Speed up your property transfer in a 'third of the time' with this checklist
Category Home owners tips
Property transfers have been hard-hit by the depressed economy and the Covid 19 Pandemic, resulting in normal turnaround times being seriously disrupted.
The normal process is that only after the offer to purchase is signed, will the Seller "get round to dealing with" the Conveyancer's requests for paperwork. This process of assembling the paperwork only after the property has been sold, can extend the time it takes a transfer to register considerably - already a 2- to 3-month long process, calculated from the date of sale.
However, these delays can be reduced, if the points listed below are taken into consideration before the property is sold, says Conveyancing Attorney Denoon Sampson, Denoon Sampson Ndlovu Inc. "The results will be registration of transfer in just a third of the usual time," says Sampson.
Why do property transfers take so long?
The two most common delay factors are the Seller taking time to gather the various certificates and paperwork required to pass transfer; and secondly, delays with cash payments to facilitate the transfer.
"It is possible to for a cash transfer to be registered in just 4 to 5 weeks, instead of the usual 8 to 12 weeks, calculated from the date of sale. The proviso to this, is that the Purchaser pays immediately and all the paperwork is handed to the Conveyancer, the moment the sale agreement is signed," says Sampson.
"It is not about how long the Deeds Office takes; but rather how long the Seller and Purchaser take to meet their obligations; before the documents can be lodged in the Deeds Office. Generally speaking, the Deeds Office does not delay; it is all about the Seller and Purchaser taking their time, after the sale agreement is signed."
It is important to note that each sale and its conditions are unique, therefore the following points must be considered carefully when aiming to expedite a transfer of a property.
Rates clearance certificates
A rates clearance certificate is valid for a period of 60 days counted from the print date, meaning the date upon which the rates assessment calculation is printed. This means that if the transfer is not registered within the 60-day period, a revised rates assessment and clearance certificate will have to be obtained.
Each municipality charges admin fees to issue a rates assessment and clearance certificate. The City of Johannesburg charges an admin fee of R301.78. This fee is paid for by the Purchaser. Many Conveyancers use a runner to expedite the issue of the clearance certificate and may charge an additional amount for this service The cost of obtaining a revised rates assessment and clearance certificate will be the same as mentioned above.
Levy clearance certificates
A levy clearance certificate is valid for the time period for which it is applied for. This means that if the transfer is not registered before the clearance certificate expires, a revised levy assessment and clearance certificate will have to be obtained.
Most managing agents for Body Corporates and Home Owner's Associations are private institutions and charge an admin fee of around R1500.00 per levy assessment and clearance certificate issued. This fee is also paid for by the Purchaser. The cost of obtaining a revised rates assessment and clearance certificate will be the same as mentioned above.
Who pays the rates and levies?
The Seller will pay the rates assessment figures and the levy assessment figures. These assessments will include both the arrears, if any, on the account, as well as a provision for rates, levies, utilities, and other charges in advance. Rates are usually calculated for 4 months in advance while levies are calculated 1 - 2 months in advance.
Sampson says, "The cost of obtaining clearance certificates cannot be incurred upfront, because it is not possible to apply for an assessment if one does not have all the Purchaser's details. Sellers would have to wait until the sale agreement has been signed, before incurring this cost."
However, knowing up front what is likely to be charged for the assessment, the Seller can ensure that their rates and levy accounts are paid up to date and that they have sufficient funds available to call on to make payment when requested to do so by the Conveyancer, so as not to delay the transfer.
What if the sale collapses? Would gathering all the documents listed below be wasted?
No. Most of the certificates and documents listed below should already be in place, even if there is no sale. One might regard this exercise as "putting one's house in order" anyway. For example, insurers and legislation require existing owners to be in possession of valid House Plans, Electrical, Fence and Gas Compliance Certificates, whether there is to be a sale or not.
Many of the certificates can still be used, even if the first sale collapses and the property is resold a second time.
Some time-saving preparations that will speed up the transfer:
(If the transfer is urgent, the Seller should avoid an offer to purchase that contains conditions that will cause a delay - for example, having to wait for the Purchaser to sell her own property with long guarantee time limits.)
