Conveyancing describes the legal procedure whereby the ownership of houses, flats and land is transferred from a Seller to a Purchaser. Property ownership in South Africa is recorded in the Deeds Office, an office in the Department of Land Affairs responsible in terms of specific legislation to deal with conventional and sectional title property ownership.
Conveyancing is a complex process involving many role players, all managed by the Conveyancer who is a specialised attorney, as well as one or more paralegals or conveyancing secretaries in a legal firm such as Molefe Roux Attorneys.
A typical conveyancing transaction starts when we receive the Deed of Sale, which is the Contract signed by the Seller and Purchaser for sale and purchase of the property, setting out their rights and obligations. After contacting the Seller, Purchaser and Agent, we do a search in the Deeds Office to confirm the full details of the parties, the property description, any mortgages, Court attachments, Interdicts as well as ordering a copy of the current Title Deed to establish further details such as onerous servitudes, restrictions against alienation and homeowners’ associations. The Purchaser will be reminded at this stage to pay any deposit due and to provide a guarantee for the full/balance purchase price.
Once all suspensive condition(s) (such as a mortgage bond) have been met, we then write to the bondholder to set up cancellation of the Seller’s existing mortgage bond over the property and to obtain the owner’s current Title Deed for lodgement in due course. If the Seller have a so-called “access bond” facility, he/she remember to draw any funds they may need as this facility is also frozen at this point. If Sellers have not given their bank the required three months’ notice of cancellation, our letter will serve as such a notice. The Seller’s bank will respond by giving us the figure required to settle the mortgage on the date of transfer, and instruct bond cancellation attorneys to supervise the cancellation process. If Sellers don’t have a bond, please let us have your Title Deed as soon as possible. If a Title Deed has been lost, we have to obtain a duplicate original which process will delay the transfer.
Our next step is to apply to the local municipality for rates clearance figures as well as a Municipal Valuation Certificate. No property can be transferred until the current rates account, usually together with a 4 month pre-payment for rates, water and services, have been paid. We will ask the Seller to pay this outstanding amount to us to enable us to pay the municipality and obtain a Rates Clearance Certificate which is a requirement for lodgement in the Deeds Office.
We then set up our preliminary documents for signature. These include:-
1. A Power of Attorney – where the Seller authorises the Conveyancer formally to appear before the Registrar of Deeds to register the transfer in the Deeds Office.
2. SARS Declaration – Transfer duty (a tax) is payable on the market value of the property sold and the Seller and Purchaser sign separate Declarations confirming the purchase price, their income tax numbers, and other facts relating to the sale. The Municipal Valuation Certificate, together with these Declarations confirm the correct sale price upon which transfer duty is levied.
3. Solvency Affidavit, FICA Affidavits – are served to confirm personal details, identity numbers, solvency, tax information and proof of residential address required in terms of the Financial Intelligence Centre Act.
4. Further documents may be required for levy clearance, homeowners’ association clearance, etc.
The Seller and Purchaser will then be contacted by our staff for an appointment to sign the above transfer documents. At this consultation, we will explain the transfer process, supervise the signature of the transfer documents and discuss the Deed of Sale and the finances of the transaction. These include transfer duty, the conveyancing fee plus VAT, disbursements, homeowners’ association and/or levy clearance fees, Deeds Office fees and searches, electronic license fees, postages etc. Bear in mind that this account does not include any bond or bank fees. The Seller should ensure that the Electrical Certificate is being attended to at this stage. (The Electrical Certificate is often required by the bank granting the bond, before lodgement).
The next stage of the conveyancing process involves following up the bond cancellation process, obtaining the original Title Deed, drafting a new Title Deed, paying the transfer duty to SARS and obtaining an official receipt and obtaining any other Certificates or clearances required.
By this stage, the Purchaser’s mortgage bond instructions should have been sent to his Bank’s mortgage bond attorneys. These attorneys will contact us for a so-called “Flysheet” which is a draft of the new Title Deed, together with other supporting documents to enable the bond attorney to prepare the mortgage bond documents. They will contact the Purchaser as mortgagor to sign their documents as soon as possible and pay their fees and bank costs. The Purchaser should also co-operate and comply with any other bank requirements such as insurance policies.
The above process takes about six to eight weeks and once all the law firms involved in the above typical conveyancing process are ready, the transferring firm will contact the other firms to arrange for simultaneous lodgement in the Deeds Office. The various documents required to register the transfer of ownership and the mortgage bond are prepared by the Conveyancer and placed into folders which are lodged at the Deeds Office for an examination period lasting two to three weeks. The Deeds Office has the right to reject any documentation which would require the documents to be re-lodged. If they are satisfied, the deeds become available for registration and the Conveyancers have five working days in which to arrange the actual transfer of ownership/registration of mortgage bond.
Back at the law firm, any last minute financial arrangements are completed and the deeds are “handed in” for formal registration by the Conveyancers in the Deeds Office the next morning. Transfer of ownership passes from the Seller to the Purchaser when a new Title Deed is formally executed by the Conveyancer and the Registrar of Deeds. The mortgage bond which serves as security for the bank loan to the Purchaser is simultaneously registered against the new Title Deed.
Once the transaction is registered in the Deeds Office, the finances of the transaction are finalised by the law firms who ensure that the amounts required to cancel any mortgage bond are paid, the Purchaser’s mortgage loan from the bank is received, the Seller receives his net purchase price and any other payments authorised by the Seller are also made. For all practical purposes, this is the end of the conveyancing transaction.
However, after a period of two to four months, the Deeds Office will deliver the registered Title Deed and mortgage bond to the involved law firms. The Conveyancer then closes and archives his file after delivery of the original Deed to the bondholder or Purchaser.
The Conveyancing process is complicated and there are many pitfalls which can slow down a transaction. At Molefe Roux Attorneys, we do our very best to achieve the target date for transfer. You will receive information on progress and the reason for delay, if any. Please give our firm your prompt co-operation to help us achieve transfer together successfully.
We thank you for making use of our services and should you require any further assistance, we invite you to contact any of our Conveyancing team.