The law of conveyancing in South Africa refers the legal process whereby a person, company, close corporation or trust becomes the registered and legal owner of immovable property, including improved and unimproved land, houses, farms, flats and sectional titles, as well as the registration of bonds and other rights to fixed properties, including servitudes, usufructs and the like. It entails the transfer process from the date the deed of sale is signed to the date of payment of finances and delivery of the deeds. It also covers the process of the registration of mortgages. Conveyancing in South Africa may only be carried out by a licensed conveyancer.
The approximate transfer period from the date of acceptance of the offer to purchase by the Seller to the date of registration in the Deeds Office takes two to three months and will depend on the terms and conditions set out in the Sale Agreement or Offer to Purchase.
Step One – Signing the Sale Agreement
The Seller and Purchaser will enter into an agreement regarding the sale of the immovable property and sign a sale agreement. Once the agreement is signed, it will be sent to the Seller’s transferring attorneys of choice to commence the transfer process.
In addition to the agreement, the transferring attorney will require the following:-
- FICA compliance and income tax reference numbers from the Seller, the Purchaser and their respective spouses, where applicable;
- payment of the deposit (where applicable) and pro forma transfer costs from the Purchaser;
- electrical, plumber, entomologist (beetle, borer, et cetera), gas, fencing compliance certificates from the Seller, where applicable;
- the title deed and bond cancellation figures from the current bondholder (bank or financial institution) over the immovable property and the details of their respective bond cancellation attorney;
- the details of the future bond holder over the immovable property and their respective registration attorney, where applicable;
- rates clearance figures from the City Council; and
- levy clearance figures from the body corporate/managing agents/insurers of the sectional title.
Step Two - Bond Cancellation and Registration
The current bondholder will appoint their own bond cancellation attorneys who will send a copy of the title deed and bond cancellation figures to the transferring attorneys, where applicable. The Purchaser will apply for a bond and make payment of the deposit (where applicable) into the trust account of the transferring attorney’s to be held in safekeeping until the transfer is registered at the Deeds Office. Once the bond is approved, the Purchaser will advise the transferring attorneys.
The future bond holder (bank or financial institution who approved the Purchaser’s bond) will appoint their own bond registration attorneys to attend to the registration of the bond and will provide the transferring attorneys with the amounts available for guarantees in respect of the future bond. The transferring attorneys will liaise with the bond cancellation attorneys regarding the guarantees and subsequently provide the bond registration attorneys with the guarantee requirements in respect of the cancellation of the current bond and the transfer of the immovable property. The bond registration attorneys to issue guarantees to cancel the existing bond over the immovable property and the guarantees will be forwarded to the transferring attorneys who will in turn forward the respective guarantee to the bond cancellation attorneys(see step five below).
Step Three – Transfer Documents
The transferring attorneys will draft the transfer documents and the Seller and Purchaser will be called to attend to the signing of the necessary transfer documents. These documents will vary depending of the type of transfer and marital status of the Seller and Purchaser. Around the same time, the bond registration attorneys will attend to the drafting their bond registration documents; and the Purchaser will deal with the signing of the documents and the paying of the bond registration fee.
Step Four – Payments
Once the Purchaser as made payment of the pro forma transfer costs to the transferring attorneys and all transfer documents are signed by the relevant parties, the transferring attorneys will make payment of the rates and/or levy clearance figures and the transfer duty. At this time, the Seller will provide the transferring attorney with all the required compliance certificates and the Purchaser will make payment of any remaining balance of the purchase price, if not already covered by the guarantees.
Step Five – Original Guarantees and Bond Cancellation
The transferring attorneys will receive the original guarantees covering the purchase price from the bond registration attorneys and send the original guarantees to the bond cancellation attorneys. At this time, the Seller will make payment of the bond cancellation attorney’s costs. This may also be done by the transferring attorneys on behalf of the Seller. The transferring attorney will receives the rates clearance certificate from the City Council, the levy clearance certificate from the body corporate/managing agents/insurers and the transfer duty receipt from the South African Revenue Services (SARS). At this stage, all suspensive conditions to the sale agreement must be met.
