, payable to the bond attorney.
- Deeds Office Fees: Charged for registering the property and bond.
- Pro-rata Rates and Levies: Buyers may need to pay a portion of municipal rates and levies in advance.
Costs for Sellers:
- Estate Agent’s Commission: Typically between 5% and 7.5% (plus VAT) of the selling price.
- Bond Cancellation Fees: If the property is bonded, the seller must pay the bond cancellation attorney’s fees.
- Compliance Certificates: Costs vary depending on the required inspections and remedial work.
- Rates and Levies Clearance: Sellers must settle outstanding municipal rates and levies before transfer.
Conclusion
Navigating the property transfer process in South Africa requires legal expertise to ensure compliance and protect the interests of all parties involved. At Wikus Strydom Attorneys, we specialize in conveyancing and property law, providing our clients with professional and efficient service from start to finish.
For assistance with your property transaction, contact us today to ensure a smooth and legally compliant transfer of ownership.