The Seller can be faced with an astonishing amount of paperwork, which could include the items listed below. "Of course, not every property has the same history and unique circumstances and therefore not all of these items will apply", advises Sampson.
- Giving the "90 days' notice" to the existing bondholder for cancellation of the
- Withdrawing cash from an access facility before it is frozen.
- Obtaining building plans for the
- Incorrect rates accounts, especially where a previous subdivision took place OR having a rates account in arrears.
- Having a levy account in arrears OR outstanding disputes with the Body Corporate or Home Owner's Association.
- Lost original title deed and the long delay in having a duplicate original
- Failing to have had conveyancing documents or a Power of Attorney signed before travelling
- Repairing all known defects in the property before show
- Arranging Electrical, Fence and Gas Certificates of Compliance, which are valid and beyond
- Making sure that the Company or CC Seller has not been de-registered by the company's
- Ensuring that for Companies, CC's and Trusts, the sale is properly authorised.
- Ensuring that the Trustees in a Trust are correct and up to date.
- Making sure that the property, if built within the last 5 years, has the obligatory NHBRC (National Home Builders Registration Council).
- Ensuring that the fees for Engineering Services and Endowments, that were raised when an application to subdivide or rezone the property, was submitted to the Council, are paid.
- Deceased Estates: The estate has been reported to the Master's Office and an executor appointed.
90 Days' Notice
Depending on the amount outstanding on your bond, the 90 days' notice penalty interest may be a considerable amount. The earlier the Seller gives notice of their intention to cancel the bond, the sooner this penalty period can start to run. It is important to note that the notice must be renewed if the bond is not cancelled within the 90 days.
Withdrawing cash from an Access Bond
Once the Conveyancer requests the existing mortgage bond cancellation figures, any access facility open on the Home Loan account will be frozen. Should the Seller need to withdraw cash from the access facility, it can take time for the bank to unfreeze the account and allow the Seller to withdraw his funds. Any funds that are required upfront, should be withdrawn from the Home Loan before the transaction reaches the Conveyancer.
Building Plans
It is becoming more and more common that Purchasers and their Banks require up to date Building Plans. "However, the City of Johannesburg often no longer has any record thereof", advises Sampson. A draughtsman or architect will have to be commissioned to prepare fresh drawings and thereafter have them approved by the Council. About 3 or 4 weeks can be saved on this process if this is done before the sale.
Incorrect rates accounts
Unravelling and correcting the Council's faulty rates records can always be done at any time before a sale.
Generally speaking, rates accounts are never updated to reflect separate and distinct accounts for each newly created subdivided property. It can take at least 4 to 8 weeks to unravel these accounts before any rates assessment can be issued for transfer.
There are many consultants available who specialize in assisting with this and they should be instructed to proceed, long before there is a sale.
Lost title deeds - a 5-week delay for a duplicate original to be issued
Legislation has changed to require an application and an advertisement in the press before a duplicate original title deed can be issued to replace one that has been lost.
Sampson says a Conveyancer should be requested upfront to assist with this process if the Seller has lost the original Title Deed.
Signing a Power of Attorney for Conveyancing Documents - before leaving to go overseas
It is costly and cumbersome to have the signature of documents authenticated before a government authority overseas, (which is necessary). Serious delays can be avoided if a Power of Attorney is signed with a Conveyancer in South Africa, before departure.
Be rigorous about repairing defects before the sale
The general rise in "Consumer Protection Awareness" is likely to put most Sellers on the back foot and Sellers are encouraged to make sure that everything in the property is ship-shape, so that they can avoid costly and time-consuming disputes and repairs.
These days Purchasers have a heightened sense of entitlement and will try and seek out defects in the property - even those that have been "covered up" or "painted over". Demands and disputes that the defects be repaired before transfer, will cause a delay and even halt a transfer completely while the issues are negotiated.
Alternatively, one can disclose in detail, the nature of the defects, by writing them into the sale agreement and stating that the Seller will not be responsible for compensating the Purchaser therefor, and will not repair, the defects.
