The cost for cancellation and early termination is for the account of the seller and therefore it is important for the seller to understand exactly what costs are due and what is required to reduce their risk.

In terms of the National Credit Act, financial institutions are entitled to charge an early termination penalty if the seller cancels their bond before the agreed term of the bond. The charge or penalty depends on the specific terms of the credit agreement – but it is usually 90 days.

Remember – giving notice to the bank of your intention to cancel and the actual cancellation of the bond are two different things. Giving notice only starts the process of calculating the penalty interest but the bond must still be cancelled physically in the Deeds Office by the bank’s appointed conveyancing attorney. The bond cancellation is registered at the same time as the transfer.

If registration takes place after the 90 day notice period, the penalty will fall away. If registration of the transfer of the property falls within the 90 day time period, the penalty will be reduced pro-rata to the time left on the notice period.

WHAT STEPS DO YOU NEED TO TAKE TO CANCEL YOUR BOND?

1. As soon as you put your property up for sale, give written notice to your bank of your intention to sell and to cancel your bond. The notice can be done telephonically but written confirmation (by e-mail) is advisable in case the date of the notice is disputed.
2. Confirm with your bank what their exact process is regarding notice i.e. do you give a once-off notice and after the 90 days no penalties are charged or do you need to give notice every 3 months if the property hasn’t sold yet?
3. The bank will instruct an attorney to cancel the bond. If the bond is on a R0,00 balance and not linked to a transaction, the attorneys will contact you and proceed with the cancellation. If there is still a balance outstanding and the cancellation is linked to the sale of your property, the attorneys will be in contact with your transferring attorneys for a guarantee to settle the balance.
4. Remember that once you give notice to the bank, most banks put a hold on your access facility (if applicable). So, it is advisable to withdraw any access funds that you may need prior to cancellation of the bond before same are frozen.
5. Bond cancellation attorneys’ fees need to be paid and are approximately R5,000 (depending on how many bonds you have registered). These costs can usually be paid from the proceeds of the sale by your transferring attorney.

If you need help cancelling your bond, contact us and we will notify the relevant bank accordingly – gillian@erasmuslaw.co.za or 0604816891.

WHAT IS A CONVEYANCER?

Immovable property (houses, flats, vacant land etc) can only be transferred by a conveyancer – a practising attorney who specialises in the preparation of deeds and documents. In a normal registration and transfer process, the transferring conveyancer oversees more than 50 activities involving up to 12 parties. The conveyancer deals with all the parties involved and assumes responsibility for the collection and payment of all amounts due (to the bank(s), agent(s), compliance bodies, local authority, SARS, body corporate, and, ultimately, the seller). The right conveyancer is the difference between a stress-free transfer and tearing your hair out over complex administration.

WHO CHOOSES AND WHO PAYS?

Typically, the seller has the right to choose the conveyancer and the purchaser pays the transfer fees. Transfer fees are regulated by a Law Society tariff to ensure that the purchaser is not unfairly prejudiced by the seller’s choice.

HOW DO I CHOOSE (AND DOES IT MATTER)?

The seller chooses the conveyancer when signing the offer to purchase. Your estate agent is allowed to make recommendations, but your choice should not be influenced by other relationships or benefits which may not necessarily always be in your best interests. If you don’t know a conveyancer, ask friends or colleagues who have recently sold a property to suggest a conveyancer who provided exceptional service and support throughout the entire process, who continually addressed any problems that arose, professionally and competently, and who kept within timelines, all while keeping the parties fully informed of the progress of the matter.

The choice of a conveyancer is critical, particularly to avoid delays and ensure a personalised service that is in the interests of all parties. Always choose a reputable conveyancer who delivers on their promises and makes your transfer their priority.

SO, WHO ARE WE?

Gillian Erasmus Attorneys Inc is a female-owned and run conveyancing firm. We always provide personal and honest advice, and we guarantee that the transfer of your property is in safe hands. Our director, Gillian Erasmus, will be your personal contact throughout the sale and transfer of your property and will ensure that what you agree to with the purchaser becomes a reality.

For more information on how we can help you, please get in touch with us. Gillian Erasmus – gillian@erasmuslaw.co.za or 0604816891.

While admirable and certainly an option, you do need a property professional to guide you (and usually the buyer) through the process. Ultimately, a conveyancer must transfer the property in the deeds office. As a qualified conveyancer, Gillian is perfectly placed to advise you on the legal process and the very important and legally binding offer to purchase.

Without an estate agent, the conveyancer must play the role of careful mediator and property professional, acting for the seller but also advising the buyer. This is a role that Gillian has played many times – ensuring that both parties have the result they desire from the sale and ensuring frequent and current communication and contact.