Step Six – Lodgement
The transferring attorneys will arrange with both the bond cancellation and bond registration attorneys for the simultaneous lodgement of their deeds at the Deeds Office, provided that all parties are ready to proceed with lodgement. At this stage, attorneys may use agents or correspondent attorneys to lodge for them. This will depend on their proximity to the respective Deeds Offices.
Step Seven – At the Deeds Office
Provided there are no unforeseen delays or queries in respect of the transfer, the transfer will take approximately eight to ten working days (Monday to Friday) to register. The documents will be examined in the Deeds Office and all respective attorneys (or their agents / correspondent attorneys) involved in the matter are called to sign off their documents for registration.
Step Eight – Registration
Once the transfer is registered, the Purchaser becomes the new owner of the proper, the Seller’s bond is cancelled and Purchaser’s bond is simultaneous registered. The new bond holder will be presented with the guarantees for payment of the purchase price which may take within two to three days to reflect. This will depend on the efficiency of the bank transfers.
All relevant parties are advised of the registration and the transferring attorney draws a final statement of account for both the Seller and Purchaser.
Step Nine – Release of Deeds
Once the deeds (title deeds and/or mortgage bond deed) have been data captured and microfilmed, the Deeds Office will release them. This process take anywhere from three to six months. The original deeds will be sent to the transferring and bond registration attorneys, who will in turn deliver them to the current bondholder or owner.
This process is followed in respect of a Seller who is cancelling his/her current bond. The current bondholder (bank or financial institution) will be given a written request to cancel the current bond or home loan. The current bondholder will require a ninety-day Early Settlement Notice, which if not complied with will incur a further penalty interest charge. The current bondholder will forward the bond cancellation figures to their bond cancellation attorney together with their instruction to cancel the bond. The bond cancellation figure will include the following:-
- the month-end balance prior to the issuing of the cancellation figures;
- ninety-day interest (where applicable).
- the Seller’s insurance premiums for the next six months to ensure that the immovable property will be insured for the duration of the transfer;
- the credit life assurance premiums for the next six months to ensure that the Seller’s life will be assured for the duration of the transfer; and
- all the legal costs, interest and/or early settlement charges incurred due to the transfer of the immovable property.
Once the current bond is paid in full and cancelled and the new bond is registered, the current bondholder or their respective bond cancellation attorney will furnish the title deed to the transferring attorney; who will in turn deliver same to the bond registration attorney.
The purchaser will apply for a new bond with a bank or financial institution. This process will be attended to by the bond originator on behalf of the Purchaser. Once the new bond has been approved by the bank or financial institution, the bond registration attorney will be instructed to proceed with the registration of the new bond. It is important to note that the registration of a new bond may be delayed for the following reasons:-
- the Seller and/or Purchaser’s failure to provide the necessary personal information.
- the Seller’s failure to provide details of the current bondholder;
- the Seller and/or Purchaser having unresolved financial issues with SARS;
- the Seller and/or Purchaser’s non-compliance with any clause set out in the sale agreement;
- the Purchaser’s failure to comply with any of the special conditions required for approval of the new bond or to pay the required deposit (if applicable); and/or
- delays on the part of any party involved in the respective transfer in respect of their contribution to the finalisation of the transfer.
The bond registration attorneys will require all the necessary compliance certificates to be furnished to them before the registration of the new bond.
If the current bond as already been paid in full and cancelled, you will skip the bond cancellation process and deal directly with the Seller as he/she will be in procession of the Title Deed together with any other security documentation. However, if the bond is paid in full but has not been cancelled, you will still have to pay a bond cancellation fee to the bond cancellation attorneys to cancel the existing bond and receive the Title Deeds.
If the Purchaser is paying the full purchase price in cash and does not require a new bond, you will skip the bond registration process and deal directly with the Purchaser.
All monies paid in respect of the cancellation of the current bond and the rates clearance figures are both estimates. If for any reason the final transfer costs are less than the estimated costs initially provided, the excess monies will be refund to the respective parties. For example, the Seller will receive a rates refund if the actual rates due calculated for the duration of the transfer is less than the estimated rates clearance figures provided.
The above sets out the general process that will be followed in respect of an ordinary transfer. However, if a transfer arises out of an endorsement, a divorce order, a deceased estate, or any other special circumstances; the general process described above will include further steps which will affect the duration of the transfer.