Electrical Fence and Gas Compliance Certificates
These certificates are always required before lodgement in the Deeds Office. Also, some of the banks have experts who will scrutinise Certificate of Compliance before they allow bank guarantees to be issued. It is therefore vitally important to avoid invalid Certificates, because inevitably, the Purchaser and/or his prospective Home Loan Bank will detect an invalid or bogus Certificate.
In such instances, costly delays will be incurred, because the Purchaser will request a second electrician to query and dispute the first Certificate.
De-Registration of a close corporation or company by the company office (CIPC)
If the Seller CC or Company has been de-registered by CIPC, then the Transfer cannot be registered by the Deeds Office. In normal times, it can take up to 8 weeks to have the CC or Company re-instated. Your accountant should start this process well in advance.
Correct approvals have been obtained: Companies and CC's
There are still many Companies and CC's that own just a single asset, namely a residential property.
If they sell the only asset, (namely the "whole or the greater part of its assets" in the entity), then the relevant legislation requires 75% of voting rights in the Company, to approve the sale by a "Special Resolution." A similar provision applies to CC's. This means that in addition to the Directors, 75% of the Shareholders or Members Interest Owners, must approve a resolution to sell the property - before the sale agreement is signed.
Correct approvals have been obtained: Trusts
For a sale from a Trust to be valid, the Trust must be; (1) registered with The Master of the High Court and issued with an IT number; (2) signed by someone who has been appointed as a Trustee in terms of "Letters of Authority" issued by the Master of the High Court; (3) and the sale agreement and signature thereof, authorised by a resolution signed by the appointed Trustees - before the sale agreement is signed.
If someone signs an agreement when he is not authorised, the contract will be invalid, and he can be sued for damages in his personal capacity - Goldex 16 (Pty) Ltd v Capper (2019). So even a beneficiary of a Trust to be created under a Will cannot sign any sale agreement, unless his name appears in the Letters of Authority.
A subsequent ratification of a Trustee's signature, by the other Trustees cannot cure an invalid sale - Thorpe v Trittenwein (2007).
It is common that Trustee resignations and appointments are frequently not updated, in the records of the Master of the High Court and this should be done well in advance before the property is sold.
National Home Builders Registration Council (NHBRC) Certificates
If the property to be purchased, is less than 5 years old, the Purchasers' Mortgage Bond Bank will request a copy of the NHBRC certificates for the building, before it will register the new mortgage bond.
If there is no existing bond holder who may be in possession thereof, or it has been lost, the Seller will need to apply for duplicate copies to be issued which is a difficult and time-consuming process to negotiate with the offices of the NHBRC.
Unpaid fees for Engineering Services and Endowments
It is not uncommon that an application to subdivide or re-zone the property is made to the Council and then postponed or never completed. The moment an application is submitted, the Council will debit the property (and not the owner) with its Town Planning fees.
Before the Council will issue the rates assessment, they will require that these Town Planning fees are paid in full. Importantly: The Council is not concerned with which owner in the past, incurred these fees. It may therefore rest on a subsequent owner to have to settle the fees, even though they were not the ones to make the application.
Deceased Estate Sale: Not Anybody can sign on behalf of the deceased estate
Only the person named as the Executor in the Letters of Executorship issued by the Master of The High Court is legally competent to sign on behalf of the deceased estate.
However, because the issue of the Letters of Executorship is frequently delayed, it is common for a family member to try and sell the deceased's property without waiting to be authorised.
If the Deceased Estate sells the property before the Letters of Authority have been issued or it is by sold by someone whose name does not appear in the Letters of Executorship, the sale will be entirely invalid.
'Not every item on this list will apply to each sale'
Not every item on this list, will apply to each sale, says Sampson.
"But it provides a checklist of what could arise. In addition, Conveyancers will always be willing to elaborate and assist upfront with queries. In conclusion, it is best to avoid signing a sale agreement and only then to find out that there is an unforeseen delay, because your paperwork has been delayed or has to re-issued, which will cause pressure from the Purchasers to expedite."
"In essence, it is best to start preparing the paperwork long before the property is sold."
Author: PROPERTY 24