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Property Transactions

All property transactions have to be recorded in writing for the protection of the contracting parties and to comply with the provisions of the Alienation of Land Act. The drafting of property agreements, particularly those for the more complex transactions should be attended to by a property lawyer and ADA offers a comprehensive service to clients in this regard. ADA also recommends to its clients, particularly sellers, who are presented with an offer by an interested purchaser, that such offer not be signed and accepted by the seller until such time as it has been checked by a property attorney. A property agreement or contract should be well drafted so as to protect both parties' rights, which is essential especially where a transaction fails for any reason.

Transfer of Property

The transfer of property is the change in ownership of property, which is registered in the Deeds Registry for the area in which such property is situated.

Property can be transferred to an individual or a legal entity, such as a company, close corporation or trust.

The transfer process, known as conveyancing, is attended to by a conveyancer, who is an attorney specifically qualified in this field of law.

The transfer of property is effected in compliance with contract (eg. agreements of sale, deeds of donation, agreements of exchange etc) or court orders (eg. divorce orders) or in some cases by operation of law (eg. expropriation). The conveyancer's duty is to implement the terms of the contract or court order, prepare all the necessary legal documentation, co-ordinate the transactions to be registered simultaneously with the transfer, such as a mortgage bond, and register the transfer in the Deeds Registry. Upon such registration ownership passes. It is therefore very important that the purchaser appoint a conveyancer of his/her choice to whom he/she can entrust this specialised process and to look after his interests.

It is important to note in the case of a sale transaction, the agreement will generally provide for the purchaser to pay the costs of transfer, including the legal fees payable to the conveyancer, and thus, at least in Kwa Zulu Natal, he has the right to appoint the conveyancer.

Mortgage Bonds

A mortgage bond is a legal document which secures a debt or other obligation in favour of the holder of the mortgage bond.

A mortgage bond is, in addition, a charge against property, which property can be immovable eg. a house, flat or business property or movable eg. equipment or stock in trade. Where immovable property secures a debt or obligation, the mortgage bond is registered in the Deeds Registry for the area in which the property is situated and it is noted against the title deed for such property owned by the bond debtor. Typically such a mortgage bond is registered by a purchaser of immovable property who borrows funds from a bank or other financial institution for payment of the purchase price. Where a third party offers immovable property as security for the debt or obligation of another party, a surety bond is registered. In addition, the person standing surety may require the borrower to register an indemnity bond in favour of the surety.

A bond registered against movable property as security is a Notarial bond and this is signed before a Notary Public and registered in the Deeds Registry where the individual bond debtor lives or, if a company or other legal entity, where it has its registered office.ADA is on the bond registration panel of several major banks and also specialises in drafting bond documents for private bonds where the holder of a bond is a private person or other legal entity.

Frequently Asked Questions

Q: If I buy property, in whose name will it be registered?
A: If you are unmarried or married out of community of property, then the property can be registered in your name only, if you have so indicated on the agreement of sale;
If you are married in community of property, the property will be registered in your name as well as in the name of your spouse;
If you are married and the marriage is governed by the laws of another country, then the documents will indicate that and your spouse will have to assist you in signing the mortgage bond documents;
Remember to communicate your intention clearly to the estate agent and to the bank.
   
Q: What is a mortgage bond?
A: This is the term used for the loan granted by the bank to finance your property, and it is registered over your property to secure the bank's interest.
   
Q: Are there costs involved in obtaining a bond?
A: Yes:
Valuation fee to the bank for valuation of property;
Initiation fee to the bank for facilitating the administration;
Bond registration fee to the attorney;
Lodgement fee to the Deeds Office.
   
Q: Are there costs involved in the transfer of the new property into the name of the purchaser?
A: Yes:
Transfer registration fee to the transferring attorney;
Transfer duty to the Receiver of Revenue;
Lodgement fee to the Deeds Office;
Provision for rates & taxes payable to the City Council;
Separate deposit to the City Council to connect water and electricity.
   
Q: Are there costs involved in the cancellation of an existing bond?
A: Yes:
The seller will pay a bond cancellation fee to the bond cancellation attorney;
Deeds Office lodgement fee in respect of every bond.
   
Q: Why does it take so long to have a property registered in the name of the new owner?
A: In a transaction where property is sold from A to B and A has an existing bond, there are 3 separate transactions which must be lodged simultaneously, namely:
Cancellation of existing bond in favour of seller's financial institution;
Transfer from seller to purchaser;
Bond in favour of buyer's financial institution;
Sometimes these transactions are handled by 3 firms of attorneys who have to liaise with each other, the banks and the clients;
Transfer of ownership is a complicated transaction and needs to be attended to with great diligence and care, and it cannot be rushed into.
   
Q: What can I do to expedite the transfer procedure?
A:

If you are a purchaser, pay your costs to the transfer attorney and bond attorney on demand;
Apply for your loan at a financial institution without delay and ensure that you provide them with all the information they require;
When your attorney contacts you to arrange an appointment to have the documents signed, do not delay it, sign as soon as you possibly can;

Provide both the transfer attorney and bond attorney with copies of your personal documents, such as:

  • Identity documents
  • Antenuptial contract (if applicable)
  • Marriage certificate
  • Divorce order (if applicable)

A seller, on the other hand, must ensure that he maintains his bond payments to his financial institution throughout the duration of the transaction as it will cause a delay if the bond is not paid up to date.

   
Q: What is a "subject to" transaction?
A: This is a term used when a purchaser bought a new property from a seller but the purchaser must still sell his own property. The new agreement will then be made subject to the purchaser selling his property. If the purchaser's property is not sold within a written specified time, then there is no contract between the seller and purchaser.
   
Q: How do I handle a dispute in the transaction?
A: Notify your attorney who will give you the best advice, but be careful not to breach any of the terms of the contract. Do not hold back costs, occupational rent or for that matter refrain from signing the documents as you can be placed on terms. Disputes are handled separately from the transfer procedure.
   
Q: What qualifies as a "cash" transaction?
A: If you have the purchase price available immediately, then it is a cash transaction.
   
Q: When does the seller's liability end and the purchaser's commence?
A: On date of registration when the property is officially transferred into the name of the purchaser, it becomes the purchaser's sole liability, unless the contract states otherwise. From this date, the purchaser's insurance will have to be in place. The seller must ensure that his debit order in respect of insurance is cancelled.

Property Research

Because of our cutting edge technology we are able to assist sellers, purchasers and agents with vital information regarding the property to be sold or purchased. Such information may include comparative sales in the area as well as the original purchase price. This information may save clients thousands of Rands.

For more information contact Mariska at convey@andredreyer.co.za

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