Yes – ANY conveyancer can transfer the property and can be appointed after the offer to purchase is signed. But having your trusted conveyancer involved from the drafting of the contract will ensure legally sound advice and a reliable contractual understanding between the parties.

Regarding fees, the seller has the right to choose the conveyancer and the purchaser pays the transfer fees. Transfer fees are regulated by a Law Society tariff to ensure that the purchaser is not unfairly prejudiced by the seller’s choice.

SO, WHO ARE WE?

Gillian Erasmus Attorneys Inc is a female-owned and run conveyancing firm. We always provide personal and honest advice, and we guarantee that the transfer of your property is in safe hands. Our director, Gillian Erasmus, will be your personal contact throughout the sale and transfer of your property and will ensure that what you agree to with the purchaser becomes a reality.

WHAT IS A GUARANTEE?

The guarantee is a document issued by a registered South African bank that guarantees the payment of funds upon the happening of certain events (i.e., the transferring attorney informing the bank that registration of the transfer of the property from the seller to the purchaser in the deeds registryhas taken place).
Guarantees are signed by a representative of the issuing bank, or an authorised agent who signs the guarantee under a power of attorney.
On transfer, the conveyancer will notify the issuer of that guarantee of the registration. The guarantee is then payable, and funds are paid in terms of that guarantee into the nominated trust account.

THE SOURCE OF THE GUARANTEE?

If the purchaser finances the purchase through a mortgage bond, the mortgagee bank and its attorneys will facilitate the issuing of the guarantee.
If the purchase price is to be secured in cash, there are two ways to issue the guarantee.

1. The first method would be for the purchaser to pay the funds into the conveyancer’s trust account and allow the attorney to issue the necessary guarantee. Most attorneys do not charge for the issue of this guarantee. The purchaser will also receive interest on the funds in the conveyancer’s account (provided they give the necessary authority to the conveyancer).
2. The second method would be for the purchaser to leave the funds in their bank account and request their bankers to issue the required guarantee. The conveyancers provide the guarantee requirements (and should adequately explain these to the purchaser). The disadvantage in this method is that banks generally charge a fee for the issue of a guarantee, which fee varies from bank to bank. There are also administrative challenges that may be difficult for a layperson to understand and overcome.

A MATTER OF TRUST?

Purchasers often enquire whether they can simply pay the purchase price on registration, without the issue of a guarantee. The answer to this question is NO!
The conveyancer has a duty to the seller to secure the purchase price so that on registration the payment of that purchase price is guaranteed. Furthermore, the seller’s bank usually requires a guarantee for the particular amount owing on the seller’s bond prior to allowing transfer. This is not possible without a valid guarantee.
This is not a matter of trust but rather one of practicality and contractual compliance.

For assistance with your property purchase or sale, get in touch.

THE TRANSFER DATE

The transfer date is usually specified as a date in the offer to purchase. Sometimes this date is simply ‘as soon as possible’, but for peace of mind a particular date no less than 8 weeks from the date of acceptance of the offer is suggested. The estate agent is well-placed to advise on a suitable transfer date.

Where a transfer date is specified, this is often followed by the phrase ‘…or as soon as reasonably possible thereafter’. The transfer process typically involves at least three sets (or more) of attorneys, two banks (one to cancel the seller’s bond and one to register the purchaser’s new bond), a municipality, SARS, and in some cases homeowners’ associations and body corporates. Where transfers should occur simultaneously or are financially dependent on one another, these parties are compounded by the number of linked transfers.

Because of the various different processes and role players, and the necessity of parties paying the prescribed transfer fees, costs, and levies on time, there is a chance that the transfer date agreed to by the parties has to be pushed back. It also happens that transfer is scheduled for the 1st of the month, which falls on a Saturday and Sunday. Transfer will only occur on the first working day following that, even if lodged timeously.

Once deeds are lodged at the deeds office, the examiners subject the deeds to rigorous scrutiny to ensure that the transfer of ownership and conditions of title are brought forward precisely. If the examiners raise a concern, the matter is either brought to prep with an examination note, or the deeds are rejected, requiring the conveyancer to correct the deeds and re-lodge.

DOES THIS MEAN THE TRANSFER CAN TAKE HOWEVER LONG IT TAKES?

No. Your conveyancer should try to register the transfer on the agreed date to the best of their abilities. This involves requesting documentation and information early, applying with the necessary stakeholders at the right time, keeping both parties informed of the costs involved in the transfer and the dates for payment, and constant communication with seller, purchaser, and agent(s) to ensure that all parties are fully aware of the progress of the matter and any potential delays.

IS THERE ANYTHING THAT CAN BE DONE?

