What is conveyancing?
Conveyancing is the legal process whereby ownership in immovable South African property is transferred from one party to another and related aspects such as the registration of mortgage bonds and real rights in respect of immovable property.
Immovable property is any land (whether improved or not) such as a dwelling, a house, a farm, a vacant erf or a sectional title unit.
A conveyancing transaction involves a number of steps which normally begins with a Deed of Sale and continues through to the registration of transfer of ownership or the registration of the mortgage bond in the Deeds Office, the reconciliation of finances and the ultimate payment of the purchase price to the Seller.
What is a property conveyancer?
A conveyancer is an attorney with a post-graduate qualification who by law is the only person who can register property transactions in the Deeds Offices. This is necessary to ensure the protection of the interest of the parties to the transaction and to maintain the high standard of land registrations.
The sale of immovable property: step by step
3.1 Agreement of sale - a written agreement in which the Purchaser, the Seller and the immovable property as well as the purchase price is specified, is essential to constitute a binding agreement of sale. A Deed of Sale must be signed by both the Purchaser and the Seller or a person who has been authorized by such party in terms of a written Power of Attorney. A verbal contract for the sale of immovable property is unenforceable.
3.2 Transfer of the property - On receipt of the Agreement of Sale the conveyancer takes the necessary steps to effect registration of transfer of the immovable property in the relevant Deeds Office. Both the Purchaser and the Seller will be required to call at the offices of the Conveyancer to sign the necessary transfer documents which have been prepared by the Conveyancer and which will enable him to effect transfer. The Conveyancer requires the following:-
A. From the Seller:
B. From the Purchaser
C. From the existing bondholder
D. From the Purchasers Transferring Attorney in the event of a subject to offer:
E. From the Estate Agent
3.3 Upon receipt of the documents referred to in A - E:-
3.4 After signature of documents by both Seller and Purchaser and payment of disbursements by Purchaser:-
3.5 After receipt of guarantees:-
3.6 After receipt of clearance certificate and transfer duty receipt:-
3.7 Transfer is effected in the Deeds Office. 3.8 After Registration:-
3.9 Upon receipt of payment i.t.o. guarantee presented:-
3.10 Upon receipt of documents from Deeds Office:-
Costs involved in a property transfer
The costs relating to the transfer of fixed property fall into the following categories:-
How long does the property transfer process take?
The period of time it takes to lodge a transaction in the Deeds Office depends on the co-operation of the parties and their contractual arrangements. After the documents are completed and the rates and taxes an the transfer duty paid, the documents are lodged at the Deeds Office. The usual time taken by the Deeds Office to examine the documents lodged by the different conveyancers for a specific transaction is 7 - 14 days.
Necessity of a conveyancer
In terms of the present legislation, only qualified conveyancers may attend to the transfer of fixed properties and related transactions. This protects the rights and interest of the public and also safeguards the integrity of the South African Land Registration System, which is universally regarded as one of the best in the world. Only an attorney can qualify as a conveyancer.
Steps taken to effect the transfer of a property
The above is only a brief guide and should not be interpreted as being an extensive lay-out of all the steps to be taken to effect transfer of a property.
Steps to effect registration of a mortgage bond
Information Kindly Supplied by Dykes Van Heerden Inc Attorneys
Sars requirements for property transfer duty
On the 14th of April 2005 SARS issued a statement entitled 'SARS LAUNCHES A NEW ELECTRONIC TRANSFER DUTY SYSTEM'.
According to SARS this new transfer duty system will improve client service and will ensure that all parties comply with South African tax law. New transfer duty forms will be used for all transactions concluded after the 1st of May 2005. Effectively SARS will only issue the relevant transfer duty receipt on condition that all parties concerned are not only registered but that all their tax returns and taxes are up to date.
In essence now, SARS will use all property transactions in South Africa to monitor everyone's tax status, not only in relation to the property purchased or sold but in relation to their tax status in general.
As such, the following additional information will now have to be obtained from all parties concerned:-
Regrettably it now takes a few days longer to obtain a transfer duty receipt from SARS due to the fact that they now proceed to check all details and the tax status of all parties concerned before SARS will issue the necessary transfer duty receipt. This places an additional burden on conveyancers and could potentially delay transfers where for instance either the Seller or the Purchaser is deemed to have outstanding tax issues with SARS. These outstanding tax issues will first have to be resolved and only thereafter will SARS provide the necessary transfer duty receipt.
Solution
As transferring attorneys we, without delay and immediately after obtaining payment of the transfer costs which will include the transfer duty, approach SARS with a request to provide the necessary transfer duty receipt. If there is a problem in regard to the tax status of either party, this will be detected at an early stage which will then provide the relevant party the necessary opportunity to approach SARS and correct any outstanding issues.
Estates agents should at an early stage advise their sellers and buyers of the above and inform them that should they not be tax compliant the registration process will be delayed due to the fact that the Receiver of Revenue will refuse to issue the necessary transfer duty receipt. This will give both parties ample opportunity to resolve any outstanding issues with SARS. We suggest you add the following clause in your agreement:-
"As a result of the South African Revenue Services (SARS) doing risk analysis on both the transferor and the transferee on all property transactions both the Seller and the Purchaser warrant to each other and the agent that all tax issues (whether personal or otherwise) including but not limited to tax returns and tax payments are current and up to date. The defaulting party will be liable for all costs incurred and damages suffered by the aggrieved party as a result of a breach of this warranty. The aggrieved party shall also be entitled to place the defaulting party on terms and thereafter cancel the agreement if this warranty is breached. These remedies are in addition to all rights which the parties have in terms of this agreement or in Law."
The above should be seen as a brief comment and our interpretation thereof and should not be seen as an extensive guideline. Please obtain a full legal opinion if you wish to act on any aspect hereof as the guideline is not fully comprehensive.