20 Aug IMMOVABLE PROPERTY TRANSFERS – THE SELLER’S COSTS
Although the costs of transfer (including transfer duty, transferring attorney fees, deeds office fees, and incidental costs) are usually paid by the purchaser, there are certain costs for the seller when transferring immovable property:
1. Agent’s commission:
The commission amount as agreed and accepted by the Seller in the Offer to Purchase. This amount is usually represented as a percentage of the purchase price plus VAT.
2. Cancellation of the existing mortgage bond and penalty interest:
The property cannot be transferred unless all mortgage bonds registered over the property are formally cancelled at the Deeds Office. In terms of the National Credit Act, the Seller is obliged to give the bank 90 (ninety) days’ notice of its intention to cancel the mortgage bond. Should the bond be cancelled before the 90 days’ notice period has expired, the Seller will be liable for penalty interest for the remaining days of such period.
3. Bond cancellation costs:
The relevant financial institution/bank will instruct an attorney on their panel to attend to the cancellation of the bond. The costs are approximately R5,000.00 and escalate based on the number of bonds registered over the property which are to be cancelled. The transferring attorneys will liaise directly with the bond cancellation attorneys and pay their fees from the proceeds of the transaction.
4. Rates clearance costs:
A rates clearance certificate is always required where a property has been sold. The certificate confirms that all monies due, owing, and payable to the local authority have been paid. Typically, the local authority insists on the payment of an estimation of 60 days advance projection in respect of rates, electricity, water, and refuse. On registration of transfer, the local authority is advised and will adjust the account accordingly. Any refund due in respect of the advance payments made will be refunded to the Seller by the local authority after registration of transfer.
5. Levy clearance costs:
Where a sectional title unit is sold, a levy clearance certificate is required which confirms that all levies and other imposts have been paid up to the end of a certain month in which registration is to take place. Although the purchaser pays for the costs of the certificate, the managing agent or body corporate require an advance payment of levies or utility charges. The transferring attorneys or body corporate will attend to the pro-rata adjustments of payments made upon registration of transfer.
6. Homeowners association clearance costs:
If there is a restrictive condition in the title deed in favour of a homeowner’s association, their clearance certificate is required. This certificate confirms that all monies due to the association have been paid in full to the end of a certain month in which of contributions. Although the purchaser pays for the costs of the certificate, the monies due to the association are to be paid by the seller. The transferring attorneys/HOA will attend to the pro-rata adjustments of payments made upon registration of transfer.
7. Compliance certificates:
Where applicable, an electrical compliance certificate, plumbing certificate, gas installation certificate of conformity, and electric fence system certificate of compliance will be required. The costs will depend on the contractor. Although contractors allow these costs to be settled on registration out of the proceeds, it is often cheaper to pay them directly.
8. Lost title deed:
In the unlikely event that the Title Deed for the property has been lost, the lost copy will need to be advertised and application made to the Deeds Registry for the issue of a certified copy thereof. The cost of the application is approximately R4,500.00 and can cause several weeks delay.
Planning for these costs (most of which are required before the purchase price can be paid to the seller) will prevent unforeseen distress and surprise costs during the transfer process. Always speak to your trusted Conveyancer before accepting an offer to properly plan for these costs.