Most offers to purchase provide for occupational rental to be paid, which is an amount paid by whichever party is in occupation when the transfer registers (if they are not the owner). An example is if the seller remains in the property after registration or where the buyer moves in before the transfer is registered in the deeds office. The payment of occupational rental allows a purchaser to move in on a specified date while allowing the seller compensation for moving out before transfer.
The choice of conveyancer is critical, particularly to avoid delays and ensure a personalised service that is in the interests of all parties. Always choose a reputable conveyancer who delivers on their promises and makes your transfer their priority.

Gillian Erasmus Attorneys Inc is a female-owned and run conveyancing firm. We always provide personal and honest advice, and we guarantee that the transfer of your property is in safe hands. Our director, Gillian Erasmus, is your personal contact throughout the transfer of the property and will ensure that what you agree to becomes a reality.

BUT WHY?

Before 1937, it was not standard practice that conditions be carried forward from deed to deed. In the Deeds Registries in the former Cape Province, the so-called pivot deed system existed, which is unique to the Cape Town deeds registry.

In terms of this system, no conditions were carried forward in a title deed. The title deed conditions would simply state:

“Subject to the conditions as contained in Deed of Transfer No … [with reference to the prior title deed]”.

When searching the above pivot deed, these deeds each refer to earlier title deeds. Only since 1937 have title deed conditions been carried forward in each new title deed. Thus, to determine all the possible conditions against and in favour of a property, a skilled conveyancer must conduct proper research in the Deeds Office archives and all previous title deeds must be checked, from the day when the first Government Grant or Crown Grant was issued (which may be as far back as the 1800s) to 1937.

WHAT WILL IT COST?

The conveyancer will generally charge on an hourly rate, depending on the length or complexity of the search. Request a quote before instructing the conveyancer to proceed because the costs vary.

WHAT IF THERE ARE RESTRICTIVE CONDITIONS?

Should there be a restrictive title deed condition preventing the approval of your building plan, you would have to submit yet another application to the municipality for the removal of the condition. This application requires advertising, as well as publishing the approval in the Government Gazette. Once the municipality approves the removal, the conveyancer will also have to apply to remove the condition from the title deed at the Deeds Office.

For advice regarding a conveyancer’s certificate or the removal of restrictive title conditions, contact our offices for professional advice.

gillian@erasmuslaw.co.za  |  060 481 6891

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.

For first-time home buyers, transfer costs can come as a bit of an unexpected (and un-budgeted) surprise. After all the effort to save for a deposit, and meticulously calculating your future property-related costs down to the last cent, the last thing you need is extra expenses required on demand to ensure the transfer goes through. Read below to make sure you’re truly prepared to sign that offer-to-purchase.

What Are Transfer Costs?

Transfer costs are not the same as transfer duty on a property. Rather, transfer costs comprise of a number of expenses, including transfer duty, that needs to be paid to the transferring attorneys before transfer (up to six weeks before). They include the following:

1. Transfer Duty

Transfer Duty is a tax (payable to SARS) levied on the value of a property above R1 000 000, to transfer the property to the buyer. This accounts for quite a large proportion of the costs involved in purchasing a home. Click here to calculate transfer duty.

2. Transferring Conveyancer’s Fee:

This is a fee payable to the Transferring Attorneys to transfer the property in your name. The amount varies depending on the property price and the law firm, but the fee is based on the Law Society’s recommended tariffs. Your estate agent or chosen attorney can provide you with a pro forma quotation before you put in an offer on a property. For a R1 million property, expect to pay approximately R22,000 and for a R10 million property, approximately R80,000.

3. Transfer Postage and Petties

These are disbursements to cover small expenses like printing, e-mails, drafting, and posting documents to other parties, including you. The amount, once again, varies from law firm to law firm, but it’s usually fixed. Look at spending somewhere in the region of R1 000.

4. Other Fees

These include rates clearance certificate fees to the municipality and electronic rates request fees (for the facilitation of the certificate). These fees usually amount to around R2 000.

5. Deeds Office Registry Fee

This is a government disbursement payable to the Deeds Office for the Title Deed and legal transfer and registration of your new home into your name. The amount is fixed according to the purchase amount.

What Are Bond Costs?

Yes, there are more costs. Bond costs are payable to the bond registration attorneys (chosen by the bank or financial institution) before the date of registration. It amounts to less than the accumulative transfer costs and includes:

1. Bond Registration Conveyancing Fees

These are for the service the bond registration attorneys provide to get your bond registered. The fee is based on tariffs recommended by the Law Society. The amount will vary according to your home loan amount and may differ from one law firm to another.

2. Bond Registration Post, Petties, and Other Fees

The Bond Attorneys also charge disbursements to cover small things like posting documents. Similar to the transfer petties, expect to pay around R1 000.

3. Bond Registration Deeds Office Registry Fee

This is a fixed fee charged by the Deeds Office for the legal registration of your mortgage bond; the amount is determined by the amount of your home loan.

However, there may be other costs involved, such as levy clearance and insurance certificate fees (for sectional titles) and homeowner’s consent fees (where such home owners’ associations exist).

Ask a conveyancer you trust to provide you with a pro forma statement so you can accurately plan for the expenses involved.

After the offer to purchase has been signed and the bond approved, three different sets of attorneys are appointed to handle the existing bond cancellation (cancellation attorneys, who are appointed by the seller’s existing bank), the new bond registration (bond attorneys, who are appointed by the purchaser’s new bank), and the property transfer itself (transferring attorneys appointed by the seller). The transferring attorneys are specified in the offer to purchase and oversee the entire process.

Upon payment of the transfer duty, documents are lodged in the Deeds Office. Registration – which transfers ownership legally – should occur 8 to 10 working days later.

• • Step 1: Once the seller has signed the Offer to Purchase, the purchaser pays the deposit and applies for finance for the balance. The bank or financial institution appoints a bond attorney to draw up the bond documents for the purchaser to sign. The purchaser pays the bond attorney’s fees. The bond attorneys provide guarantees for payment of the balance of the purchase price.

• • Step 2: The transferring attorneys obtain FICA (ID and proof of residence) of both parties and apply for figures to cancel the seller’s bond (from the bank). The bank instructs cancellation attorneys and provides them with the original title deed. If there is no bond to cancel, the seller should give the title deed to the transferring attorney.

• • Step 3: The transferring attorney drafts the necessary documents and the purchaser and seller sign. The transferring attorney then requests figures from the municipality to ensure that all the seller’s rates and taxes are paid up to date to acquire a clearance certificate issued by the municipality. The seller pays the current rates and advance rates for up to 60 days to the transferring attorney, who pays the municipality. The seller pays for and arranges the necessary compliance certificates (beetle, electrical, gas, plumbing).

• • Step 4: The purchaser pays transfer duty to SARS (a tax levied on property transfers over R900,000) as well as the transferring attorney’s fees. The transferring attorney pays the transfer duty on behalf of the purchaser.

• • Step 5: All three attorneys lodge the required documents at the Deeds Office simultaneously. It takes 8 to 10 working days for these to be examined and, provided there are no changes, the transaction is registered. The purchaser is now the rightful owner of the property!

Immovable property can only be transferred by a conveyancer; a practising attorney who specialises in the preparation of deeds and documents. Our property registration system in South Africa is one of the safest and best in the world, which is dependent on the integrity and the proper execution of the functions of conveyancers and the staff of deeds registries. The word ‘conveyancing’ describes the administrative and legal procedures necessary to transfer ownership (and other rights) in immovable property.

Certain deeds and documents must be prepared and signed by a conveyancer, who accepts responsibility for the correctness and accuracy of certain facts. Conveyancers have proper knowledge of more than 390 pieces of legislation governing land registration as well as the common law, conference resolutions dating back to 1938, and all relevant Chief Registrar’s Circulars.

Usually, three ‘types’ of conveyancing attorneys are involved in the property buying/selling process:

• Transferring Attorneys transfer the property from the seller to the buyer. They represent the seller and are appointed by the seller.
• Bond Attorneys register the bond over the property in favour of the bank financing the purchase of the property. They represent the buyer and the bank granting the buyer’s home loan and are therefore appointed by the bank/financial institution.
• Cancellation Attorneys cancel the seller’s existing home loan on the property. They represent the bank cancelling the seller’s home loan and are appointed by the bank cancelling the seller’s bond.

In a typical registration and transfer process, the transferring conveyancing attorney oversees more than 50 activities involving up to 12 parties. The conveyancer deals with all the parties involved and assumes responsibility for the collection and payment of all amounts due (to the bank(s), agent(s), compliance bodies, local authority, SARS, body corporate, and, ultimately, the seller).

So how do I choose (and does it matter)?

The seller has the right to choose the conveyancer. The estate agent may make recommendations, but the seller’s choice should not be diluted by other relationships or interests which may not necessarily always be in their best interests. If you do not know the conveyancer, ask friends or colleagues who have recently sold a property to suggest a firm/conveyancer who provided exceptional service and support throughout the entire process, who continually addressed any problems that arose, professionally and competently, and who kept within timelines, all while keeping the parties fully informed of the progress of the matter.

The choice of a conveyancer is critical, particularly to avoid delays and ensure a personalised service that is in the interests of all parties. Always choose a reputable conveyancer who delivers on their promises and makes your transfer their priority.